A promising young executive at IBM was involved in a risky venture that lost $10 million for the company. When Tom Watson Sr., the founder and CEO of IBM, called the executive to his office, the executive tendered his resignation. Watson is reported to have said, "You can’t be serious. We’ve just spent $10 million dollars educating you!”
If you've ever watched The Apprentice starring Donald Trump, you will have seen a different approach to handling failure. Every season goes something like this: The best people step up to lead. They do well for a while but eventually make a mistake. Trump berates them for that mistake and they are fired. By the end, only the weakest players are left because they stayed in the background and didn't make themselves a target.
Mistakes inevitably happen. As a manager, when they do, you must choose how to react. You can choose to act like Tom Watson or like Donald Trump. In my experience, I have seen managers make both choices. I have seen both sorts of managers be successful. However, those who emulate Trump do not usually have happy organizations. Watson's response engenders love. Trump's fear. Both are good motivators, but ruling by fear has serious consequences for the organization. If you want the most from your team, you want them to be motivated by love. People will simply go further for love than they will for fear. They'll also stick with you longer. If you rule by fear, people will only follow as long as they think you can offer them something.
Here is a real world example. As a test manager, there have been times when we've missed things. Late in the product cycle, or worse, after we shipped, a significant bug is found. The scrutiny then begins. My manager will usually start asking pointed questions. At this point there are two ways to react. The first is to get upset. "How could we have been so stupid that we missed this thing?" "Only incompetent people wouldn't have done the obvious things which would have led to this being found." The pressure to take this approach is high. There is emotion involved. Something went wrong and our most base instincts say that we must demand payment. There is also the desire to deflect the blame. "It's not my fault. Sam screwed up." Jumping on Sam about this will scare him into thinking twice before making a mistake again. There are problems though. The fear of being blamed for failure will distort team behavior. People will be more careful, but they'll also be less honest. They'll deflect the blame. They'll hide mistakes. It's possible that the real cause will remain hidden. If it does, the same mistake will repeat.
The second reaction is the one I strive to take. My rule of thumb is that if something goes wrong, I don't ask who messed up. I ask my team to tell me not what went wrong, but rather how we'll avoid this mistake next time. I don't get mad unless they make the same mistake twice. Then they aren't learning. As long as they are learning from their mistakes, I am not upset. This causes the team to react much differently when things go wrong. They will be supportive of the efforts to find out what happened. They will be more open about what led up to the mistake. They'll also work hard next time not to make mistakes. Not because they fear being chewed out, but because I've been supportive. They'll want to do well because they respect me and doing well is what I expect of them.