Managing employee failure in an organization

By on September 22, 2012

The terms ‘failure’ and ‘success’ have been perceived in an absolute sense of being negative and positive respectively. Failure has always been avoided and success on the other hand is welcomed. Though everybody avoids failure, yet they differ in their ways. It is very important for a leader to understand different reactions to failure and how to manage them in a positive way. It is because failures demotivates employees and have a negative impact on their productivity.  Let’s explore the different reactions of employee failure and how these reactions affect organizational well-being.

Reactions to employee failure and their impact

Employee failure is avoided commonly in three alternative ways:

  1. Employee failure occurs and the one responsible stops taking risks. This is done with a view to avoid failure in future. If the employees start avoiding risks, this may adversely affect their creativity and talent. This also develops an organizational culture of non-experimentation and discourages innovation.
  2. Employee failure occurs but it is denied. It is because failure has always been conceived negative, so the person tries to pretend as if nothing has happened. This gives rise to a tendency of manipulations and frauds among employees. They try to hide their failures. This further leads to the development of an unethical corporate culture.
  3. Employee failure occurs and the person knows he/she is responsible, but still transfers blame on someone else. Employees indulge in a blame game and instead of accepting the failure, transfer it. This promotes internal conflicts and leads to low productivity, lower job satisfaction, and high stress levels among employees. The result is a higher employee turnover rate for the organization.

So, all the above three ways of reacting to failure are harmful to organization’s well-being in the long-run. The question arises how to manage failure?

Managing employee failure

A good leader is always aware that reactions to employee failure depends largely on the personality type.  Therefore it is important for the leaders to understand personality types and the way each personality type reacts to failure. Employee failures often lead to a feeling of probably not being trusted by the leader in future. Therefore nobody should be blamed for failure without deep research and proper evidence. The emotional intelligence of the leader is important to empathize with the employees.  Employees should be made to feel free not only to disclose their failures but also discuss their failures with the leader. This way they would perform optimally without any fear of being criticized or terminated and would enhance innovation in the organization. Moreover, employees should be made to perceive failures as a means of continual improvement and growth. Growing competition in the marketplace demands learning from failures and not avoiding failures.

Holistic approach to employee failure

The leader should adopt a holistic approach to employee failures because many times the employee failures have their roots in management level issues. Organization culture also influences individual failure management. A culture of openness in the organization supports acceptance of employee failure. The organization culture should motivate employees to experiment and they should be provided with the means to learn from their failures.

Further, there should be a system of regular review of both success and failures. While review of the success boosts up employee’ morale. Reviewing failure provides an opportunity of real-time learning and growth. Once the causes of failure are assessed, corrective action regarding process or person should be taken.

Intense competition has made every business vulnerable to failure and as such managing failure is crucial to survival of the business. Proper failure management would improve employees’ productivity and retention and lead to the development of an ethical organization.


  • Dattner, B. & Hogan, R. (April 2011). “Managing Yourself: Can You Handle Failure?” Harvard Business Review.


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