Oops. I Made a Mistake.

A CEO I know once bragged about his management style: “I’m an asshole. I don’t tolerate mistakes — and when people screw up, I’m not afraid to let them know it.” He added, helpfully, that his therapist approved. “It reduces my stress when I let my anger out.”

Hmm.

How leaders respond to mistakes is one of the most powerful cultural drivers in any organization. At one end are leaders who leave a massive emotional wake — creating an atmosphere where employees conceal rather than fix mistakes, and delegate upward to avoid humiliation. At the other end are leaders who treat mistakes as the necessary cost of learning.

On the road to becoming CEO of Florsheim Shoes, Bob Berk once made a mistake that left him with $350,000 of unsold inventory — a total write-off. His CEO came to town, and Bob was walked through the warehouse in silence, past shelf after shelf of shoes. “Okay,” Bob finally said, “I get it. Are you going to fire me?” “Why would I ever do that?” his CEO replied. “I’ve just invested $350,000 in your education.”

Ed Catmull, in his book Creativity, Inc., describes the fail-fast, fail-early, fail-publicly culture he built at Pixar — where imperfection was not only tolerated but expected as part of the creative process. The results: 22 films averaging $662 million in worldwide box office. An 89% average on Rotten Tomatoes. Their worst-performing film did $332 million. When Disney purchased Pixar in 2006 for $7.5 billion, they asked Catmull to take over the struggling Disney Animation Studios as well. His team’s first film there was Frozen.

In Vistage rooms, conversations about how members react to mistakes — including their own — are among the most revealing. They tend to surface fears about control, failure, and appearing weak. But at the end of the day it comes down to one question:

Who would you rather work for?