Failures are easier to recover from if they are spotted early on, when they are small. And, organizations can do a lot to encourage their members to face up to failure.Find more here via Fouroboros
There is an interesting story about Wernher von Braun. When a Redstone missile went out of control during prelaunch testing, von Braun sent a bottle of champagne to an engineer who confessed that he might have inadvertently short-circuited the missile. An investigation revealed that the engineer was right, which meant that expensive redesigns could be avoided.
You don't get a lot of admissions like that in organizations today. But all it takes is one such story to make an individual in the company buck up and say, "Hey, these folks are serious about facing up to failures, so I'm going to take a chance and speak up." [Note: there was minor editing in the above]
If you have a top-notch performer who acknowledges error, you aren't going to fire him. But what if it's an average guy? I'd say he's headed out the door. So, you can never institutionalize acknowledgement of error because there is no way to insulate it from negative consequences without making a commitment to hold on to dead wood.
Perhaps, the plea-bargaining model would apply. You say to your employees, "Listen, if you goof up, we're going to find out in the end. But if you fess up right off the bat we'll take that into consideration and give you some kind of favourable package if we decide to let you go."
Yesterday, a blog I was reading noted that the old practice of resignation from a senior post in response to error is no longer adhered to. Bush's cabinet, for instance, has remained the same in spite of the failure to prevent the Sept 11 attack. The blogger said that this makes sense since the last thing you want in the middle of an emergency is the loss of an experienced hand. (Though some might label it otherwise).