You do not want employees who are always frightened; you might think that this will 'keep them from making mistakes,' but actually, it is more likely to cause them to make mistakes; instead, one of the best ways to keep your employees from feeling frightened and nervous is to understand the value of positive reinforcement, as providing positive reinforcement to your employees will put them in a place where they can continue to do these same things for which you are praising them.
On top of understanding the value of positive reinforcement, it will also help you to understand the value of competition; some business owners have a tendency to view competition in a negative light, but when you allow your employees to compete with one another, this will give them a greater sense of investment in their job, and it will put them in a position where all of them are constantly striving to do their best.
And of course, you will need to understand the value of relaxation if you are hoping to create a great work environment for your employees; your employees can get burned out quite easily if you do not allow them to relax, so make sure they have enough time off from work, and make sure their work environment is not stressful!
As you continue to focus on these goals, you will continue to create a positive work environment for your employees - and they will continue to reward you with quality work!