When I arrived at MIT as a first-year graduate student in electrical engineering and computer science, I asked a professor for help with a research problem. He said "The reason that you've having trouble is that you don't know anything and you're not working very hard." A friend of mine was a surgery resident at Johns Hopkins. He complained to one of his teachers that he was having trouble concentrating because he'd been up all night for several nights in a row. The professor replied "Oh... does your pussy hurt?" According to Business Week, Jack Welch "encouraged near-brutal candor in the meetings he held [at GE]".
The bottom line: self-esteem is great but beware of creating a cozy home for unproductive people with bad ideas.