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Bridgewater Associates founder Ray Dalio.
- Ray Dalio's employees once sent him a memo stating that his behavior made employees feel "belittled, oppressed, or otherwise bad."
- Dalio was shocked about the impact of his leadership style, so he decided to be more open with his employees.
- The conflict helped perfect Dalio's philosophy of radical truthfulness, inspire his Work Principles, and eventually, his best-selling book "Principles."
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When Ray Dalio received a critical memo from his employees, he didn't get upset. Instead, he accepted the blame and worked with them to find a solution.
Back in 1993, Dalio was head of the growing hedge fund Bridgewater Associates, which is now the world's largest, with $150 billion in assets. Three of his employees took him out to dinner one night to give him feedback on his performance as their boss. In his 2017 best-seller, "Principles," based on what he learned in four decades of running Bridgewater, Dalio recounted the meeting.
His employees wrote him a memo beforehand, which stated: "Ray sometimes says or does things to employees which makes them feel incompetent, unnecessary, humiliated, overwhelmed, belittled, oppressed, or otherwise bad. The odds of this happening rise when Ray is under stress... The impact of this is that people are demotivated rather than motivated."
Naturally, Dalio was not pleased to hear this. "Ugh. That hurt and surprised me," he wrote. "I never imagined that I was having that sort of effect."
The meeting made Dalio reconsider his leadership style and his relationship with the people working with him. He wrote, "Was I demanding too much?"
Despite the negative bottom line, Dalio's employees also noted several good things about his leadership in their memo: "He has good intentions about teamwork, building group ownership, providing flexible work conditions to employees, and compensating people well."
Dalio's takeaway from the memo and meeting was that his employees were dissatisfied. He wrote, "I wasn't paying them enough money to put up with my crap."
Dalio was faced with two choices. He could either continue to embrace radical truthfulness (his philosophy of being totally open in the workplace), or he could have happy employees. He found he could have both as long as every person was radically truthful and presented their problems up front immediately, so that everyone could work through them.
To solve the conflict once and for all, Dalio and his team were able to draft a set of principles to deal with communication in the workplace: "1) Put our honest thoughts out on the table, 2) Have thoughtful disagreements in which people are willing to shift their opinions as they learn, and 3) Have agreed-upon ways of deciding if disagreements remain so that we can move beyond them without resentments."
These principles eventually grew into Dalio's Work Principles, the tools he used to mold Bridgewater's company culture, and the inspiration for "Principles," which has sold 2 million copies.