Principles: Life and Work

by Ray Dalio

It’s more important to do big things well than to do the small things perfectly.

People are given the authority that they need to achieve outcomes and are held accountable for their ability to produce them.

The challenging and probing that we encourage is not meant to second-guess their every decision but to improve the quality of their work over time.

Don’t leave important conflicts unresolved.

It’s critical that conflicts actually get resolved—not through superficial compromise, but through seeking the important, accurate conclusions.

Almost every group that agrees on the big things ends up fighting about less important things and becoming enemies even though they should be bound by the big things.

The group is more important than the individual; don’t behave in a way that undermines the chosen path.

At Bridgewater, I have encountered some people, especially junior people, who mistakenly think they are entitled to argue about whatever they want and with whomever they please. I have even seen people band together to threaten the idea meritocracy, claiming that their right to do so comes from the principles. They misunderstand my principles and the boundaries within the organization.

While all individuals have the right to have their own opinions, they do not have the right to render verdicts.

Remember That the WHO Is More Important than the WHAT.

The “interviewing” process doesn’t end when employment begins, but transitions into a rigorous process of training, testing, sorting, and most importantly, getting in sync,

believe that the ability to objectively self-assess, including one’s own weaknesses, is the most influential factor in whether a person succeeds,

Now, after decades of hiring, managing, and firing people, I understand that to be truly successful I need to be like a conductor of people,

In the end, what you need to do is simple: 1. Remember the goal. 2. Give the goal to people who can achieve it (which is best) or tell them what to do to achieve it (which is micromanaging and therefore less good). 3. Hold them accountable. 4. If they still can’t do the job after you’ve trained them and given them time to learn, get rid of them.

The ability to see and value goals is largely innate, though it improves with experience.

Make sure that everyone has someone they report to.

In order to match a person to the design, start by creating a spec sheet so that there will be a consistent set of criteria that can be applied from recruiting through performance reviews.

Don’t design jobs to fit people; over time, this almost always turns out to be a mistake.

Values are the deep-seated beliefs that motivate behaviors

Abilities are ways of thinking and behaving.

Skills are learned tools, such as being able to speak a foreign language or write computer code.

In picking people for long-term relationships, values are most important, abilities come next, and skills are the least important.

We value people most who have what I call the three C’s: character, common sense, and creativity.

The process for choosing people should be systematically built out and evidence-based.

If you’re looking for a plumber you might be inclined to fill the job with the first experienced plumber you interview, without ascertaining whether he has the qualities of an outstanding plumber. Yet the difference between an ordinary plumber versus an outstanding one is huge.

Don’t use your pull to get someone a job. It is unacceptable to use your personal influence to help someone get a job because doing so undermines the meritocracy.

Personality assessments are valuable tools for getting a quick picture of what people are like in terms of their abilities, preferences, and style.

Remember that people tend to pick people like themselves, so choose interviewers who can identify what you are looking for.

Don’t assume that a person who has been successful elsewhere will be successful in the job you’re giving them.

Ultimately, what you need in the people you work with are excellent character and excellent capabilities, which is why it’s so hard to find great people.

a. Pay for the person, not the job.

b. Have performance metrics tied at least loosely to compensation.While

If you’re not generous with others and others aren’t generous with you, you won’t have a quality relationship.

Recognize that personal evolution should be relatively rapid and a natural consequence of discovering one’s strengths and weaknesses; as a result, career paths are not planned at the outset.

It’s a bad sign if you are constantly telling people what they should do; micromanagement typically reflects inability on the part of the person being managed.

Instead of micromanaging, you should be training and testing.

Recognize that experience creates internalized learning that book learning can’t replace.

Evaluate accurately, not kindly. Nobody ever said radical honesty was easy.

Remember not to be overconfident in your assessments, as it’s possible you are wrong.

Radical truth doesn’t require you to be negative all the time.

Recognize that tough love is both the hardest and the most important type of love to give (because it is so rarely welcomed).

The greatest gift you can give someone is the power to be successful. Giving people the opportunity to struggle rather than giving them the things they are struggling for will make them stronger.

a. Recognize that while most people prefer compliments, accurate criticism is more valuable.

Use evaluation tools such as performance surveys, metrics, and formal reviews to document all aspects of a person’s performance.It’s hard to have an objective, open-minded, emotion-free conversation about performance if there is no data to discuss. It’s also hard to track progress. This is part of the reason I created the Dot Collector.

Having metrics that allow everyone to see everyone else’s track record will make evaluation more objective and fair.

For performance reviews, start from specific cases, look for patterns, and get in sync with the person being reviewed by looking at the evidence together.

It’s difficult for people to identify their own weaknesses;

If there are performance issues, it is either because of design problems (perhaps the person has too many responsibilities) or fit/abilities problems.

The goal of a review is to be clear about what the person can and can’t be trusted to do based on what they are like.

Remember that when it comes to assessing people, the two biggest mistakes you can make are being overconfident in your assessment and failing to get in sync on it.