Page 270 - Ray Dalio - Principles

16 And for Heaven’s Sake, Don’t Overlook Governance!
16.1 To be successful, all organizations must have checks and balances.

a. Even in an idea meritocracy, merit cannot be the only determining factor
in assigning responsibility and authority.

b. Make sure that no one is more powerful than the system or so important
that they are irreplaceable.
c. Beware of fiefdoms.

d. Make clear that the organization’s structure and rules are designed to
ensure that its checks-and-balances system functions well.

e. Make sure reporting lines are clear.
f. Make sure decision rights are clear.
g. Make sure that the people doing the assessing 1) have the time to be
fully informed about how the person they are checking on is doing, 2)
have the ability to make the assessments, and 3) are not in a conflict of
interest that stands in the way of carrying out oversight effectively.
h. Recognize that decision makers must have access to the information
necessary to make decisions and must be trustworthy enough to handle
that information safely.

16.2 Remember that in an idea meritocracy a single CEO is not as good as a
great group of leaders.

16.3 No governance system of principles, rules, and checks and balances can
substitute for a great partnership.