Page 300 - Ray Dalio - Principles

To give you an idea of what radical truth and transparency
look like, I’ll share a difficult situation we faced a few years
ago when our Management Committee began thinking about

reorganizing our back office. Our back office provides the
services we need to support our trading in the markets,
including trade confirmations, settlements, record
maintenance, and accounting. We had built this team up over
many years and it was full of hardworking, close-knit
employees who were part of our extended family. But at the
time we were seeing a need for new capacities that would

stretch us beyond what we could do in-house. This led our
COO, Eileen Murray, to devise an innovative strategy for
spinning off this team and having them incorporated into a
tailor-made group within the Bank of New York/Mellon. It
was just an exploratory conversation at first; we had no idea
whether we would pursue it, how we would pursue it, or what

that would ultimately mean for the members of our back office
team.

Put yourself in the shoes of the Management Committee.
When would you tell the back office team that you were
thinking of spinning off their group into another company?
Would you wait until the picture was clear? In most
organizations this kind of strategic decision would typically be

kept under wraps until it was a done deal, because bosses
generally think it’s bad to create uncertainty among
employees. We believe the opposite: that the only responsible
way to operate is truthfully and transparently, so that people
know what’s really going on and can help us sort through any
issues that arise. In this case, Eileen led a town-hall meeting
with the back office team right away. In the way typical of

leaders at Bridgewater, she explained that there was a lot she
didn’t know and there were a lot of questions that she
wouldn’t be able to answer. This was the harsh reality at that
moment, and while it did create uncertainty, had she followed
the more traditional approach of being less open, the inevitable

rumors and speculation would’ve made things much worse.
Though the group ultimately did get spun off, we continue

to have wonderful relationships with the people in it. Not only
did they cooperate fully throughout the transition, they still