Page 318 - Ray Dalio - Principles

quality, long-term relationships and a high sense of personal
responsibility, you can’t allow a sense of entitlement to creep
in.

c. Know where the line is and be on the far side of fair. The line is what’s

fair, appropriate, or required, as distinct from what’s generous,
in light of the defined quid pro quo relationship between
parties. As mentioned earlier, you should expect people to
behave in a manner consistent with how people in high-
quality, long-term relationships behave—with a high level of
mutual consideration for each other’s interests and a clear

understanding of who is responsible for what. Each should
operate on the far side of fair, by which I mean giving more
consideration to others than you demand for yourself. This is
different from how people in most commercial relationships
generally behave, as they tend to focus more on their own
interests than on the interests of others or of the community as
a whole. If each party says “You deserve more,” “No, you

deserve more,” rather than “I deserve more,” you are more
likely to have generous, good relationships.

d. Pay for work. While it isn’t all about the quid pro quo between
the company and the employee, this balance must be
economically viable for the relationships to be sustainable. Set
policies that clearly define this quid pro quo, and be measured,
but not excessively precise, when shifting it around. While you

should by and large stick to the arrangement, you should also
recognize that there are rare, special times when employees
will need a bit of extra time off and there are times that the
company will require employees to give it extra hours. The
company should pay for above-normal work one way or

another, and employees should be docked for below-normal
work. The give-and-take should roughly equal out over time.
Within reasonable boundaries, nobody should worry about the
exact ebbs and flows. But if the needs of one side change on a
sustained basis, the financial arrangement will need to be
readjusted to establish a new, appropriate relationship.

2.3 Recognize that the size of the

organization can pose a threat to