Page 389 - Ray Dalio - Principles

the shot.” Since good and bad outcomes can arise from circumstances that might not have had
anything to do with how the individual handled the situation, it is preferable to assess people based
on both their reasoning and their outcomes. I probe their thinking in a very frank way so as not to let
them off the hook. Doing this has taught me a lot about how to assess others’ logic, and how to have
better logic myself. When both the outcomes and the thinking behind them are bad, and when this
happens a number of times, I know I don’t want them to do that type of thinking anymore.
For example, if you’re a poker player and you play a lot of poker, you will win some hands and
lose others and on any given night you might walk away with less money than a lesser player who’s
gotten lucky. It would be a mistake to judge the quality of a player based on just one outcome.
Instead, look at how well someone does what they do and the outcomes they produce over time.
a. If someone is doing their job poorly, consider whether it is due to inadequate learning or inadequate ability. Think of
people’s performance as being made up of two things: learning and ability, as shown on page 437. A
weakness that is due to a lack of experience or training can be fixed, while a weakness that is due to
a lack of ability can’t be. Failing to distinguish between these causes is a common mistake among
managers, because managers are often reluctant to appear unkind or judgmental. Also, they know
that people assessed this way tend to push back. This is another one of those situations in which you
must force yourself to be practical and realistic.

b. Training and testing a poor performer to see if he or she can acquire the required skills without simultaneously trying to
assess their abilities is a common mistake. Skills are readily testable, so they should be easy to determine.
Abilities, especially right-brained abilities, are more difficult to assess. When thinking about why
someone is a poor performer, openly consider whether it is a problem with their abilities.

9.8 Recognize that when you are really in sync with someone
about their weaknesses, the weaknesses are probably true.

When you reach an agreement, it’s a good sign you’ve arrived at truth, which is why getting to that
point is such a great achievement. This is one of the main reasons that the person being evaluated
must be an equal participant in the process. When you do agree, make a formal record of it. This
information will be a critical building block for future success.

a. When judging people, remember that you don’t have to get to the point of “beyond a shadow of a doubt.” Perfect
understanding isn’t possible; trying to get to it wastes time and stalls progress. Instead, work toward
developing a mutually agreed-upon, by-and-large understanding of what someone is like that has a
high level of confidence behind it. When necessary, take the time to enrich this understanding.