Page 391 - Ray Dalio - Principles

9.9 Train, guardrail, or remove people; don’t rehabilitate them.

Training is part of a plan to develop people’s skills and help them evolve. Rehabilitation is an
attempt to create significant changes in people’s values and/or abilities. Since values and abilities
are difficult to change, rehabilitation is typically impractical. Since people with inappropriate values
and inadequate abilities can have a devastating impact on the organization, they should be fired. If
rehabilitation is attempted, it is generally best directed by professionals over extended periods of
time.
Remember that if you are expecting people to be much better in the near future than they have
been in the past, you are probably making a serious mistake. People who repeatedly operate in a
certain way will probably continue to operate that way because that behavior reflects what they’re
like. Since people generally change slowly, you should expect slow improvement (at best). Instead,
you need to change the people or change the design. Since changing the design to accommodate
people’s weaknesses is generally a bad idea, it is better to sort the people. Sometimes good people
“lose their boxes” (they get fired from their role) because they can’t evolve into Responsible Parties
soon enough. Some of them might be good in another position, in which case they should be
reassigned within the company; some of them will not and should leave.
a. Don’t collect people. It is much worse to keep someone in a job unsuitable for them than it is to fire or
reassign them. Consider the enormous costs of not firing someone unsuited for a job: the costs of
bad performance; the time and effort wasted trying to train them; and the greater pain of firing
someone who’s been around awhile (say, five years or more) compared with letting someone go
after just a year. Keeping people in jobs they are not suited for is terrible for them because it allows
them to live in a false reality while holding back their personal evolution, and it is terrible for the
community because it compromises the meritocracy and everyone pays the price. Don’t let yourself
be held hostage to anyone; there is always someone else. Never compromise your standards or let
yourself be squeezed.
b. Be willing to “shoot the people you love.” It is very difficult to fire people you care about. Cutting someone
that you have a meaningful relationship with but who isn’t an A player in their job is difficult
because ending good relationships is hard, but it is necessary for the long-term excellence of the
company. You may have a need for the work they’re doing (even if it’s not excellent) and find it
hard to make a change. But they will pollute the environment and fail you when you really need
them.
Doing this is one of those difficult, necessary things. The best way to do it is to “love the people
you shoot”—do it with consideration and in a way that helps them.
c. When someone is “without a box,” consider whether there is an open box that would be a better fit or whether you need to
get them out of the company. Recognize that if they failed in that job, it is because of some qualities they
have. You will need to understand what those qualities are and make sure they don’t apply to any
new role. Also, if you learn that they don’t have the potential to move up, don’t let them occupy the
seat of someone who can.
Remember that you’re trying to select people with whom you want to share your life. Everyone
evolves over time. Because managers develop a better idea of a new hire’s strengths and weaknesses
and their fit within the culture than what emerges from the interview process, they are well
positioned to assess them for another role if the one they were hired for doesn’t work out.
Whenever someone fails at a job, it’s critical to understand why they failed and why those
reasons won’t pose the same problems in a new job.
d. Be cautious about allowing people to step back to another role after failing. Note I said “be cautious.” I didn’t say
never, because it depends on the circumstances. On the one hand, you want people to stretch
themselves and experiment with new jobs. You don’t want to get rid of a great person just because
he or she tried something new and failed. But on the other hand, if you look at most people in this
situation, by and large you’ll regret allowing them to step back.
There are three reasons for this: 1) You’re giving up a seat for someone else who might be able to
advance, and people who can advance are better to have than people who can’t; 2) The person
stepping back could continue to want to do what they aren’t capable of doing, so there’s a real risk
of them job slipping into work they’re not a fit for; 3) The person may experience a sense of
confinement and resentment being back in a job that they probably can’t advance beyond. Keeping
them is generally viewed as the preferable short-run decision but in the long run it’s probably the