From "Principles"
π§ Listen to Summary
Free 10-min PreviewMaking Hard Personnel Decisions and Maintaining Standards
Key Insight
Leaders face a critical choice between removing liked but incapable individuals to achieve goals or retaining them and accepting the failure of those goals. This 'tough love' approach, while challenging, is the most important type of management, as maintaining high standards requires choosing excellence even when it is difficult. Since core values and abilities are inherently resistant to change, 'rehabilitation' of individuals with inappropriate values or inadequate abilities is generally impractical and often has a devastating impact on the organization. It is more effective to focus on training for skill development and personal evolution, recognizing that expecting rapid, significant change in ingrained behaviors is a serious mistake; instead, expect slow improvement at best.
Keeping someone in a job for which they are unsuited incurs enormous costs, including poor performance, wasted training efforts, and the amplified difficulty of eventually firing a long-tenured employee. This practice is detrimental to the individual, who lives in a false reality, and to the organization, as it compromises the meritocracy. Therefore, the principle is 'don't collect people.' Leaders must be willing to 'shoot the people they love'βremoving individuals with whom they have meaningful relationships but who are not 'A players.' While emotionally difficult, this is necessary for long-term organizational excellence, as such individuals can hinder progress and fail when truly needed; this action should be taken with consideration and in a way that helps them.
When an employee fails in a role and is 'without a box,' the focus must be on understanding the specific qualities that led to their failure to determine if another internal role is a better fit or if they must leave the company. Caution is advised when allowing individuals to step back into previous roles after failing in new ones, as this can tie up a seat for someone with greater advancement potential, risk them re-engaging in unsuitable work, and foster resentment. Ultimately, any transfer must serve the highest, best use of the person to benefit the entire community. Organizations must never lower their standards; if an individual cannot meet the requirements of excellence through radical truth and transparency within an acceptable timeframe, they must depart.
π Continue Your Learning Journey β No Payment Required
Access the complete Principles summary with audio narration, key takeaways, and actionable insights from Ray Dalio.