The Power of Feedback and Radical Candor for Performance Management and Cultural Health

Billionaire Ray Dalio is one of the richest and most influential people in the world. He has run the largest hedge fund in the world, Bridgewater Associates, for the last 20 plus years and attributes much of his success to a concept he calls Radical Transparency. Bridgewater served as testing ground for this concept where almost all information is shared as broadly as possible among staff. In meetings, feedback is recorded, shared and graded on almost all interactions. Dalio’s argument for radical transparency is that it allows us to make better decisions. The more information, opinions and feedback we share with each other the less room for blindspots, ego, insecurities, weaknesses and bad ideas to go untested. In a field as competitive as hedge funds there is very little room for bad decisions and Dalio preferred testing them aggressively in the meeting room before testing them in the market.

The results speak for themselves. Bridgewater Associates is the largest hedge fund in the world because they consistently beat the performance of their peers. Yet, working at Bridgewater is not for everyone. One of the most common complaints about their culture is that the line between Radical Transparency and brutal honesty is a very thin one. When getting the right answer at all costs takes a back seat to people’s feelings some people can feel run over, abused or like they are working in a psychologically hostile workplace. You have to have a thick skin to hear the truth immediately and all the time, and Dalio freely admits that not everyone can survive at Bridgewater under that constant microscope. For those that can handle it they get to share a fortune, however that may end up being a small sliver of the general population.

The Bridgewater Radical Transparency pressure cooker is an extreme example that may not work for most companies, however moving closer to a culture of transparency can have positive benefits for performance management and cultural health. Dalio is right, truth is the great equalizer, teacher and judge. However making sure everyone’s truth is delivered and received in a respectful, productive manner is the nexus where performance and cultural health meet. In most companies the key is making it safe for people to be honest with each other, and caring for the human as much as we care for the truth.

Kim Scott, a previous senior executive at Google and Apple, wrote the best-selling book Radical Candor: Be a Kickass Boss Without Losing Your Humanity  , exactly addressing this dynamic. She defines radical candor as the nexus of challenging people directly and caring for them personally. Her argument takes a lot of the meat of Dalio’s Radical Transparency and then humanizes it by emphasizing the importance of caring. Scott suggests that radical truth without care can not only be miserable, but may actually take away from our effectiveness as leaders. The brutal-honesty-at-all-costs culture and reputation Dalio has at Bridgewater may work in hedge funds and navy submarines, but in most companies human capital is just as important as making good decisions, and requires as much weight in our concern as well.