Be Crystal Clear on What the Deal is

2.2 Be crystal clear on what the deal is.

To have a good relationship, you must be clear with each other about what the quid pro quo is—what is generous, what is fair, and what is just plain taking advantage—and how you will be with each other.

One important thing that typically divides people is how they approach their work. Are they working just for their paycheck or are they looking for something more? Each of us has our own views about what is most important. I have made a lot of money through my work, but I see my job as much more than as a way to make money—it’s how I choose to live out my values around excellence, meaningful work, and meaningful relationships. If the people I worked with were primarily interested in making money, we would have conflicts whenever we had to choose between upholding our values and making an easy buck. Don’t get me wrong—of course I understand that people don’t work for personal satisfaction alone, and that a job must be economically viable. But we all have definite ideas about what we value and what we want our relationships to be like, and employers and employees have to be in sync on such things.

Naturally there will be disagreement and negotiation, but some things cannot be compromised and you and your employees must know what those things are. This is especially true if you’re seeking to create an environment that has shared values, a deep commitment to the mission, and high standards of behavior.

At Bridgewater, we expect people to behave in a manner that is consistent with how people in high-quality, long-term relationships behave—that is, with a high level of mutual consideration for each other’s interests and a clear understanding of who is responsible for what. On the surface, that sounds nice and straightforward, but what exactly does that mean? It is important to be clear.

None of this is easy, but the following principles provide some guidance.

a. Make sure people give more consideration to others than they demand for themselves.

This is requirement.

Being considerate means allowing other people to mostly do what they want, so long as it is consistent with our principles, policies, and the law. It also means being willing to put others ahead of your own desires. If the people on both sides of an argument approach their disagreements in this way, we will have many fewer disputes about who is offending whom.

Still, judgments will have to be made and lines will have to be drawn and set down in policies.

This is the overarching guideline: It is more inconsiderate to prevent people from exercising their rights because you are offended by them than it is for them to do whatever it is that offends you. That said, it is inconsiderate not to weigh the impact of one’s actions on others, so we expect people to use sensible judgment in not doing obviously offensive things. There are some behaviors that are clearly offensive to many people, and it is appropriate to specify and prohibit them in clear policies. The list of those specifics, and the policies pertaining to them, arise from specific cases. Applying this principle to them is done in much the same way that case law is created.

b. Make sure that people understand the difference between fairness and generosity.

Sometimes people mistake generosity for not being fair. For example, when Bridgewater arranged for a bus to shuttle people who live in New York City to our Connecticut office, one employee asked, “It seems it would be fair to also compensate those of us who spend hundreds of dollars on gas each month, particularly in light of the New York City bus.” This line of thinking mistakes an act of generosity for some for an entitlement for everyone.

Fairness and generosity are different things. If you bought two birthday gifts for two of your closest friends, and one cost more than the other, what would you say if the friend who got the cheaper gift accused you of being unfair? Probably something like, “I didn’t have to get you any gift, so stop complaining.” At Bridgewater, we are generous with people (and I am personally generous), but we feel no obligation to be measured and equal in our generosity.

Generosity is good and entitlement is bad, and they can easily be confused, so be crystal clear on which is which. Decisions should be based on what you believe is warranted in a particular circumstance and what will be most appreciated. If you want to have a community of people who have both high-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.

This 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.

* Source: Principles by Ray Dalio