- Matej Kastelic/Shutterstock
- Bridgewater Associates is the world’s largest hedge fund.
- On his new podcast, Wharton professor Adam Grant spoke to some Bridgewater employees about their culture of “radical transparency.”
- One manager remembered finding out in front of 200 coworkers that he’d been ranked the worst performer. He said it “energized” him by motivating him to either improve or leave.
- Bridgewater founder Ray Dalio told Grant that if you care about results, you’ll want this kind of candid feedback.
Kiran Rao is a smart guy. Before joining Bridgewater Associates, the world’s largest hedge fund, he’d been a medical doctor who worked with the World Health Organization and a principal at a consulting firm.
One day after joining Bridgewater, he was sitting in a meeting with 200 other employees when an announcement was made. Everyone was would be shown a list that ranked the people in the room according to their performance.
“Some of the people in this room probably shouldn’t be here,” the person presenting the list said.
Sure enough, there was Rao’s name – the worst performer on the list.
Rao recounted this story – in fact, he shared the recording from the meeting – on the first episode of “WorkLife with Adam Grant,” a new podcast hosted by the Wharton professor Adam Grant.
Rao was able to share the recording because almost all meetings are recorded at Bridgewater, a company that’s by now well known for its culture of “radical transparency.”
On the podcast episode, Grant spoke to Bridgewater founder Ray Dalio, who built the culture of radical transparency. Dalio said that if your objective is to be as good as possible – if you care about results more than your image – you’ll want criticism of your performance.
It’s unclear that public rankings motivate everyone at every company
On the podcast episode, Grant mentioned that research suggests ranking employees can be demotivating. It could depend on the specific work environment.
In one 2016 study from New York University and Columbia Business School (not mentioned on the podcast), researchers looked at the effect of performance ranking among truck drivers. Results showed that drivers who were told to emphasize teamwork performed worse after the rankings were posted, while drivers who had not been told to emphasize teamwork performed better.
Rao told Grant that learning he was the worst manager was like “dressing for the beach one day in flip flops and your swimwear and you swing your door open and you’re in a full-force winter storm.” But, he added, “I felt great.”
On the recording, you can hear Rao introduce himself to the group and say that he agrees he should be in this spot. “This leaves me more energized versus not,” he says. The feedback motivated him to either improve – or leave.
Rao is still a manager at Bridgewater.
Rao more or less echoed what Dalio said. He told Grant: “It’s just data, objective data about what I’m like. I would rather know how bad the bad is and how good the good is so I can do something with it.”