Dive Brief:
- Ray Dalio, CEO of the world’s largest hedge fund, Bridgewater Associates, fired an employee via email, then later called his action a joke, reports the New York Times. The firm’s 67-year-old billionaire operates the firm on what’s called “radical transparency,” which he outlines in the company's employee handbook.
- The Times says Dalio's management style is causing concerns and drawing criticism from ex-employees. Sources say he has created a culture of intimidation and humiliation that includes videotaping every staff meeting and encouraging employees to challenge each other.
- Even Dalio'a senior managers, many of whom have been shuffled around, question his aggressive management tactics, says NYT.
Dive Insight:
Dalio joins a list of former high-profile CEOs who created a corporate culture of military-style intimidation and paid the price with a mass exodus of talent. Last year, Bridgewater made headlines after one former employee accused his manager of sexual harassment.
Managers — including CEOs — need to know that the military-based, top-down forms of running companies are becoming obsolete. At their worst, such cultures create the same type of overbearing conditions that lead to the recent Wells Fargo scandal.
Bridgewater required employees to sign confidentiality agreements that prevented them from talking negatively about the firm. Confidentiality agreements that protect companies’ trade secrets are common and reasonable. Agreements that bar employees from criticizing their companies have far less merit. Employers should create cultures of collaboration and respect, and value employee input — even in the form of criticism.
Also, the National Labor Relations Act protects employees’ right to discuss working conditions. Last year, the U.S. Court of Appeals for the District of Columbia Circuit ruled that Quicken Loan's non-disparagement agreement violated federal law.
