How Ray Dalio responds to painful criticism from employees that he sometimes makes them feel 'incompetent, unnecessary, belittled'

Business Insider EIC Henry Blodget spoke with, Bridgewater Associates Chairman and Co-CIO and author of "Principles: Life and Work," Ray Dalio about how he deals with painful criticism from employees. Following is a transcript of the video.

Henry Blodget: One of the very striking moments in the book is when you talk about how your top managers after you rebuilt Bridgewater into a success again. Basically, they came to you and said, look. Here's what Ray does well. He's a genius money manager and thinker and so forth, but here's what Ray doesn't do well.

And I have to read this because for anybody leading other people, just a very startling quote. It says, quote, "Ray sometimes says or does things "to employees that make them feel incompetent, "unnecessary, humiliated, overwhelmed, belittled, "oppressed, or otherwise bad." And you say very candidly, your first reaction was ugh.

Ray Dalio: I'm like, I don't want to do that. These are the people I work with. I don't want to have those consequences. And on the other hand, it's this radical straightforwardness, and I want them to speak to me in a straightforward way, so we were at a moment.

That's a painful moment. And then it's a moment of reflection. Should I not be as straightforward? Should they not be? What could I do differently? So what we decided to do was deal with it together. Like I thought that I should then ask the questions. Do you not want me to tell you what I think? Do you, I would appreciate you doing the same with me in that straightforward. So how should we be with each other? And by agreeing how we should be with each other and writing those things down so that this is what we're doing, we began to get more of the management principles of how we are with each other because it's the key to our success.

But it can be painful. It can be not understood well. There's things in our brain. Neuroscientists tell me that there's a part of our brain, which we call the prefrontal cortex, the thoughtful part of our brain, in which we sort of want to be radically straightforward. We'd like to know what our weaknesses is 'cause it's logical. And then there's an emotional part of the brain. We understand the amygdala that is the fight or flight. And it takes disagreement and it converts that into a battle, and it's not easy.

And so those two parts of our brains are at odds, and if we understand that and we work ourselves through. At the end of the day, can I be radically truthful with you? Like, what's so bad about us being radically truthful with each other and radically transparent?