One money manager who knows Mr. Harris but did not want to be identified said: "Britt is just not used to having someone challenge him. As a powerful plan sponsor, he never had to put up with that. And Bridgewater is all about challenge."
Mr. Dalio described his firm's institutionalized philosophy of "challenge" on the company website, www.bwater.com: "Conflict in the pursuit of excellence is a terrific thing and is strongly encouraged (in fact demanded). There should be no (or as little as possible) hierarchy. … While there are drawbacks to this approach…the advantages… outweigh them."
An executive recruiter, who also requested anonymity, said the situation had all the classic elements of a mismatch of expectations: an entrepreneurial firm, dominated by an individual "who wants to let go, who thinks he can let go, but can't," vs. a "highly capable individual who has spent his career being stroked and massaged about how capable he is."
"The employer was not realistic about what the firm's principal was willing to let go of, and the employee was not realistic about what responsibilities would actually be given to him."
Recruiters also said many former pension fund executives find the transition from being a buyer to a seller of investment services unpalatable once they start asking clients for money.
Mr. Harris' own reasons for leaving could not be learned; he could not be reached for comment at Bridgewater's offices in Westport, Conn., before he left the firm and did not return calls to his home.
Mr. Dalio said in an interview that Bridgewater has always fostered "an extreme meritocracy of ideas," noting that there is no hierarchy in the investment decision-making process at Bridgewater. "Anyone can say anything to anyone in this firm, with respect, of course. You have to be ready to be challenged. It's the reason for our success, but it's very difficult for some people," Mr. Dalio said. "People either love or hate our culture," he said, adding that turnover is fairly high within the first 18 months of employment, but very low after that point.
Mr. Dalio said when Mr. Harris joined Bridgewater, they both acknowledged the culture might be difficult, but "he was really excited. He said he couldn't wait. But there's no doubt that you can talk about the culture, but living it is something different. It's like going into cold water: You can't be sure you can get used to it, that you'll like it."
Mr. Dalio added that Mr. Harris "is a superstar, with an absolutely fabulous character. He's an industry leader," and he expressed confidence that they will continue their relationship of a dozen-plus years.
Giselle Wagner, Bridgewater's chief operating officer, said there is no immediate plan to replace Mr. Harris, and the firm is reviewing its options.
Mr. Dalio said he is building a deep bench to take the firm forward into its second 30 years, and he is looking for a talented candidate who will relieve him of administrative responsibilities. Mr. Dalio stressed that at age 55, he has no plans to retire, and the move to appoint a CEO is being made to free him to concentrate exclusively on investments.
As for Mr. Harris' prospects, a range of industry sources were confident he would encounter little difficulty in finding future employment in the money management industry or with a plan sponsor.
"I give credit (to Mr. Harris) for taking the plunge and trying something new," said Richard Lannamann, vice chairman of recruiter, Spencer Stuart, New York. "He undoubtedly came away with good experience."