Warren Buffett, popularly known as the 'Oracle of Omaha', is one of the finest and most successful investors in the world. He is also the chair and CEO of Berkshire Hathaway, a financial service and public organisation that started as a textile company but now has over 60 companies under it including Duracell, Dairy Queen, and Geico.
- From investing in his first stock at age 11, Warren Buffett has gone on to own a company with over 60 subsidiary companies under it and become one of the most successful investors of all time. The investor is also ranked one of the richest billionaires in the world, but how has his leadership style contributed to his success? This article examines Warren Buffett's leadership style, its qualities, and the principles behind it.
Rule No.1: never lose money. Rule No.2: never forget rule No.1. ”- Warren Buffett
Born in the year 1930 in the town of Omaha, Nebraska to a US congressman, Warren Buffett first invested in stock at the tender age of 11 but he now has over 65 years of experience in investing.
He is currently ranked among the top ten wealthiest men in the world by Forbes magazine with a net worth of $ 107.2B.
Warren Buffett Leadership Style
Playing the role of a mentor to his employees, instead of that of a boss, Warren Buffett practices the Laissez-faire leadership style, which is also called the delegate or hands-free leadership style. Warren Buffett's laissez-faire leadership style makes him surround himself with skilled and trusted accomplices to make sure jobs are efficiently done without worries.
Warren Buffet Lassiez-Faire Leadership Style
Laissez-faire leadership style is a type of hands-off leadership style where the leaders tend not to micromanage their employees, nor get too involved in tasks already assigned to employees. They allow the employees to take the lead on projects, trusting their creativity, training, and experience, and are often confident about the employees' capabilities.
Though delegation leaders tend not to get involved in employees' decision-making, they provide guidance in the form of mentorship and take responsibility when needed. This leadership style is best suited to an organization with professional, skilled, and motivated labour.
In an annual report from Berkshire Hathaway in 2010, Warren Buffett said:
We allow our subsidiary companies to operate independently without supervision because it allows many of our managers to keep an owner-oriented behaviour, and they use them well in motivating their team members to perform well. "
Even with the risk that comes with this leadership style, Warren Buffett believes that giving autonomy to managers to manage tasks efficiently without being bothered about watching how they perform and constantly checking their work quality will help the managers perform better.
In addition to practising the laissez-faire leadership style, Warren Buffet is also an authentic leader. Authentic leaders are leaders who have clear values and an understanding of their values. Their attitude towards life is based on this value, and they have a clear picture of who they are, the goals they chase, and the right way of doing things. This is particularly evident in Warren Buffett's company, Berkshire Hathaway.
His leadership has a focus on the fundamentals, like investing in a good company that makes good products at a fair price. This shows his value-oriented behaviour as he seeks to create value from wealth. He is also a self-disciplined man, choosing to live frugally and donate from his wealth, demonstrating his moral values. He also demonstrates transparency in his relationships and trusts his managers by letting them lead his companies and succeed in their own way.
A popular Warren Buffet leadership quote is:
We don't have to be smarter than the rest, we just have to be more disciplined.
Warren Buffett laissez-faire leadership style qualities
Below are some of Warren Buffett's characteristics in leading his organization
Employees are empowered to make decisions.
Leaders provide guidance in the form of mentorship.
Leaders take responsibility for the actions of employees or team members.
Leaders can take charge when things are not going to plan.
Employees have access to resources and tools needed which are usually provided by the leaders.
Team members are expected to solve their problems with their creativity and knowledge.
Mistakes are tolerated and constructive criticism is given by leaders.
Warren Buffett transformational leadership
In being able to inspire his employees towards his vision, Warren Buffet has been able to grow Berkshire Hathaway, a company that was initially called a failure, and transform it into one of the world's biggest financial service companies. The success of his company proves the transformational leadership skill possessed by Warren Buffet.
Apart from transforming his company and inspiring his employees to strive towards his vision, Warren Buffet's transformational leadership also looks to create a change in the world through his philanthropic deeds. In 2006, Warren Buffet pledged to distribute over 99% of his net worth to charitable causes, and he has been fulfilling his pledge since then.
He also looks to cause a change within his organization by pushing and motivating employees to be successful in their respective sectors. He provides support and mentorship and celebrates their achievements.
Warren Buffett leadership principles
Warren Buffett leadership principles include:
1. Effective communication
Part of Warren Buffett's leadership is the ability to communicate his ideas and thoughts clearly with minimum jargon. This is mostly due to the fact that he knows his business in-depth and to the importance he places on education.
2. Transparency
Warren Buffet is transparent with his thoughts and ideas. This principle has proven invaluable to him as it has drawn him admiration glances from notable people. One such person is Bill Gates.
3. Solitaire
No matter how great the talents or efforts, some things just take time. "- Warren Buffett
This is one of Warren Buffett's leadership quotes. He believes great people should have enough patience to wait for the growth process.
4. Don't micromanage
He believes in his ability to identify and employ the right talent and give them the environment to be creative and do things their way. He believes that his managers will perform better when they have his trust in allowing them to do things their own way without interference from him.
5. Choose a career you love
Loving what you do provides you with a competitive edge according to Warren Buffett. This is particularly evident in his words:
There comes a time when you should start doing what you love. You will get the energy to jump out of bed every morning."
Despite the risk of employees abusing their role in the organisation, Warren Buffett has been able to use the laissez-faire leadership style to build his company, Berkshire Hathaway, into one of the world's leading financial service organizations. With over 60 companies currently under it, including Duracell, Dairy Queen, and Geico, Warren Buffett's leadership style proves that with the right professionals and environment, employees will thrive in roles assigned to them.
Warren Buffett Leadership Style - Key takeaways
Warren Buffet, also known as Oracle of Omaha, is one of the finest investors in the world and he is the chair and CEO of Berkshire Hathaway.
Berkshire Hathaway is a financial service and public organization that started as a textile company but now has over 60 companies under it including Duracell, Dairy Queen, and Geico.
Warren Buffet practices the laissez-faire leadership style.
The laissez-faire leadership style is also called delegative leadership style or hands-free leadership style.
Warren Buffet is also an authentic leader
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