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Warren Buffett Leadership Style

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Warren Buffett Leadership Style

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.

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.

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. 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

  1. Employees are empowered to make decisions.

  2. Leaders provide guidance in the form of mentorship.

  3. Leaders take responsibility for the actions of employees or team members.

  4. Leaders can take charge when things are not going to plan.

  5. Employees have access to resources and tools needed which are usually provided by the leaders.

  6. Team members are expected to solve their problems with their creativity and knowledge.

  7. Mistakes are tolerated and constructive criticism is given by leaders.

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


References

Inc.: Warren Buffett Says All Successful Leaders Have 1 Thing in Common. https://www.inc.com/marcel-schwantes/warren-buffett-says-all-successful-leaders-have-one-thing-in-common.html

Forbes: Warren Buffett. https://www.forbes.com/profile/warren-buffett/?sh=2a09a8404639

Financhill: Warren Buffett Leadership Style. https://financhill.com/blog/investing/warren-buffett-leadership-style

Frequently Asked Questions about Warren Buffett Leadership Style

Warren Buffett practices the Laissez-faire leadership style, which is also called the delegate or hands-free leadership style.  

Warren Buffett's leadership principles are:

  • Effective communication
  • Transparency
  • Solitaire
  • No micromanagement
  • Motivation to choose a career you love 

Yes, Warren Buffett is a transformational leader. Apart from transforming his company and inspiring his employees to strive toward his vision, Warren Buffet's transformational leadership also looks to create a change in the world through his philanthropic deeds. 

Warren Buffett is the chair and CEO of Berkshire Hathaway, 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. 

Warren Buffet is 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. 

Final Warren Buffett Leadership Style Quiz

Question

 Warren Buffett practice which leadership style


  1. laosez-feire leadership style

  2. laissez-faire leadership style

  3. Autocratic leadership style

  4. Democratic leadership style

Show answer

Answer

B. laissez-faire leadership style

Show question

Question

Choose the correct answer


  1. laissez-faire leadership style is also called delegative leadership

  2. Warren Buffett is also a transformational leader

  3. A and B are both wrong

  4. A and B are both correct

Show answer

Answer

D. A and B are both correct

Show question

Question

Warren Buffett is an authentic leader


  1. True

  2. False

  3. Not sure


Show answer

Answer

A. True

Show question

Question

Which of the following is not a quality of the laissez-faire leadership style


  1. All decisions is made by the leader

  2. During decision making, employees are only allowed to provide inputs

  3. The leadership style uses a hands-free approach, giving autonomy to managers

  4. None of the above


Show answer

Answer

C. The leadership style uses a hands-free approach, giving autonomy to managers

Show question

Question

“The first rule is never lose money. The second rule is never forget rule one”  is a famous investment rule by


  1. Bill Gates

  2. Jeff Bezos

  3. Warren Omaha

  4. Warren Buffett


Show answer

Answer

D. Warren Buffett

Show question

Question

What is the name of Warren Buffett's company?


  1. Microsoft 

  2. YouTube

  3. Duracell

  4. Berkshire Hathaway

Show answer

Answer

D. Berkshire Hathaway

Show question

Question

Warren Buffett as a transformational leader, explain 


Show answer

Answer

In being able to inspire his employees towards his vision, Warren Buffet has been able to grow Berkshire Hathaway, a company which 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 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.

Show question

Question

Is Warren Buffett a micromanager?

  1. True 

  2. False

  3. Not sure

Show answer

Answer

B. False

Show question

Question

Explain authentic leadership?


Show answer

Answer

Authentic leaders are leaders who have a clear value and an understanding of the value. 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 thing

Show question

Question

Explain authentic leadership?


Show answer

Answer

Authentic leaders are leaders who have a clear value and an understanding of the value. 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 thing

Show question

Question

 A reason why Warren Buffett prefers not to micromanage is because

  1. He is lazy

  2. He doesn’t have the required skills 

  3. He believes that giving autonomy to managers help them work more efficiently

  4. He is busy looking for new companies to invest in


Show answer

Answer

C. He believes that giving autonomy to managers help them work more efficiently

Show question

Question

Which of these is not a quality of Warren Buffett leadership style is


  1. Employees empowerment 

  2. Leaders provide constructive criticism when needed

  3. Leaders regularly check on teams to give insights into realizing a project 

  4. None of the above


Show answer

Answer

C. Leaders regularly check on teams to give insights into realizing a project 

Show question

Question

Explain the laissez-faire leadership style


Show answer

Answer

Laissez-faire leadership style is a 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. 

Show question

Question

Which of the following is not a Warren Buffett leadership principle 


  1. Patience 

  2. Effective communication 

  3. Always micromanage

  4. Do not micromanage 


Show answer

Answer

C. Always micromanage 

Show question

Question

Due to his leadership style, Warren Buffett doesn’t provide any form of guidance to employees on projects 


  1. True

  2. False

  3. Not sure


Show answer

Answer

B. False

Show question

Question

Explain the following Warren Buffett leadership principles - 

Don’t micromanage 

Show answer

Answer

He believes in his ability in identifying and employing the right talents, and giving 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.

Show question

Question

Choose a career you love


Show answer

Answer

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.”



Show question

Question

Warren Buffet's leadership has a focus on the ..., like investing in a good company that makes good products at a fair price. 

Show answer

Answer

fundamentals

Show question

Question

Part of Warren Buffett's leadership is the ability to communicate his ideas and thoughts ...


Show answer

Answer

clearly with minimum jargon 

Show question

Question

Warren Buffet values people who ...

Show answer

Answer

are patient and know that success take time

Show question

Question

A Laissez-faire leader does not tolerate mistakes and often gives criticism to the employees.

Show answer

Answer

True

Show question

Question

Warren Buffet 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.

Show answer

Answer

True

Show question

Question

What are the characteristics of Laissez-faire leaders?

Show answer

Answer

micromanage their employees 

Show question

Question

Laissez-faire leaders believe they should constantly check what the employees are doing and give advice. 

Show answer

Answer

True

Show question

Question

A Laissez-faire leader is the one who is likely to ...

Show answer

Answer

delegate tasks and allow employees to take the lead

Show question

Question

What qualities of employees are valued by Warren Buffet?

Show answer

Answer

discipline

Show question

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