More Than an Oracle: Warren Buffett’s Employee Engagement Practices

Warren Buffett is in the news these days after publicly expressing his confidence in the future of corporate America, recently investing $8 billion to buy stakes in GE and Goldman Sachs. With the recent stock market turmoil, many are looking to the world’s richest man for guidance, and with good reason. Buffett is widely recognized as an exceptional judge of corporate value. “The Oracle of Omaha,” as he is known, is arguably the most successful investor in history. Corporate leaders regularly travel to Omaha, Nebraska, seeking his wisdom. With so much focus on Buffett’s investment acumen, it’s easy to overlook another talent: motivating people. It’s one of the many reasons why your investments tend to outperform the market.

The talented managers who run Buffett’s companies stick with him because he keeps them engaged in their jobs. In Buffett’s own words, “Charlie [Charlie Munger, Buffett’s longtime business partner] and I deal primarily with capital allocation and the care and feeding of our key managers. . . Most of our managers are independently wealthy and it’s up to us to create a climate that encourages them to choose to work with Berkshire over golf or fish.”

A closer look at Buffett shows, at least in part, how he does it.

It imparts an inspiring identity to members of the Berkshire Hathaway family. The vision he consistently communicates is that Berkshire companies are well run and staffed with great people. It’s not unusual to hear him tell employees to “just keep doing what you’re doing … we’ll never tell a .400 hitter to change his batting stance.” Who wouldn’t be flattered to be praised by Buffett?

Buffett shows that he values ​​people in a number of ways. He is trusting and forgiving. By investing for long periods in the companies he owns, Buffett indicates that he trusts his managers. He delegates decision-making authority, in his own words, “up to the point of abdication.” And when a manager makes an honest mistake, he keeps it in perspective. A manager who informed Buffett that his business had to write off $350 million was shocked when Buffett told him, “We all make mistakes… if you didn’t make mistakes, you can’t make decisions… You can’t dwell on them.” .

Buffett models civility and respect for others. His secretary has said that she has not seen him angry once in the nine years that she has worked for him. The only time I’ve met Buffett at a meeting in New York City, she patiently waited to speak to everyone who wanted to meet him. He was attentive and focused on them, never projecting the slightest hint of self-importance.

He is confident, but humble. Buffett knows that he is very good at what he does and projects easy confidence rather than superiority or arrogance. He credits his managers for his success, speaks candidly, works in a modest office, lives in a modest home, and proclaims thrift as a virtue (the vanity plaque on his old one says “Thrifty”).

Compare Warren Buffett to Donald Trump, for example. It’s hard to imagine Buffett displaying his name prominently on everything he owns or enjoying telling someone “you’re fired.” Instead of it all being about him, Buffett insists it’s about everyone else. He seems to be guided by the golden rule rather than Machiavelli’s The Prince.

Given the way Buffett treats people, it should come as no surprise that some private business owners report turning down more lucrative offers to join the Berkshire family. Tellingly, no manager who sold a company to Buffett has ever gone to a competitor, and several continue to work well into their eighties. Simply put, “people want to work for him,” proclaimed another satisfied manager, Rich Santulli, the head of NetJets.

Buffett promotes communication by being accessible and candid. At the annual meeting he hosts in Omaha for Berkshire shareholders, Buffett and Charlie Munger sit on a platform, listening to shareholder views and answering questions for hours on end. When dealing with his managers, he follows the data they provide him in the periodic reports and makes himself available if they want to talk. Buffett writes and speaks candidly, even pointing out the mistakes he made and what he learned from them.

Warren Buffett’s ways make Berkshire Hathaway managers proud to be affiliated with the company, feel valued as human beings, and feel that they can communicate openly and honestly with Buffett. These feelings (or emotions) make people want to do their best at work and make them more energetic, optimistic, confident, and cooperative. Warren Buffett’s behavior reflects common sense, yet studies have shown that such behaviors are rare in practice among those with power in organizations. It’s yet another reason why Buffett deserves to be called the Oracle of Omaha.