Table of contents

S.No Topic Page

1 Introduction of Barren Buffet 1 2 Awards 1

2 Leadership styles 2 3 Important leadership lessons 4

4 Leadership qualities of Warren Buffet 5

5 Motivation 6 6 Management styles 7

7 Leadership grid 8 8 Powers used by Buffet 8

9 Buffet changing use of power 9

10 Burlington Northern Airways 10

11 Conclusion 12

12 References 13

Introduction:

There are many leaders in the world contributing in different fields. In our opinion Warren

Buffet posses the most distinguishing characteristics of a dynamic leader. He got special type of

expertise in different fields, which became the cause of his boom throughout his entire life. He

was born on August 30, 1930, in Omaha Nebraska to Howard and Leila Buffet. His father

Howard worked as a stockbroker and also served as a US congressman. His mother was a stay at

home mom. Nick named: “the oracle of Omaha”.

Warren Buffet is the chairman, CEO and the largest shareholder of Berkshire Hathaway, a

multinational conglomerate holding company headquartered in Omaha. He is much respected by

his peers and the world alike for his personal frugality and adherence to ethical principles when it

comes to successful business management. Called the ‘Oracle of Omaha’, Buffett rose from a

modest beginning to become one of the richest men on earth through his sheer hard work and

keen sense of investing. He started demonstrating his financial abilities from his early years

when he would go from door to door selling candies and soft drinks. He began investing as a

teenager and had saved almost $10,000 dollars by the age of 20. He had great business acumen

and started out on his career as a stock broker. He developed his own investment principles

which helped him acquire a lot of wealth; he was already a millionaire by the time he was in his

early thirties. As his wealth grew, so did his desire to give back to the society—he is a notable

philanthropist and has pledged to give away a significant portion of his fortunes to charity. Even

from an early age Buffett showed that he had interest in stocks and an Entrepreneurial spirit. He

often spend time in his father's brokerage company trying to learn all that he could about stocks,

finally pulling the trigger on his first stock investment at the age of 11.. (The World's

Billionaires : Warren Buffett, 2015)

Awards:

He was presented with the Presidential Medal of Freedom by President Barack Obama in

2011.

He is the chairman and CEO of Berkshire Hathaway and ranks among the world’s wealthiest

people. Considered to be the most successful investor of the 20th century, he is also the

biggest philanthropists of our times and had pledged to donate most of his fortunes to social

causes.

Trust Reputation and Integrity:

Valued at the most important aspect by Warren Buffet “we can afford to lose money- a lot of

money. We cannot afford to lose reputation – even a shred of reputation. It can take years to

develop trust, but it can only take one lie to destroy trust and relationship .(Achua, lussier, 2013)

Berkshire Hathaway:

Berkshire Hathaway Inc. (Berkshire), incorporated on June 16, 1998, is a holding company

owning subsidiaries engaged in a number of diverse business activities. The Company is engaged

in the insurance businesses conducted on a primary basis and a reinsurance basis, a freight rail

transportation business and a group of utility, and energy generation and distribution businesses.

Berkshire also owns and operates a number of other businesses engaged in a variety of activities.

In October 2012, HomeServices acquired a 66.7% interest in the residential real estate brokerage

franchise network in the United States. In May 2013, Berkshire acquired the remaining 20%

stake in IMC International Metalworking Companies BV.(McGregor,2015)

Berkshire Hathaway Statistics

Fortune 500 Rank 7

Total no. of employees 260,519

Total no. of brands 53

Price of 1 Berkshire Hathaway stock 128.224

Companies owned by Berkshire Hathaway:

Gecko (insurance)

General Re (insurance)

NRG (Insurance)

Berkshire Hathaway assurance (Insurance)

Approx 84 % of mid American holding company (energy)

Union Underwear corp. Fruit of the loom (Textile)

Garran (Textile)

Russell Corporation (Textile)

H.H brown shoe group (Footwear)

Acme Boots (Footwear)

Warren buffet’s leadership style at Berkshire Hathaway:

The leadership style warren buffet has adopted at Berkshire Hathaway is:

1. Laissez faire style

2. Democratic style

Laissez faire style:

Laissez-faire is a hands-off management style that allows employees or group members to carry

out a specific task given. This management styles requires very little guidance from leaders,

which the leader has also provided freedom for the employees to make the decision. Employees

are expected to solve problems by themselves.

Democratic:

Democratic is a management styles where mangers in a company listens to their employees and

share responsibilities among the team for decision making. In this management style, employees

are encouraged to voice out their ideas and opinions. These way employees would feel more

engaged into their work

Warren Buffett has adopted the laissez-faire and democratic style in managing his

employees. Warren Buffett recruited honest, skillful and likable people to work and run his

various businesses in Berkshire Hathaway. Buffett has put in full trust with the Berkshire’s

employees that he leaves his managers alone to work his jobs; Buffet would only intervene

whenever it is required to. He often monitors how his employees work, but he doesn’t interfere

that much.

In Buffett’s case, however, this leadership style has had positive effects; by allowing his

managers full autonomy, he has created an atmosphere where his employees feel confident and

motivated by their extreme latitude. In Berkshire Hathaway’s 2010 Annual Report, Buffett

states,” We tend to let our many subsidiaries operate on their own, without our supervising and

monitoring them to any degree. Most managers use the independence we grant them

magnificently, by maintaining an owner-oriented attitude.

The Laissez-Faire style can work if followers are motivated and highly skilled, but quite often;

this is not the case .Followers that are not highly skilled, competent or good problem-solvers

often end up failing at their tasks or not meeting their deadlines . It would seem that Mr. Buffett

has the ability to choose highly motivated and capable managers who thrive in a results-oriented

environment. By choosing whom to place his trust in wisely, he is able to afford them the

autonomy that they need to be successful.

By using democratic leadership style warren buffet had empowered his management team to

make the decision they need to make without his approval.

Empowerment Leadership Style:

Intrinsic motivation and self-efficacy of people are influenced by leadership behavior, job

characteristics etc. Transferring authority to sub-ordinates. The style of Warren Buffet is

empowerment that is to transfer the powers to grass root level. It is difficult to be the boss of all

companies so the only solution is empowerment. Warren Buffet, “I know when to get out the

way and let people get on with it.” The advantage of this style is that the work is meaning full,

develop self-determinationand self-efficacy because they have a significant impact on work.

Three most important leadership lessons:

Stick to fundamental values – go with what you know and trust your instincts

Live simply- Don’t be distracted by the ‘things’ and other possessions they can have a leaders, so

much so that it sometimes that the motivation of leadership can become clouded.

Give back – Remember the purpose by which one is a leader; not to take from the world; but to

be an asset and a person of value.

Rule no 1: Never lose money. Rule no 2: never forget rule no. 1.

Leadership qualities of Warren Buffet:

Risk Seeking and Innovative:

Warren Buffet is Risk seeking and Innovative in every aspect of life. He tried out every mean to

promote his business and investments. Bought a company in the mid-'90s called Dexter Shoe and

paid $400 million for it. And it went to zero. And he gave away about $400 million worth of

Berkshire stock, which is probably now worth $400 billion but it's part of the game."

No successful person is mistake-free, and that's a good thing. Each stumble is a chance to learn

and a warning when you're tempted to do something similar in the future.

People Oriented:

His belief People Come First “People Include Employees and Customers”. For customers, he

tries to keep them paying the lowest price for their products as long as he can cover the cost and

earn some profit. Believes in keeping faith with the employees, no matter in good times or bad.

Determined and Optimistic:

Always looked into the positive side.Master motivator and pushing employees into their limits.

Took immediate action in every matter and seeks optimistic in every matter, try to motivate

employees at grass root level and brings positivity in every matter, gives courage to his people in

every aspect of life and seeks optimism in every challenge and face it with courage and boldness.

Circle of Competence:

“Selecting individuals with whom you work – individuals with whom you trust”

Surround yourself with ten or eleven individuals that you genuinely like and enjoy working with

can lead to a more fulfilling career as a manager.

Down To Earth:

Even though Warren Buffett is the fourth richest person in the world, he doesn't show it. He still

lives in the house he bought back in 1957 and is not known to splurge on luxury. He lives a

simple life to the point where you wouldn't be able to guess that he is even a millionaire if you

see him walking down the street or eating in one of his favorite restaurants in Omaha.

Hard Working:

Officially Warren Buffett has been working since 1951 without taking (as far as I know) any

real time off. Unofficially, he has been hustling since the age of 8 or for 75 years. Yet, he doesn't

call it work. He has famously said that he tap dances to work every day. Simply put, he loves

what he does and its more of a play than work for him.

Fair & Honest:

Warren Buffett is famous for saying that rich should pay their fair share of taxes (arguing that

they should pay more). He even lobbied the congress to increase taxes. You see the same

consistency throughout his business career. He puts a significant amount of premium on his own

reputation and believes the only way to get a good one is too be fair and honest in all of his

business dealings.

Courage:

I think I developed courage when I learned I could deal with hardship. You need to get your feet

wet and get some failure under your belt. Courage does not grow on its own. Just like a muscle,

it must be constantly worked out and developed. Life begins outside your comfort zone and

that’s where courage is developed. Most people don’t succeed because they’re afraid to fail.

Failure isn’t that bad anyway. It will make you tougher and more likely to win the next time

around. If I had a dime for every time I heard someone tell me about an idea they wanted to

pursue or how much they would like to give blogging a shot, without an ounce of action to

follow…well, I might own a few more shares of Berkshire Hathaway stock. No one has

succeeded without going through their own failures at some point. To try and to fail is much

better than to never try. Why not get started early and get some of them out of the way! What’s

the worst that could happen? As big wave surfer Laird Hamilton says “If you’re not falling then

you’re not learning.( Torbert, Fisher, 1992)

Motivation:

Motivation is basically about the ways a leader can do to encourage their employees to put in all

their effort into the company. Motivated staff mostly cares about the business and can co-operate

with the leader to make things better. If there is motivated staff in a company, it would definitely

result in having an improved quality as employees put in more effort than they usually do. But

how do we motivate our employees to make them work more efficiently? There are ways such as

offering a higher pay to the employees or either that the employees get a

promotion.(Cheah,2013)

Leaders can use several motivational theories to help encourage their employees including:

McGregor's Theory X and Theory Y

Maslow's Hierarchy of Needs

Management Styles:

Choosing the right employees:

Buffett has delegated his managers and focused mostly on the people who stand out from

the group by his or her performance in the company. As I have mentioned, his style is to

pick the right people and give them as much freedom as possible to get the job done.

Whenever his business leaders or representative makes a mistake, Buffett doesn’t scold or

fire anyone from his team but instead he encourages them to do better. This is where he

has put his trust in his employees to take care of his business.

Pick the manager with the right qualities:

Buffett seeks for managers and representatives that have integrity, intelligence and

passion to be a part of the business. According to Buffett, “In the management of our lives,

the rule is: Love what you do. In the management of our businesses, the rule is: Hire

people who love what they do.”

Motivate the team:

Buffett has investigated various ways to motivate his employees. He has encouraged his

people to not be afraid to speak up to him or the group, and give in creative ideas for the

company.

Managing pitfalls and facing challenges:

Buffett has said that we should learn from our mistakes instead of leaving our problems

aside. If we faced difficulties, it is better to seek for the better path to god

Leadership grid

Leadership grid can be applied to warren buffet because of his high concern for both

employees and production. He follows the middle of the road characteristic from that grid.

He possessed the qualities of producing the most with satisfying employees upto the most

appropriate level.

(Achua,Lussier,2014)

Powers Used By Warren Buffet

Coercive Power

It is where a person leads threats and force. It is unlikely to win respect and loyalty from

employees for long. Sometimes Buffet used powe by firing some of the non performing

employees.(Giang,2013)

Expert Power

It is the perception that one possesses superior skills, expertise or knowledge. In order to keep

their status and influence, however, experts need to continue learning and improving. Buffet was

very much concerned about using his expert power in an effective manner. (Giang,2013)

Informational Power

It is where a person possesses needed or wanted information. This is a short-term power that

doesn't necessarily influence or build credibility.Buffet was working in about 53 different

companies .his boundary of knowledge was very much explored as compared to other typical

leaders. (Giang,2013)

Reward Power

It is where a person motivates others by offering raises, promotions, and awards. Bonuses and

incentives were offered to employees in accordance with performance. (Giang,2013)

Buffett’s Changing Use of Power

In the earlier examples from Buffett’s life, i.e., those that match with the Opportunist, Diplomat,

Expert and Achiever action-logics, Buffett exercises a kind of ‘unilateral power’ which ensures

that he gets what he wants. In the later examples from Buffett’s life, i.e., those that match with

the Individualist, Strategist and Alchemist, he exercises a kind of ‘mutual’ power that ensures

that others get what they want as well. This shift from a ‘unilateral’ to ‘mutual’ use of power lies

at the heart of the main transformation in Buffett’s life and is key to appreciating the leadership

culture he and Munger have created at Berkshire.

Example Period in Buffett’s career Use of power

. Dempster Mill Buffett the investor Transactional

.National Furniture Market Buffett the business leader Transformational

Burlington Northern Railway Buffett the elder statesman Mutually transforming

Burlington Northern Railway

Fast forward another 25 years to 2009 and Buffett is making the largest investment of his career,

i.e., a $33 billion acquisition of Burlington Northern Railway. Buffett paid full price, i.e., 18

times BNSF’s earnings and said the acquisition was “an all-in-wager on the economic future of

the United States” to which he added “I love these bets” (Berkshire Hathaway press release, Nov

3, 2009). Later in an interview with Charlie Rose on the PBS Network , Buffett said that, “I felt

it was an opportunity to buy a business that is going to be around for 100 or 200 years” (Buffett,

1977).

.

Buffett’s Changing Use of Power

From a development perspective, a mindset that ordinarily uses unilateral power to get what they

want could not have created the kind of mutual leadership culture that we now see at Berkshire.

There is no doubt that Buffett’s changing circumstances demanded a change in his leadership

approach but it still required that he change his mind as well. Just because we need to change

does not mean we will. We may also observe that while we can temporarily change our behavior,

we need to change our minds before it can be made permanent. Recall the big shifts in Buffett’s

thinking and behavior from owning lots of small stocks for the short-term (during the Buffett the

investor period) to owning few businesses for the long-term (starting with the Buffett the

business leader period). These weren’t short-term behavioral changes; rather they represented a

fundamental change in his mindset which was then reflected in what interested him.

“I don’t believe in fear as a manager. I don’t operate like that. I don’t like this life. Probably

certain circumstances call for it: operate this way for a policeman. I believe the most powerful

force is love and that is the most effective way of dealing with people. I would not want to live a

life where people are afraid of me. People don’t operate well under fear. Some circumstances

where mutually assured destruction is the end result, fear is good. But not at Berkshire

Hathaway, love is way better to operate. By the way, how did Machiavelli do? There is no

religion of Machiavelli 500 years later, is there”? (Gad, 2007).

Conclusion

Warren Buffett's success is very difficult to analyze. First, he wasn't involved in one company

that made him rich. He has built his fortune over the last 57 years, one day at a time and through

acquiring over 50 companies that now reside under Berkshire Hathaway. He did have major

scores, but a steady annual compounding of his money is what really did it for him. Second, most

of his work is analytical in nature and out of the public eye. He spent most of his time analyzing

companies and making investment decisions. That in itself is very difficult to pinpoint. Luckily

for you, I do something very similar. Here are the factors that contributed directly to his success.

Warren Buffett plays to win. It is no accident that he was named the most successful investor of

the last century. Yes, investing provides his with a way to show off his intelligence, but it goes

much deeper than that. Warren Buffett has also redefined the game and has shown everyone that

it is possible to take it easy and be nice to people while at the same time being one of the most

coldblooded capitalist on the face of this earth. All things are interrelated and so perhaps it is

unwise to isolate one factor, such as Buffett’s development, and say that is the primary factor in

explaining his success as a leader. Non-developmental factors were considered equally as

important and in some cases more important. And yet it is through the development in Buffett’s

meaning-making that Buffett was able to create the kind of leadership culture that now exists at

Berkshire and which is fundamental to Berkshire future success in the post-Buffett era.

References

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Gad.2007. Retrieved from http://www.intelligentinvestorclub.com/downloads/Warren-Buffett-

University-Georgia.pdf

Giang.2013.retrieved from http://www.businessinsider.com/the-7-types-of-power-that-shape-

the-workplace-.july 31.12:56 pm

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leadership/wp/2015/03/02/the- leadership-wisdom-in-warren-buffetts- letter

"The World's Billionaires : Warren Buffett". Forbes. Retrieved January 1, 2015

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development. Management Education and Development, 23, 184-198.