5 Lessons We Can Learn From Warren Buffett’s Leadership Style
It’s almost impossible to fathom the type of success Warren Buffett has seen in his lifetime. At age 94, he’s been one of the richest men in the world for decades; his current net worth is $149 billion. He started investing in stock when he was just 11 years old and, by age 25, had started his own investment partnership. The statistics could go on for pages: Warren Buffett has seen incomprehensible amounts of success in his professional career and if we could bottle up and sell his insight, skill, and a little bit of luck, we would all be billionaires.
If you asked Buffett, however, he would likely be reluctant to recount the tales of his financial conquests. Instead, most of the insight we gain about his success has to do with what he’s said about the real factors behind the making of a mogul: integrity, relationships, and a different approach to leadership.
What can we learn from Warren Buffett’s leadership style? Well, while we can’t promise that you’ll become the next billionaire, we can guarantee that these tips can help you level up as a leader and think about your own philosophy in a new way.
What is Warren Buffett’s leadership style?
While he’s never labeled his leadership philosophy per se, we can make an educated guess based on what we know about his history, his ethics, and what others have said about him as a leader. We’d be willing to bet about $149 billion that Buffett could be best described as a combination of a democratic and laissez-faire leader.
A democratic leader is transparent, collaborative, and flexible. Their main goal is empowering employees to have a voice and help make decisions within the organization. A laissez-faire leader is similar but, as the term laissez-faire translates to “allow to do” or “let it happen,” it’s a leadership style that delegates responsibilities and success and failure to employees. A democratic leader takes everyone’s opinions into account when making decisions, while a laissez-faire leader would leave the decision-making up to their employees. We see Buffett lead in both ways throughout his career. Here’s what we can learn from this blended approach to leadership.
1. Integrity comes first
Warren Buffett always said that the three things he looks for in a new hire are integrity, intelligence, and energy. Putting integrity first on that list wasn’t an accident—it’s a core tenet of how Buffett has run his business, relationships, and life. “It takes 20 years to build a reputation and five minutes to ruin it,” he said “If you think about that, you will do things differently.”
Boiled down, integrity can be defined as the art of doing what you say you’ll do. As a leader, think about how significant this can be to your employees. You’re setting the tone for the way you all do business from the top down. If you hire people with integrity in mind, you know that you can trust them to make decisions that benefit the greater good. If you lead with integrity, your employees trust that you’ll keep their best interests in mind. It becomes a healthy cycle of believing the best in people and seeing those results in your work. Sure, you might see short-term success if you cut corners or go against your word, but what’s the overall cost? Long-term success comes from carefully building your reputation, doing things with intention, and creating trust between you and your team members.
2. Stay transparent
Ethical leadership requires a high degree of transparency. Buffett often reminded managers to consider the “newspaper test” when making a decision. Imagine that the decision was printed in the next day’s newspaper and the entire organization and your family would read it. Not only is this a test of integrity—would I want people to know that I made this choice?—but it speaks to the importance of transparency as a catalyst for making the right call. Transparency essentially forces you to utilize solid communication, perspective, and accountability before acting. When your team knows what you’re doing and, perhaps more importantly, why you’re doing it, you create an environment of understanding.
The same goes for trusting others to make decisions and delegating responsibilities. If you’ve made transparency a priority in your organization, your employees will already feel comfortable communicating and taking responsibility for their work. Even if team members don’t agree with a decision, leading with transparency allows the opportunity for insight. No one is left in the dark, and no one needs to question your integrity or motives.
3. Identify the rowers
In Shaping a Winning Team, Paul Fayad and Chak Fu Lam introduce three key team archetypes: rowers, sitters, and drillers. Rowers are the high-performing individuals who consistently contribute to the team’s objectives, demonstrating dedication and drive.
We know that Buffett is a rower. He has spent decades putting in the work, navigating, and being a team player for his organizations. Even better than that, though, is his skill in recognizing the difference between rowers and drillers during the hiring process. When asked about how he hires, he advises “We look for intelligence, we look for initiative or energy, and we look for integrity. And if they don’t have the latter, the first two will kill you, because if you’re going to get someone without integrity, you want them lazy and dumb.”
What a quote! Think about it. It is possible to hire someone with both initiative and energy. They seem like great employees that will do whatever it takes to be successful. But if they’re not proceeding with integrity, you can’t trust them to do the right thing when you give them the chance to make decisions or create solutions. The same energetic hire that seemed like a solid rower can quickly become a driller when their motivations and loyalty no longer align with your organization’s ethos.
4. Run it like a small business
When asked about the most valuable information she learned from working with Warren Buffett, Karen Goracke—the CEO of Borsheims—said he taught her to run their international organization like a small family business. Now, Borsheims is a luxury jewelry business bringing in $40 million in annual revenue: Why run it like a small business?
When you keep your business “small,” you’re simplifying the way you work. In a small business environment, leaders need to put trust in their employees because they simply can’t be everything to everyone all at once. That empowers trusted employees with more autonomy, which allows them the opportunity to rise to each occasion, experience growth, and see increased job satisfaction. At the same time, small business owners enjoy the chance to be more empathetic as they get to know their employees on a more personal level than they would in a huge faceless corporation. Even large organizations can think smaller by allowing department heads to model positive leadership and agile problem-solving. When in doubt, think “What would a small business do?”
5. Prioritize relationships over partnership
Buffett’s entire investing strategy could be summarized as long-term holdings for long-term success. Unlike business leaders who levy advice on how to make a quick ROI, Buffett has always played the long game—and he’s obviously been successful doing business accordingly. It’s interesting that his personal relationships have followed a similar pattern: Investing the time and effort to see greater gains on a long-term basis.
Instead of chasing the next great partnership, Buffett has carefully selected and cultivated real relationships with his colleagues, employees, and clients. His partner Charlie Munger, for instance, has worked with Buffett for over four decades, but they’ve been friends for over 60 years. To become a master at business partnerships, Buffett first had to prioritize personal relationships.
Seeing quick success might sound like the American dream, but relationships are the ultimate long-term investment. When asked by students at the University of Georgia how he defined success, Buffett responded by cautioning against trading business success for personal relationships. “The problem with love is that it’s not for sale,” he said. “The only way to get love is to be lovable. It’s very irritating if you have a lot of money. You’d like to think you could write a check: I’ll buy a million dollars’ worth of love. But it doesn’t work that way. The more you give love away, the more you get.”
Final word
No one will argue with the history books that record Warren Buffett as one of the most successful and influential business leaders of all time. They might, however, disagree on how he reached those levels. When reduced to sheer numbers, it might seem like Buffett’s success can be boiled down to shrewd business sense and oracle-like market predications. But, in his own words, Buffett’s greatest successes weren’t achieved in a vacuum. By surrounding himself with the right people and adopting a mentor-over-management laissez-faire leadership style, Buffett has reached the pinnacle of success—and then reached back to bring others along for the ride.
