This is a story about Warren Buffett's latest Berkshire Hathaway shareholder letter, and one of the biggest clichés in business. In fact, if you follow top business leaders, I'm sure you've heard it over and over:
- "Our people are our strength."
- Or "It's all of you -- the employees, the shareholders, the stakeholders, the people -- who make this possible."
- Or "We can't do any of this without our people."
You've probably heard it until (sadly) you're not sure that the business leaders themselves actually believe it.
Remember that sentiment. We'll circle back to it. For the moment, however, let's talk about Buffett's most recent letter, which was released over the weekend.
Just like every year, there's a lot packed into it. We can start with the numbers: the $90 billion in net earnings that Berkshire reported during 2021, and the $3.3 billion in federal taxes the company paid, which turns out to about .8 percent of all federal corporate income taxes collected by the U.S. Treasury.
"'I gave at the office' is an unassailable assertion when made by Berkshire shareholders," Buffett wrote.
Also, as he has done in recent years, Buffett worked through updates on the "Big Four" giant holdings that currently comprise Berkshire's biggest investments:
- Its insurance companies
- The 5.55 percent stake it holds in Apple
- Railroad operations
- Its energy operations, Berkshire Hathaway Energy
Now, as regular readers might know, I tend to scour this letter each year when it comes out, looking at it as holistically as I can: examining critically what Buffett includes, what he leaves out, and the little details he adds that make it a bit more compelling than many corporate reports.
This year, two things made me sit up a bit and take notice as I read the letter for the second or third time:
- The first is a passage that I'll quote below, about the life and professional goals that Buffett says he encourages audiences of university students to pursue.
- The second is the long list of individual people Buffett mentions -- some of them expected, but really two who stood out on my later readings.
Let's cite the passage first. Buffett says that when he talks with university students, he advises them to try to seek employment in whatever field interests them most, but while working only with "the kind of people they would select if they had no need for money."
Yes, he acknowledges, financial considerations can get in the way. But Buffett, who is now 91 years old (his longtime COO and partner, Charlie Munger, is 98), says he's learned that if you do eventually find that situation, then "work" no longer feels like work.
Charlie and I, ourselves, followed that liberating course after a few early stumbles. ... [A]t Berkshire, we found what we love to do.
With very few exceptions, we have now "worked" for many decades with people whom we like and trust. It's a joy in life ... In our home office, we employ decent and talented people -- no jerks. Turnover averages, perhaps, one person per year.
Do you see what I'm getting at? Really, it's those eight words: "We employ decent and talented people -- no jerks."
So many business leaders talk the good game we've seen above. But it's hard sometimes to really, truly believe (and act on the belief) that "our people are our biggest asset."
It's one thing to share platitudes; it's another to have the courage to act from that belief when, say, your need for a specific skill set bumps up against your "no jerks" policy.
Here's the second small detail that stood out to me: the people Buffett takes the time to mention by name.
Certainly, some of these are to be expected. Munger is mentioned by name 15 times; Apple's Tim Cook gets only one mention, but Buffett describes him as "brilliant."
Plus, there are vignettes about Ajit Jain and Greg Abel, the top Berkshire executives who were mentioned for years as potential heirs to Buffett himself. Abel got the nod last year, so perhaps that's why Buffett spends time on Jain first, offering a folksy recollection of what it was like to hire him:
We first met on a Saturday morning, and I quickly asked Ajit what his insurance experience had been. He replied, "None."
I said, "Nobody's perfect," and hired him. That was my lucky day: Ajit actually was as perfect a choice as could have been made. Better yet, he continues to be, 35 years later.
Yet two other names jump out. Buffett devotes nearly 1,000 words of this 4,500-word letter to the memory of Paul Andrews, who was the founder and CEO of Berkshire subsidiary TTI, and who died about a year ago at age 78.
I won't reprint the entire story of Andrews's company and how Berkshire came to acquire it, but the heading Buffett used at the top of the section makes the sentiment clear: "A Wonderful Man and a Wonderful Business."
Finally, there's one more person mentioned by name that I think drives home the point. When Buffett talks about another important acquisition, he makes a point of including this otherwise superfluous line: "Deb Bosanek, my assistant, scheduled our board's opening dinner ... "
People who follow Buffett closely already know who Bosanek is. Still, it's striking to me that Buffett is describing a meeting that took place 12 years ago, yet he goes into an aside about who made the travel and dinner arrangements, simply so that he can include his assistant's name in the document.
Again, if Buffett were not 91 years old and in an apparently reflective and advice-giving mood, I'm not sure I'd pick up on this. But he is, and it's also not the only time Buffett has done this sort of thing.
In my free e-book Warren Buffett Predicts the Future, I include some other examples of people Buffett has singled out in the past. My favorite example is someone most people have never heard of: the man Buffett describes as his "hero," Charles Feeney.
I hope we'll have many more years of Buffett writing these letters and people like me reading and writing about them, but this one stands out for helping to peel away just a small bit of the skepticism that many of us feel when we hear a CEO say something like, "Our people are our greatest asset."
Is it a cliché? Maybe not, if you really believe it. Or else, maybe it's a cliché because it's so true.