Warren Buffett, the CEO of Berkshire Hathaway, has solidified his place as arguably the greatest investor of all time. But many wonder whether his leadership style is on par with his investing genius. And whether other leaders should model and practice it.
Buffett is known for having a very hands-off, laissez-faire approach to managing his companies. While this philosophy of leadership has worked for him, it's not suitable for every senior manager.
Buffett's leadership style explained
In a nutshell, Buffett's style of leadership keeps leaders from running any interference in the decision-making process. It gives workers full freedom to run the show.
Buffett has said in the past that he lets his company owners "operate on their own, without our supervising and monitoring them to any degree." He adds, "Most managers use the independence we grant them magnificently, by maintaining an owner-oriented attitude."
Such counterintuitive methods are risky in bureaucratic settings with layers of bosses calling the shots, because that requires micromanagers to release control and stop looking over people's shoulders. Few are able to fully let go and stop interfering with how people self-manage to their best ability.
Buffett's leadership style has its distinct advantages. If you're considering employing it company-wide, also consider whether its top characteristics align with your current environment:
1. Leaders create the conditions necessary for an autonomous culture.
2. Leaders offer little guidance but plenty of mentoring.
3. Workers have complete freedom to exercise their creativity and make decisions
4. Workers, not managers, are expected to solve problems on their own.
5. Resources are provided by managers.
Why it works
Autonomy, or the ability to control what you do, when you do it, and with whom, is one of the fundamental elements of what intrinsically motivates human beings, which leads to better performance.
Autonomy is also motivating because it is more satisfying. To achieve it, leaders need to step down from their ivory towers and set the right environment for their people to make decisions on their own. This means pushing decision-making as far down as possible in an agile and participative way of working.
Keep in mind, that much autonomy may come at a cost if managers don't hire the very best people and delegate authority to their strengths. When they do so, they will create an environment that Buffett's long-term partner Charlie Munger calls a "seamless web of deserved trust."
A trust-based, decentralized place of work can also save a company money since there's little need for employing multiple layers of management in an inefficient hierarchy controlling all decisions.