Warren Buffett and Secrets of Management - 9
To make a manager think like an owner, they've got to be treated like owners. This is one of Warren Buffett's secrets that he uses with Berkshire Hathaway (BRK-A) managers.
Now what are the specifics of that secret? To treat them like owners, he simply gives them a stake in the company they're running. In other words, he treats them like owners because they are owners. This brings it beyond simply having an interesting theory to throw on a manager, but makes it a practical reality. They don't have to be taught to think like an owner because they already do.
Second, and I think most important, he ties their rewards specifically to how they perform in their own businesses, not the overall performance of Berkshire Hathaway the conglomerate.
I've managed businesses that offer incentives based upon overall company performance, and it's a demotivator rather than a motivator. That means no matter how good you may do locally, regionally or in a division, someone else's performance is still tied to your rewards. Many companies unfortunately still run things this way. It seems they do it on purpose to keep from having to give out rewards to their good managers. This is a bad mistake.
These are two major reasons that Buffett and Berkshire have been so successful in their management ranks.
Other Buffett Resources:
Warren Buffett: The trouble with being a legend
Sponsored link: The outsourcing every manager requires - Tampa Locksmith
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