By bringing in the best and then taking himself out, Buffett was sending the message that he had complete confidence in his staff. In turn, his staff rewarded him with hard work and loyalty.
No words can create loyalty among our workers unless our actions preceed them. It's only at that time effectiveness of management, as it relates to employee response, can truly be measured.
That's the case with Warren Buffett and his position at Berkshire Hathaway (BRK-A). Buffett sends messages through his actions far more than he does through communicating verbally. Talking about it only happens in cases where he may describe the actions already taken.
Effective communication is far more than having channels open and information shared. That's important, but not sufficient. After all, information shared can include negative as well as positive. Negative usually comes from the perception that what management says and does are two different things.
By Buffett hiring the best he can find, he's announcing through his actions that he's a secure man. He doesn't want people less than him, he wants those greater than him in areas he's not an expert in. Other than general oversight of Berkshire, Buffett's job is to allocate capital. That's it!
As a result of hiring the best, Buffett than simply gets out of the way and let them run their perspective businesses and departments. Very seldom does he ever communicate with the executives across the various companies under the Berkshire umbrella.
The response, is they for the most part, other than an occasional exception, perform heroically and with integrity. As a matter of fact, the reason why the occasional problem at Berkshire can generate a lot of interest is because it's so rare: it's news.
In a business climate that has a huge percentage of executives bouncing from job to job, those working under Buffett rarely if ever leave their positions. The only reason they usually do is old age or death.
When Buffett buys a company, even if all the signs and signals are right, the existing management must line up with his measure before he makes a decision. When I mention hiring management earlier, it's usually not done in the convential way thought, rather it's almost always part of buying a company; the management just comes with it. That's Buffett's hiring strategy for business leaders.
What all this means is Berkshire executives remain entrepreneurs, rather than hired hands. Buffett will get them to keep a part of the company to encourage this idea, and they respond back by running it like their own business, which in truth and action it is.
All this is one of the major reasons Berkshire Hathaway performs so well year after year.
Other Buffett Resources:
Warren Buffett: The trouble with being a legend
Warren Buffett: 'I told you so'
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