Warren Buffett as an Employer

Warren Buffett is one of the most successful investors of all time. People constantly look to him for advice on investing, but we often forget that Buffett holds a lot of other roles, as well. Not only is he an investor, he is the CEO and president of the board at Berkshire Hathaway. And through his positions at Berkshire Hathaway, Buffett is one hell of an employer.

When I say “one hell of an employer” I’m talking about quantity (for now) over quality. Berkshire owns plenty of businesses outright— Diary Queen, Fruit of the Loom, GEICO, Helzberg Diamonds, Nebraska Furniture Mart, and the list goes on. Warren Buffett is technically in charge of all of these employees, but how does he handle that responsibility? Here are a couple of strategies that Buffett uses in the businesses he runs.

Money Where His Mouth Is

For the most part, Buffett is pretty laissez-faire with the businesses he owns. One thing he does like to be in charge of though, personally, is pricing. A lot of CEO’s are scared of ruining their business by having high prices, and therefore low-ball their pricing. Buffett has no problem taking risks, so he looks for companies that can get away with higher pricing than what the CEO originally thought— and then runs with it.

Buffett is also not afraid to offer his employees plenty of incentives. And, considering he is the second richest man in the world, that is probably a good thing. He is personally in charge of setting the salary of the CEO of all of his subsidiaries, and he isn’t afraid to change it from year to year— sometimes by a factor as big as 30.

Take the Business As Is

Buffett wants to make sure that his managers can effectively run their business without Buffett’s help, since he prefers a hands-off style. With that being said, he doesn’t buy businesses where he thinks he would need to change the manager— he just looks for these qualities in one.

And, if the business is bad, Buffett doesn’t even think about it: “With few exceptions, when a manager with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.”

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