Widely lauded as an extremely savvy investor and talented businessman, Warren Buffett is also an example of an authentic leader. According to Bill George’s Authentic Leadership Approach (as cited in Northouse, 2013, pg. 259), “authentic leaders understand their own values and behave toward others based on these values…they have a clear idea of who they are, where they are going, and what the right thing is to do.” Characteristics of authentic leadership include heart, purpose, values, relationships and self-discipline. These characteristics lead to corresponding behaviors: compassion, passion, value-driven behavior, connectedness and consistency. Other theoretical perspectives identify similar components such as self-awareness, internalized moral perspective, balanced processing, and relational transparency (Northouse, 2013).
Buffett demonstrates an enlightened view of free market capitalism, and his enthusiasm for business is matched by his commitment to community. He refers to creating value for ‘stakeholders’ rather than ‘shareholders’, as the term stakeholders encompasses not only investors, but also employees and the community. This indicates both moral reasoning (focusing on broader impacts of decisions) and strong purpose (improving standards of living in the communities in which he does business).
His record as a leader is characterized by a focus on fundamentals: investing in good companies that make good products. He was quoted as saying “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” (Lubitz, 2009). This is a stark contrast to widespread attitudes in the financial industry that seek to create wealth for the sake of wealth, rather than wealth for the sake of generating value for stakeholders. Such predatory attitudes were responsible for the egregious practices that led to scandals such as the subprime mortgage crisis. Again, Buffet’s approach exemplifies value-driven behavior and connectedness.
He’s never been abashed about his pursuit of wealth, but at the same time he has demonstrated strong moral values. For instance, he has committed to giving away a significant portion of his fortune, well over $50 billion, to the Gates foundation (Loomis, 2006) where it will be used to promote health and education across the globe. In addition, he has recently become an advocate for addressing income inequality in the United States via reform of the tax code. These actions indicate compassion, and underscore Buffet’s view of wealth as a tool rather than an end unto itself.
Buffett is notoriously self-disciplined. In his personal life, he eschews gaudy displays of wealth, preferring to live frugally, for the most part. He still owns the Omaha home he bought in the 1950’s, and drives himself to work. Despite his position as one of the world’s richest men, he takes home a salary from Berkshire Hathaway of around 100,000 per year.
The man’s connectedness and commitment to his people is evidenced by his own words, such as this gem from the 2010 Berkshire Hathaway annual report: “Berkshire’s CEOs come in many forms. Some have MBAs; others never finished college. Some use budgets and are by-the-book types; others operate by the seat of their pants. Our team resembles a baseball squad composed of all-stars having vastly different batting styles. Changes in our line-up are seldom required” (Berkshire Hathaway, 2010). This plainspoken assessment of his business colleagues illustrates relational transparency: he places his trust in the leaders of the companies in which he invests, and gets out of the way so those leaders can best succeed.
In short, Buffet is a model of authentic leadership, demonstrating heart, purpose, values, relationships and self-discipline.
Berkshire Hathaway: Annual report 2010. (2010). Retrieved from http://www.berkshirehathaway.com/2010ar/2010ar.pdf
Loomis, C. J. (2006). Warren Buffett gives away his fortune. Fortune. Retrieved June 28, 2013, from http://money.cnn.com/2006/06/25/magazines/fortune/charity1.fortune/
Lubitz, L. (2009). Warren Buffett’s Best Buys. Investopedia. Retrieved June 28, 2013, from http://www.investopedia.com/articles/stocks/08/buffett-best-buys.asp
Northouse, P. G. (2013). Leadership: Theory and Practice (6th ed.). Thousand Oaks, CA: Sage Publications.