Financial well-being is a pursuit important to many of us. Both leaders and followers alike seek to improve their station in life by employment, investment, and budgeting. Many that seek wealth follow leaders who are already wealthy. This is the case in most corporations where the CEO is the highest paid employee and leads the rest of the company. When considering the wealthiest individuals in the United States there is no doubt that Warren Buffet is among the richest. Buffet is ranked number four in the 2018 ranking of the world’s billionaires (Forbes, 2018). How did Buffet become so wealthy? Did he do it individually? Or did he lead followers?
This blog is an effort to show what kind of followers Warren Buffet required to make his fortune. His great skill in investments is not the only factor—Buffet’s great skill in leadership is just as important. As CEO of Berkshire Hathaway, Buffet “has grown the market value of this company at a compound growth rate of over 25% per year” (O’Loughlin, 2002, pg. 1). Although Buffet may seem to be attributed all the credit for this extraordinary accomplishment, he did not make these gains without followers. “Buffett has not delivered this performance by being a stock picker. He has done it by being a CEO: by leading people and by managing capital” (O’Loughlin, 2002, pg. 2, emphasis added).
This blog is not about how exceptional of an investor Warren Buffet is. This blog is about the leadership/followership that created the outcome that puts Buffet on the Forbes list. “Leadership and followership are two sides of the same coin, each intimately connected with the other in a dynamic manner” (Riggio, et. al. 2008, pg. 93). If the leader talent is there, what’s important about the followers? From the research, the most important element seems to be hiring the right followers. In a 2015 letter to shareholders, Buffet noted that “Character is crucial” (McGregor, 2015). From CEO, down the line to first line managers, Buffet sought new hires with the right skill sets and characteristics to align with the mission of the company. This approach is like the contingency model of leadership, but instead of the leader using “a leadership style that best meets followers’ motivational needs” (Northouse, 2015, pg. 115), Buffet hired followers that best met the organizations thrust. “As a manager, you can’t just tell people what to do and expect them to do it. You have to find some other way, some other form of leadership. They have to be motivated personally to do it (O’Loughlin, 2002, pg. 48). Buffet advises to “pick out a few heroes” and that “there’s nothing like the right ones” (pg. 5).
To sum this up, Buffet is an exceptional investor and leader who hired followers based on matching the organizations mission. Well, what then is necessary from the followers to want to be led by Buffet? Berkshire Hathaway’s net worth and employee compensation may be enough to attract new hires, but what keeps the followers motivated after that? Most important is trust. The follower must trust that the goals will be met, and success and satisfaction will be maintained. “A leader’s capacity to cultivate follower trust affects his or her ability to direct followers” (Hernandez, et al. 2014, pg. 1). Buffet cultivates follower trust by communication of the organizations guiding principles, stability in the industry, and philanthropy.
Reference
Forbes. (2018) Online. The World’s Billionaires. 2018 Ranking. Real time ranking. The List. Retrieved on 5/31/18 at https://www.forbes.com/billionaires/list/#version:realtime
Hernandez, M., Long, C. P., & Sitkin, S. B. (2014). Cultivating follower trust: Are all leader behaviors equally influential? Organization Studies, 35(12), 1867-1892. doi:10.1177/0170840614546152
McGregor, J. (2015). The leadership wisdom of Warren Buffett. Washington: WP Company LLC d/b/a The Washington Post.
Northouse, P. G. (2015). Leadership: Theory and practice (Seventh ed.). Los Angeles: SAGE Publications, Inc.
O’Loughlin, J., & Net Library, I. (2002). The real warren Buffett: Managing capital, leading people. Yarmouth, Me; London: Nicholas Brealey.
Riggio, R. E., Chaleff, I., & Lipman-Blumen, J. (2008). The art of followership: How great followers create great leaders and organizations (1st;1. Aufl.; ed.). San Francisco, CA: Jossey-Bass.