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Warren Buffett, the CEO of Berkshire Hathaway and one of the world’s wealthiest people, is widely considered one of the most successful investors of all time. He is known for making shrewd and profitable business decisions and for being a suburb manager (Sorkin, 2011). It comes as some surprise then that Mr. Buffett employs a “hands-off” management style, which has worked extremely well for him (Stern). This style of leadership is referred to as Laissez-Faire, or delegative leadership, and often leads to low productivity levels (Cherry).
The characteristics of this style of leadership are:
1. Leaders provide little guidance.
2. Followers have complete freedom to make decisions.
3. Needed resources are provided by leaders.
4. Followers are expected to solve problems themselves (Cherry).
In Buffett’s case, however, this oft-maligned leadership style has had positive effects; by allowing his managers full autonomy, he has created an atmosphere where his employees feel confident and motivated by their extreme latitude (Stern). In Berkshire Hathaway’s 2010 Annual Report, Buffett states, ” We tend to let our many subsidiaries operate on their own, without our supervising and monitoring them to any degree. Most managers use the independence we grant them magnificently, by maintaining an owner-oriented attitude (Stern).”
The Laissez-Faire style can work if followers are motivated and highly skilled, but quite often, this is not the case (Cherry). Followers that are not highly skilled, competent, or good problem-solvers often end up failing at their tasks or not meeting their deadlines (Cherry). It would seem that Mr. Buffett has the ability to choose highly motivated and capable managers who thrive in a results-oriented environment. By choosing whom to place his trust in wisely, he is able to afford them the autonomy that they need to be successful.
Cherry, K. What is Laissez-Faire Leadership? Retrieved from http://psychology.about.com/od/leadership/f/laissez-faire-leadership.htm
Sorkin, A. (2011). Warren Buffett, Delegator in Chief. The New York Times. Retrieved from http://www.nytimes.com/2011/04/24/weekinreview/24buffett.html?ref=warrenebuffett
Stern, G. Why Warren Buffett’s Laissez-Faire Management Style Works. Investor’s Business Daily. Retrieved from http://www.marshallgoldsmithlibrary.com/cim/articles_print.php?aid=897