Warren Buffett quotes on management. What Buffett looks for in his managers and what it takes to create quality management teams.
Avoid the Big Egos
Buffett has said on many occasions that his managers are extremely important. A large part of making good investments is selecting good managers who are reliable, motivated, and can be trusted. According to Buffett, the reason many acquisitions do not work well is that they either lack excellent managements or the nature of the business has poor economics.
The problem is that many of these mergers are motivated by big egos, with the notion that making deals is sexy; existing managers can often be caught up with the notion of making deals just for the sake of making deals. This leads to almost nonsensical deals at times – these deals create big splashy headlines but might add little shareholder value.
Management Warren Buffett likes
What kinds of management does Warren Buffett like? He likes managers who are frugal – the CEO drives an ordinary car and lives in an ordinary house and does not feel anything weird about that. The managers he would avoid are those who have a large tendency to want to brag.
He also likes managers who are not self-aggrandizing. His ‘sort of guy’ would be the manager who would not waste money on painting his office.
Managing his own Managers
Buffett has a very hands-off management approach. For example, with Berkshire Hathaway when it was still a textile company, he asked Ken Chace for monthly financial reports, but did not want any quarterly projections and other reports that were largely a waste of time.
Warren Buffett emphasizes having a personal connection with each CEO. ‘Like a kid on report-card day, managers hated to bring Buffett bad news’ – great way to ensure that managers do their best.