Ability to Delegate Responsibilities by Warren Buffet

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Table of Contents

Introduction
Understanding This Method of Leadership
Conclusion
References

Introduction

One of the best leadership qualities that Warren Buffet shows is his ability to delegate responsibilities to the other executives that manage Berkshire Hathaway. He does this by separating different types of asset portfolios in the company into batches that can be distributed to a select number of individuals. After this is done, Buffet gives instructions regarding expected returns or performance indexes that the individual executives or portfolio managers have to meet or exceed.

That is the entirety of the process that occurs at Berkshire Hathaway when it comes to delegating responsibilities and, as seen in the success of the holding company so far, it has proven to be a sound method of managing investment portfolios. The benefit of delegating responsibilities is that it shows a certain level of trust between a leader and a team member (Allio, 2015). This in turn encourages the team member in question to live up to the trust that they were given by performing to the best of their ability thereby leading to potentially greater work outputs (Warner, 2015).

Understanding This Method of Leadership

There are many ways in which a company president or even a manager can choose to run their organization. For instance, they could focus on a leadership style wherein they micromanage everything to make sure that all aspects of a project operate exactly as they want it to be (Overstreet, Hazen, Skipper & Hanna, 2014). The benefit of this style of leadership is that it ensures that operations proceed along the desired paths that a leader wants; however, it also entails a considerable commitment of time (Hamstra, Van Yperen, Wisse & Sassenberg, 2014). The result is that a leader often focuses so much on a day to day operations that they neglect to examine the external market environment of the company leading to missed opportunities or not anticipating changing consumer trends. On the other end of the spectrum, there are also leadership styles that focus on a “less engaged” method of management. Under this particular style, leaders focus less on micromanagement and more when it comes to developing the business as a whole (Marques-Quinteiro & Curral, 2012).

The benefit of this style of leadership, as seen in the case of Warren Buffet and Berkshire Hathaway as a whole, is that aspects related to investment opportunities and changes in consumer behavior are more observable by a leader resulting in the potential to be able to take advantages of trends while they last. This was seen in the case of Buffet investing in the railroad industry within the U.S. as well as his initial investment into Coca-Cola several decades ago. Not only that, but it also allows a leader to better observe how the company functions since they are not immersed in every aspect of day-to-day operations.

This allows them to develop a more objective outlook when it comes to the performance of certain company divisions (Leavy, 2014). Through such a perspective, inefficient or ineffective departments can be more easily identified and potentially revamped or removed from the company. While this method of leadership frees up a leader to concentrate more on developing the business, it does result in the potential for employees to engage in activities that could potentially cripple the company (i.e. stealing from the company).

Conclusion

Overall, as seen in the success of Berkshire Hathaway, Warren Buffet’s leadership strategy of delegating responsibility has been proven as an effective means of ensuring a company’s success.

References

Allio, R. J. (2015). Good strategy makes good leaders. Strategy & Leadership, 43(5), 3.

Hamstra, M. W., Van Yperen, N. W., Wisse, B., & Sassenberg, K. (2014). On the perceived effectiveness of transformational-transactional leadership: The role of encouraged strategies and followers’ regulatory focus. European Journal Of Social Psychology, 44(6), 643-656

Leavy, B. (2014). Strategy, organization and leadership in a new “transient-advantage” world. Strategy & Leadership, 42(4), 3-13.

Marques-Quinteiro, P., & Curral, L. A. (2012). Goal Orientation and Work Role Performance: Predicting Adaptive and Proactive Work Role Performance Through Self-Leadership Strategies. Journal Of Psychology, 146(6), 559-577.

Overstreet, R. E., Hazen, B. T., Skipper, J. B., & Hanna, J. B. (2014). Bridging the Gap Between Strategy and Performance: Using Leadership Style to Enable Structural Elements. Journal Of Business Logistics, 35(2), 136-149.

Warner, J. (2015). Linking Compensation to Strategy, Performance, and Culture. NACD Directorship, 41(2), 26.

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Ability to Delegate Responsibilities by Warren Buffet

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