Mba 550 final project

Final Project Part II: Self-Assessment and Leadership Analysis of Warren Buffett

MBA 550: Leading in an Organization


By: Kelly A. Giambra

Southern New Hampshire University

Module 9 July 24, 2016

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Abstract

The paper will present a leadership analysis of Warren Buffett, the CEO and largest

shareholder of Berkshire Hathaway, Inc. The specific elements that are covered include teams,

organizational vision, organizational culture, problem-solving, conflict management, and a

professional self-assessment. The section about teams analyzes how Warren Buffett structured

the organization of Berkshire Hathaway, and provides some best practices that were used to

organize teams. The sections on organizational vision and culture assesses Warren Buffett’s

leadership style of extreme autonomy and how this structures the culture of his organization.

Problem-solving and conflict management are covered in Sections IV and V, which includes

some examples of how Buffett handles problems and conflict at Berkshire Hathaway. Sections

VI and VII, conclude with my professional self-assessment using the top five strengths found as

a result of the Clifton StrengthFinder analysis tool.

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Introduction: Leadership Analysis of Warren Buffett

Warren Buffett is the CEO and largest shareholder of Berkshire Hathaway, Inc., a

holding company who owns subsidiaries of various types of businesses. Berkshire Hathaway

invests mainly in media assets, insurance, oil, and lower performing businesses with a

competitive advantage (Forbes, 2016). The Company owns several familiar companies such as

Geico, Dairy Queen, Fruit of the Loom, and has large investments in Wells Fargo, Fruit of the

Loom, IBM, and Coca-Cola (Forbes, 2016). In recent years, Buffett purchased hundreds of

millions of stock in Phillips 66, an energy firm. He has also teamed up with 3G Capital for

additional investment deals with Kraft Foods, Heinz, Burger King, and Tim Hortons (Forbes,

2016).

Warren Buffet was born in Omaha, Nebraska in 1930 and is approximately 85 years of

age. He is nicknamed and frequently referred to as the “Sage of Omaha” and the “Oracle of

Omaha” in the media (Bio, 2016). Buffett has an estimated net worth of approximately 66.4

billion and has been known for both his philanthropy and very successful investment strategies.

In 2016, he was ranked by Forbes as being one of the top three billionaires and one of the top 13

most powerful people in the United States (U.S.) (Forbes, 2016). He also had ownership in the

company Salomon Brothers, was a former director of Coca Cola, and held similar leadership

roles at Citigroup Global, Graham Holdings Company, and Gillette (Bio, 2016).

Warren Buffett’s Career Track

Warren Buffett began his career at the very young age of 11, where he found himself

having a natural talent for math, investments, finance, and business matters (Bio, 2016). Since

his father was a stockbroker, Buffett would often visit his workplace to help, which eventually

led to his first stock purchase of three shares of Cities Service Preferred (Bio, 2016). It was at

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that point in which Buffett had learned his first lesson on the patience of investing (Bio, 2016).

When the stock had initially plunged, Buffett waited for the stock to increase and then sold it.

However, he later regretted selling the stock because it increased to an even higher value.

When Buffett was only 13 years old, he began running two businesses. The first business

involved newspaper delivery, and the second business involved a horseracing tip sheet sales. In

high school, Buffett partnered in with a friend to purchase a pinball machine where they used

profits to buy other machines and then re-sell them for a profit (Bio, 2016). As a young adult, he

attended the University of Pennsylvania with a major in Business, and then later achieved a

Bachelor’s degree from the University of Nebraska. In 1951, Buffett attended the Columbia

University School of Business where he earned a Master’s degree (Bio, 2016).

Immediately out of graduate school, Buffett sold stocks for Buffett-Falk & Company and

then later worked as an analyst at Graham-Newham Corporation. In 1956, he formed a first

partnership, Buffett Partnership, Ltd, in Omaha, Nebraska. From that point on, Buffett became

very successful in identifying undervalued businesses to invest in for multi-million dollar profits

(Bio, 2016). Buffett first acquired stock in Berkshire Hathaway, Inc. in 1960 and then ended up

taking full control of the company only five years later. In 1969, Buffett closed the partnership

business in order to focus more on Berkshire Hathaway.

I. Teams and Warren Buffett

How Warren Buffett Structured the Organization of Berkshire Hathaway, Inc.

The organizational structure of Berkshire Hathaway, Inc. is considered very diverse with

many businesses that operate within several types of industries. The Company holds stocks in

many large and well known U.S. publically traded companies such as Coca-Coca, Kraft Heinz,

IBM, American Express, and Wells Fargo (Carpenter, 2015). Berkshire Hathaway also owns

several private companies with commonly known brand names such as Geico, the McLane

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Company, and Burlington North Santa Fe (Carpenter, 2015). The Company’s headquarters are

located in Omaha, Nebraska and consist of a team of about 24 employees who are responsible

for SEC filings and other administrative duties. According to Buffet: “they handle all of these

business tasks cheerfully and with efficiency, while making my life easy and pleasant” (Ro,

2014).

Warren Buffett’s Team Management Style

When it comes to team management, Buffett’s organization is uniquely based upon a

“well founded” reputation in the investment community (Larcker & Tayan, 2009). The

operating structure of Berkshire Hathaway is generally “decentralized” because the performance

obligations are placed under the control of the managers of its many subsidiaries, with little or no

interference from Buffett. Berkshire Hathaway is a holding company, which is “a type of entity

that may own either a portion or all of another company’s assets” (Gilani, 2016). Thus, the

Company exists for the main purpose of holding a percentage of the stock of a company and

owns subsidiary businesses as a part of its investment portfolio. Since holding companies

consist of several businesses, it would be difficult for Buffett to personally manage and control

each team.

Warren Buffett and the Berkshire Hathaway Executive Team

Warren Buffett has been the Chairman, CEO, and President of Berkshire Hathaway Inc.

since 1970 (Bloomberg, 2016). He is also the Owner of IMC Group and the Manager of

Burlington Northern Sante Fe, LLC (Bloomberg, 2016). Buffett’s professional background

consists of experience with managing teams of both publically and privately traded companies.

A majority of the senior managers and directors of Berkshire Hathaway’s subsidiaries’ are also

shareholders of the businesses they manage. As a result, the team structure, decision-making, and

operational functions all fall under the direct management of these subsidiaries (Stern, n.d.).

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Buffett’s immediate team consists of both a Board of Directors and “C-Suite” Executives, whom

have strong backgrounds in financing, investing, leadership, and other business strategies

(Bloomberg, 2016).

Buffett is also known for having a “laisse-faire” or hands-off management style where he

allows for various co-leaders and managers to have “extreme autonomy” when making decisions

(Stern, n.d.). The concept of laisse-fair involves a team’s completion of tasks or projects under

little supervision, so they are able to make decisions independently (Cheah, 2016). The leader

allows for managers to work on projects alone and only interferes if deemed necessary.

According to Buffett: “We tend to let our many subsidiaries operate on their own, without

supervising and monitoring them to any degree. Most managers use the independence we grant

them magnificently, by maintaining an owner-oriented attitude” (Stern, n.d.). Therefore, Buffett

tends to invest in companies that are already well organized, and keeps those managers in place

since they are already familiar with the business.

Evaluation of Best Practices Used by Warren Buffett to Develop the Executive Team

As a leader of Berkshire Hathaway, one of Buffett’s best practices has involved having a

“no nonsense” attitude and down-to-earth style of leadership (Forbes, 2016). With this in mind,

Buffett seeks out employees who are intelligent, have high levels of energy, and demonstrate

integrity. As an additional best practice, Buffett keeps the hiring levels at a minimum so that he

can free up more capital in order to invest in business growth. He also prefers to have board

members whom relate to and identify with their shareholders. Buffett does not believe in paying

excessive salaries for these directors, and does not carry liability insurance to protect the board

members (McGregor, 2015).

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The board of Berkshire Hathaway consists of split roles of the CEO and Chairman,

instead of having one person who assumes both roles. The reason for this is that in the event that

the CEO needs to be replaced, it would not be as difficult if they were also the Chairman

(McGregor, 2015). Buffett believes that a company should not be led by a CEO who is

“arrogant, bureaucratic, or complacent” because these leadership traits have been known to cause

failure in some of the strongest companies like General Motors, IBM, and Sears Roebuck

(McGregor, 2015). He places his trust in managers, does not micromanage, and treats employees

the way he would like to be treated. Buffet is known for being humble and also willingly admits

to making mistakes, while paying credit to others when credit is due (McGregor, 2015). Thus,

recognition and team work is important part of Berkshire Hathaway and Buffett’s leadership

style.

Subsequently, the leader’s skills have helped to improve overall operations, structure, and

communication within Berkshire Hathaway. For one, the Company is small consisting of

roughly 25 co-leaders responsible for overseeing the business. Virtually all of its operations

remain within the executives in charge of Berkshire Hathaway’s portfolio, along with Buffett and

his long time co-partner, Charlie Munger (Irwin, 2015). All of these leaders decide on how they

should allocate capital over the different potential investments (Irwin, 2015). In addition,

Buffett’s reputation as a leader has made Berkshire Hathaway one of the primary choices for

businesses looking to sell while leaving their company still intact (Irwin, 2015).

Warren Buffett and Team Management

The term team may be defined as “a group of individuals whom meet over a given period

of time to pursue a shared goal of completing a task or project” (AMA, 2014). The notion of

teamwork emphasizes groups working together to overcome barriers, find new opportunities,

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improve productivity, and develop problem-solving skills (AMA,2014). Some common team

characteristics may include openness, acceptance, understanding of common goals, assessing

progress and results, and sharing trust (AMA, 2014). One of Buffett’s best practices in this

regard involves rewarding both the team and subsidiaries according their level of production

(McAleenan, 2015). Buffett does not hassle the team for updates, and only requests that bad

news be reported immediately so that the issue can be promptly addressed (McAleenan, 2015).

The leader has simulated the idea to his managers they are the owners of the business. Buffett

believes this is a best practice to consider when there are exceptional employees considered as

indispensable to the Company (McAleen, 2015).

In recent years, team structure has become a significant part of organizational dynamics,

and most businesses today use some form of team work (Morgeson, DeRue, & Karam, 2010).

For instance, a 2010 survey of upper-level managers, had revealed that 91 percent agreed that

teams are the key to organizational success (Morgeson, et.al, 2010). Buffett’s leadership style

appears to involve “team self-management” which is a more indirect form of teamwork, as his

subsidiaries generally manage themselves (Morgeson, et.al, 2010). Many theories surrounding

self-managed teams have shown that members who complete tasks and solve problems on their

own typically becomes stronger and more resilient (Morgeson, et.al, 2010).

Warren Buffett and the Three Dimensions of Team Development and Communication

The three dimensions of team development and communication are energy, engagement,

and exploration, all present in high performing teams like Berkshire Hathaway (Sorenson, n.d.).

Buffett tends to look for highly energetic managers to become a part of his team and encourages

both formal and informal communication (Rhee, 2013). He also engages his managers by

motivating them using financial and emotional rewards for jobs well done (Allan, 2014). This

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exploration dimension typically occurs both at Buffett’s annual meetings with shareholders, and

on a monthly basis when managers submit their financial reports to the Berkshire headquarters

(Cheah, 2016).

II. Organizational Vision and Berkshire Hathaway, Inc.

How Warren Buffett Developed the Strategic Plan for Berkshire Hathaway, Inc.

Buffett’s strategic plan for Berkshire Hathaway consists of investing in companies that

have products or services which rarely change so they are easier to re-sell and manage (Buffett &

Clark, 2009). The leader tends to look for certain characteristics when identifying these types of

businesses. For one, Buffett manages and invests in businesses that spend less capital then what

they earn, such as brand name products like Coca-Cola. As a well-known company, Coca-Cola

does not usually over-spend on research and development or repurchasing new equipment to

develop new products. This allows for the same equipment to be reused over several years, so

that money can be saved to expand, increase capital for more internal growth, and provide better

pay to its company managers (Buffett & Clark, 2009).

Warren Buffett’s Management Roles, Functions, and Impact on Improvement

According Munger, “the Berkshire system is essential for success in management”

(Lowenstein, 2015). When it comes to management, Berkshire Hathaway tends to look for

people with “hands-on” experience in investing (Irwin, 2015). In addition, Buffett compensates

these managers according to their success at meeting performance goals and regardless of the

Company’s profits (Irwin, 2015). Buffett also emphasizes the importance of “capital allocation”,

and allows for managers to be autonomous in their decisions (Lowenstein, 2015). He is non-

bureaucratic, thinks on the short term, and does not offer earnings guidance, regular stock splits,

or stock options to employees (Lowenstein, 2015).

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As a manager, Buffet typically pursues ownership in companies with certain “inherent

business economics”, who people already desire to work for so that the organization requires

little improvement (Buffet & Clark, 2009). Buffett also believes that the best companies to

invest in and have ownership in are the ones that offer their employees opportunities for

advancement, job security, and options to make more money from within (Buffett & Clark,

2009).

The Strategic Direction of Berkshire Hathaway, Inc.

The strategic direction of Berkshire Hathaway consists of a course of action that leads the

business to achieve its specific goals and objectives. As a leader, Buffett establishes this by using

facts, analysis, intuition, and experience, in order to achieve the Company’s vision. The strategic

direction of Berkshire Hathaway is clearly stated in the Company’s 2015 letter to shareholders.

However, due to Buffett and Munger’s advanced ages, there has been some concern over the

Company’s succession plan when the two are no longer around (Chipmann, 2015). As Buffett

stated in his 2015 letter: “Charlie is 92, and I am 85. If we were partners with you in a small

business, and were in charge of running the place, you would want to look in occasionally to

make sure we hadn’t drifted off into la-la land (Berkshire Hathaway, 2016)”.

In contrast, a panel of speakers from Stanford University recently discussed the future of

Berkshire Hathaway. It was agreed that the Company’s organizational culture is likely to survive

past Buffett’s leadership (Chipmann, 2015). The panelists also agreed that Buffett’s embedment

of the three core values of integrity, autonomy, and permanence are likely to continue so long as

they have the right successor (Chipmann, 2015). Berkshire Hathaway’s revenues have continued

to grow which is a positive sign of the Company’s strategic direction. In 2015, the Company’s

total revenues increased by about 16 billion (Berkshire Hathaway, 2016). A significant part of

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the increase was due to the Buffett’s increase in ownership interest of American Express, Coca-

Cola, IBM, and Wells Fargo (Berkshire Hathaway, 2016).

Permanence is another one of Berkshire Hathaway’s most important cultural values. The

Company currently employs over 300,000 people worldwide within 80+ subsidiaries and

includes the same 25 staff members at Berkshire’s Omaha headquarters. Buffett attributes this

permanence to efficiency because he only hires if needed and does not feel a need to restructure

his workforce. In addition, Berkshire Hathaway has never sold a single one of its subsidiaries

within its 50-year history (Chipmann, 2015). As a result, the future of the Company requires for

Buffett and Munger’s successors to follow through with these values and continue on with

Berkshire Hathaway’s mission, vision, culture, and strategic direction.

The Organizational Vision and Mission of Berkshire Hathaway, Inc.

An organization’s vision statement may be defined as “a brief statement created to help

an organization clearly define its purpose and goals”, and is often accompanied with a mission

statement (Carpenter, Bauer, & Erdogan, 2016). A mission statement may be defined as “a

statement identifying an organization’s reason for being, as well as what it does to serve its

customers, employees, and shareholders” (Carpenter, et.al.). Remarkably, Berkshire Hathaway

does not have a formal vision or mission statement, which is highly uncommon in businesses

today. In fact, a recent study conducted by Bain and Company found that almost 90 percent of

firms surveyed have some form of mission and vision statement to which they base their

organization (Carpenter, et.al.).

Despite the Berkshire Hathaway’s lack thereof, Buffett is certainly a leader with a clear

vision. The leader often describes where industries are going, and then acquires those companies

with strong managers, to help carry out the goals and objectives of their subsidiaries. Buffett

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also discusses the vision, goals, and investment strategies of Berkshire Hathaway every year in

his renowned letters to shareholders. As Buffett states in his 2015 letter, “to achieve our goals,

we emphasize the avoidance of bloat, by buying businesses such as PCC that have long been run

by cost-conscious and efficient managers” (Berkshire Hathaway, 2016). Thus, Buffett places a

great level of trust in his managers’ in having the knowledge and capabilities to shape the overall

vision of their own companies.

Furthermore, as evidenced by Berkshire Hathaway’s continued growth, the lack of a

formal mission and vision statement does not appear to be hindering this Company in any way.

Buffett prefers to be efficient and run his organization using a non-bureaucratic structure. He

states in his 2015 letter that the future of Berkshire Hathaway will be “to continue to operate

with extreme, almost unheard of decentralization” (Berkshire Hathaway, 2016). Considering

this, there was no mention of either he or Charlie Munger retiring anytime soon, even though

both are ages 85 and 92 respectively. The two partners merely expect their successors to carry

on Berkshire Hathaway’s basic mission of improving earnings for their many subsidiaries,

acquiring more profitable companies, continuing growth for investees, and repurchasing

Berkshire shares when available at a discount (Berkshire Hathaway, 2016).

III. Organizational Culture of Berkshire Hathaway, Inc.

How Warren Buffett Influences Corporate Culture

Organizational culture may be defined as “the unified beliefs and values which exist

within an organization over a period of time and its members’ attitudes and behaviors that

influence the value of their work” (Tsai, 2011). The corporate culture of Berkshire Hathaway is

strongly influenced by Buffett’s own values. Hence, the Company stresses the importance of

ethics, honesty, integrity, longevity, and customer satisfaction within their culture (Larckner &

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Tayan, 2015). When choosing its directors, Berkshire Hathaway seeks out professionals who

already possess these similar values, as well as industry-based knowledge and a genuine interest

in their business (Corporate Governance, n.d.). The Company’s directors, officers, employees,

and subsidiaries all must adhere to its Code of Business Conduct and Ethics.

According to Buffett, “I want employees to ask themselves whether they are willing to

have any contemplated act appear the next day on the front page of the local paper” (Code of,

n.d.).

Nonetheless, a majority of Berkshire Hathaway’s subsidiaries’ CEOs strongly believe that the

organization’s culture is based upon maintaining a good reputation, running your business as if

it’s your own, and placing integrity as first and foremost (Larcker & Tayan, 2015). Ultimately,

the Berkshire system is based upon the philosophy that managers who are given complete and

total autonomy on the long-term will perform better.

In effect, a survey conducted on what it’s like to work for Berkshire Hathaway found that

most of its CEOs agreed their financial performance is much better than it would be if not owned

by Buffett (Larcker & Tayan, 2015). The reasons for this ranged from the advantage of being

autonomous, to brand value, financial strength, and Buffett’s long term investment strategy

(Larcker & Tayan, 2015). All in all, it is the managers of these subsidiaries that help create a

unique culture where behavior and performance expectations are the utmost importance. Since

Buffett is non-bureaucratic, he trusts these managers with such extreme autonomy since he

believes it promotes more accountability than it would if there were too much oversight.

IV. Problem-Solving

Problem-Solving and Conflict Management at Berkshire Hathaway, Inc.

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Problem-solving and conflict management are a fundamental part of both everyday life

and business. The most important elements involve being able to recognize the problem and this

may range in complexity (Spaho, 2013). When problems are recognized, it is then possible for

the leader to come up with an appropriate strategy to solve it. It is the leader’s role to find the

right solution as well as implement processes that effectively manage conflict within his

organization. In addition, research has shown that problem-solving approaches to conflict

management generally result in improved satisfaction in short and long term goals and better

solutions (Weitzmann & Weitzmann, 2000).

How Warren Buffett Manages Problems at Berkshire Hathaway, Inc.

At the organizational level, there are several types of approaches to managing conflict.

Warren Buffett typically addresses conflicts at Berkshire Hathaway simply by avoiding complex

business decisions. According to Buffett, “Charlie and I have not learned how to solve difficult

business problems. What we have learned is to avoid them” (Brown, 2014). The avoidant style of

conflict management is a conservative approach to problem-solving. The conservative method

of handling conflict “follows the belief that all conflict is negative and destructive so it should be

avoided” (Kaimenyi, 2014). This is common characteristic of a “laissez-fair” leader like

Buffett, since these leaders generally allow followers to solve problems on their own (Kaimenyi,

2014). “Laissez-fair” leaders also tend to surround themselves with highly skilled, experienced,

and knowledgeable managers so they are capable of working un-supervised (Kaimenyi, 2014).

Furthermore, leaders who manage conflict through avoiding tend to be more passive and

will either distance themselves or minimize their problems. This style may be most appropriate

when problems are more trivial since it is likely that the leader cannot fully solve the problem

(Spaho, 2013). Buffett states that though on occasion Berkshire Hathaway may encounter a

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“larger but solvable” problem, the Company has “done better by avoiding dragons than by

slaying them” (Brown, 2014). Buffett also learns from his mistakes and then develops strategies

to prevent the same problems from occurring in the future. As theory points out, in order to

reduce conflict, it is often necessary to identify all previous conflicts, what caused those

problems, and how they were solved in the past (Spaho, 2013).

Warren Buffett and Problem-Solving During the 2008 U.S. Financial Crisis

Some of Buffett’s greatest problem-solving skills occurred during the 2008 U.S. financial

crisis. One of Buffett’s most famous quotes during this time were to “Be fearful when others are

greedy, and be greedy when others are fearful” (Das, 2013). Berkshire Hathaway was not only

able to survive the economic recession, but also continue to earn profits from it. When many

organizations were failing, Buffett handled the crisis with a strategy by “extending lifelines”

to a few blue chip companies whose market shares were down at the time

(Das, 2013). Blue chip companies are well known businesses that are less volatile, with good

reputations that can still profit even when the economy is bad. Thus, they are more reliable and

likely to grow. By 2016, Berkshire Hathaway had profited approximately 10 billion (Das, 2013).

The fact that Buffett avoids risky investing in such blue chip companies is an example of

how he manages a crisis related financial problems at Berkshire Hathaway. According to the

textbook, a success factor of a leader in an organization is to be able to think strategically and see

the big picture (Dubrin, 2016). During a financial crisis, this skill is important as a leader since

many followers may be so distracted by the problem that they see no way out (Dubrin, 2016). As

Buffett stated, “By year-end, investors of all stripes were bloodied and confused, much as if they

were small birds that had strayed into a badminton game” (Koppenheffer, 2014). In Buffett’s

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2008 annual letter to shareholders, the leader had also offered insight into what caused the

financial crisis and how to prevent significant losses on the long term (Koppenheffer, 2014).

V. Conflict Management

How Warren Buffett Manages Conflict at Berkshire Hathaway, Inc.

As an avoidant, Buffett prefers to defer his attention from managing conflict to trying to

prevent problems from occurring. One of his best solutions to this is by taking great care when

selecting CEOs so that strong performers are in place to withstand difficult times (Rhee, 2013).

Research has shown that solving conflicts of higher-level managers like CEOs have a negative

influence on organizational performance (Spaho, 2013). This is because it defers the leader from

other important duties (Spaho, 2013). According to Buffett, “Outstanding CEOs do not require

much management or oversight from owners, though they can additionally benefit from a

similarly exceptional board” (Rhee, 2013). Essentially, the CEOs of Berkshire Hathaway’s

various subsidiaries are given simple expectations of running their company as if 1.) they are the

only owner; 2.) it is the only asset they own, and 3.) they have no intention of selling it (Rhee,

2013).

Buffett does not usually speak out publically if he disagrees with one of his CEOs

decisions. In addition, if Berkshire Hathaway receives criticism for any of its business practices,

Buffett will defend the Company. For instance, in 2014, Coca-Cola voting shareholders had

approved a compensation plan for its executives in which Buffett had opposed (Ioselevich,

2014). He did not respond in the public, but did state at the Company’s annual meeting that

though he did oppose it, he would rather address his concerns directly with the CEO to avoid

“going to war” with a close business partner (Ioselvich, 2014). In addition, when Coca-Cola was

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criticized for having unhealthy products for consumers, he diverted the topic to choice, in that

consumers choose to drink Coke products because it tastes good (Udland, 2016).

Warren Buffett and the 2008 Subprime Mortgage Crisis

Remarkably, the 2008 subprime mortgage crisis had little impact on Buffett’s Clayton

Homes, and he continued to make high risk, high cost mortgages without falling into debt or

losing profits (Haverkamp, 2008). At the time, this was almost unheard of since many banks,

mortgage lenders, and other investors suffered severe losses and legal ramifications. Berkshire

Hathaway had first acquired Clayton Homes in 2003 and is now the largest financer of mobile

homes in the U.S. (Haverkamp, 2008). Clayton Homes primarily lends to borrowers with poor

credit and lower income who are unable to afford a traditional home. Though in 2008, these

subprime borrowers were likely to default or foreclose on their mortgage, this was not the case

with Clayton. Buffett was able to avoid the subprime problem conservatively, by not structuring

a loan so that it would be difficult to repay (Haverkamp, 2008).

On the contrary, Berkshire Hathaway did receive negative publicity when Clayton Homes

was accused of engaging in predatory lending (Baker, 2015). This conflicted with Buffett’s

portrayal of being a responsible lender by helping lower income borrowers fulfill the American

dream of owning a home (Baker, 2015). When Clayton Homes was first confronted with these

accusations, the Company’s spokeswomen failed to respond (Baker, 2015). This appeared to be

the appropriate response for the Company at the time. In leadership, one aspect of using

avoidance as a strategy here involves gathering information and analyzing the situation (Dubrin,

2016).

Buffett eventually responded to Berkshire’s shareholders in defense of Clayton Homes.

He stated that the claims of predatory lending were “misleading” and that “Clayton has behaved

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very well” (Das, 2015). He then when on to present factual information to his shareholders in

order to support his claim. For instance, he addressed how Clayton’s default rate was only 3

percent and most borrowers successfully pay off loans within a 20-year time frame. As Buffett

stated: “It’s true that manufactured housing hits the lower end of the market...the question is, can

you lend intelligently to people [so that they can continue] making those payments and keeping

their house?” In that regard, Clayton has been “exemplary” (Das, 2015).

VI. My Profession Self-Assessment Using the Clifton StrengthsFinder

As we see from the analysis of Warren Buffett, problem-solving and decision-making are

especially important leadership skills in everyday business. In addition, completing a self-

assessment can assist in determining a leader’s strengths and weaknesses when it comes to

managing problems and making decisions within their organization. One way of assessing these

qualities is through the usage of the Clifton StrengthsFinder assessment. The Clifton

StrengthsFinder assessment was first developed by Dr. Donald O. Clifton, based upon his 40-

year study conducted on human strengths which identified 34 most common strengths within

individuals. The assessment has been extremely effective in helping people to both discover and

recognize their inner leadership talents (Strengths Dashboard, n.d.). The results of the Clifton

StrengthFinder assessment revealed my five strengths as: 1.) Input, 2.) Intellection, 3.) Achiever,

4.) Strategic, and 5.) Learner.

Strength Number One: Input

My number one strength found as a result of the StrengthsFinder assessment is that of

“input”. According to Gallup, a person who is talented in the area of input will generally possess

a strong desire to increase their knowledge base. These individuals have a tendency to collect

and archive all kinds of information such as ideas, facts, books, articles, and quotations (Gallup

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Strengths Center, n.d.). Leaders with input strengths may often serve as experts or specialists

which are extremely necessary in complex industries (Schubring, 2014). They often tend to

acquire, compile, and file away information in the event that it is needed for the future. This is

important in succeeding in leadership, as strong input talents are required when making decisions

to help improve growth and performance of an organization.

Strength Number Two: Intellection

A second strength found as a result of the StrengthsFinder assessment is that of

Intellection. According to Gallup, individuals with strong intellection skills, enjoy thinking,

constant mental activity, and the exercising of their minds (Gallup Strengths Center, n.d.).

Leaders with strong intellect abilities are effective at solving problems, developing ideas, and

understanding the feelings of others. Individuals with strong intellection are also introspective so

they are able to reflect upon and ponder over current and past events. These traits are beneficial

for a leader since they can serve as a “sounding board” to help team members find new ways to

solve problems and improve the quality of their work (Gallup Strengths Center, n.d.).

Strength Number Three: Achiever

A third strength found as a result of my StrengthsFinder assessment is that of an achiever.

According to Gallup, achievers have a strong desire to constantly attain goals and accomplish

more (Gallup Strengths Center, n.d.). Achievers also enjoy facing challenges and are motivated

with future goals and assignments while requiring little or no recognition. Achievers in

leadership roles are devoted to completing tasks, and have the inner drive and energy needed to

push their team to succeed (Gallup Strengths Center, n.d.). Therefore, having the achiever

strength is useful in decision-making when overcoming hurdles to growth, developing strategies

needed to improve the leader’s organization, while also saving time and money for the business.

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Strength Number Four: Strategic

A fourth strength found as a result of the StrengthFinder assessment is that with the trait

of “Strategic” ability. According to Gallup, people who are exceptionally talented in the area of

strategy can quickly identify problems and issues (Gallup Strengths Center, n.d.). Strong

strategic talents are also useful in helping an organization sort through large amounts of data to

find the best possible route for success (Gallup Strengths Center, n.d.). This special perspective

allows for them to identify patterns and then envision the outcome of alternative, “What-if”

scenarios (Gallup Strengths Center, n.d.). This makes the leader very powerful in bringing forth

plans for future situations while being creative, imaginative, and persistent in the projects they

work on. A leader with this ability may quickly weigh in alternative paths to determine the best

possible and most efficient plan moving forward.

Strength Number Five: Learner

My fifth strength as a result of the StrengthFinder assessment involves the desire to learn

more and continuously improve. According to Gallup, individuals with strong learner talents are

consistently striving to learn more in order to maximize their skills (Gallup Strengths Center,

n.d.). Leaners value education and prefer the gaining of new knowledge since it increases their

level of competence. They tend to become inspired after learning new facts, studying new

subjects, and mastering their skills and abilities (Gallup Strengths Center, n.d.). This is a

valuable strength for leaders because they typically learn very quickly and present the new

information to their organization. The learner strength is especially helpful for leaders when

making business decisions that require a high level of competency.

VII. Conclusion

Self-Assessment Investigation in Comparison to Warren Buffet

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In summary, this paper identified several of Warren Buffett’s leadership qualities which

have positively effected the strategic direction of Berkshire Hathaway, Inc. I have found that

virtually all of these leadership traits are somewhat similar to the outcome of my five strengths

found from the Clifton StrengthFinder assessment: 1.) Input; 2.) Intellection; 3.) Achiever; 4.)

Strategic; and 5.) Learner (Gallup Strengths, n.d.). Buffett utilizes input strengths as he

frequently shares knowledge and philosophies on life and investments to the public (Watts,

2016). Each year, Buffett shares expertise in his annual letter to shareholders of Berkshire

Hathaway which is a major event for many investors (Watts, 2016).

As a leader with strong intellect, Buffett prefers to spend approximately 80 percent of the

day reading mostly annual reports of other companies’ which are often several hundred pages

(Sao, 2014). Buffett is constantly “deep in thought” assessing different companies’ competitive

advantage to decide which stocks to invest in (Sao, 2014). As an achiever, Buffett’s high level

of intelligence and natural ability to invest has led to extreme success which continues on even at

the age of 85 (Forbes, 2016). This is one of Buffett’s greatest leadership strengths as he is

frequently referred to as a “super achiever” in the media (Forbes, 2016). This is also where my

achiever qualities are slightly different from Buffett, since my accomplishments are very

different.

The fourth strength similar to Buffett as a result of my professional assessment is that of

“strategic” ability (Gallup Strengths, n.d.). As a leader, Buffett has proven to be very powerful

in strategic growth by not only bringing forth plans for future investments, but also by being

persistent in the projects that he works on. Buffett tends to use strategies that mainly use

“quantitative probability analysis” in which he has used since a young child (Sao, 2016). Buffett

also evolved his investment philosophies and over time went from buying and reselling

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inexpensive companies, to buying larger competitive businesses at reasonable prices, while

holding onto them for longer or indefinite periods of time (Sao, 2014).

Lastly, a fifth strength that I found to be similar to Buffett involves the desire to “learn”

more and continuously improve (Gallup Strengths, n.d.). As a learner, Buffett consistently

strives to gain new information on investments in order to maximize returns for his organization.

Buffett is a “firm believer” that prior to investing, due diligence is necessary to learn about the

company before deciding to invest (Curtis, 2016). Along with this, Buffett believes that

investing is not always about choosing the best company, but also about minimizing risks while

maximizing long term outcome (Curtis, 2016).

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