Warren Buffett - Leadership vs Managemen
There is a blurred difference between leadership and management. Leadership is a display of innate ability where one influences and motivates people so that they work effectively towards the realization of an organization's goals. On the other hand, management is the process of planning, controlling and directing people and resources so that the entire system is able to achieve the set goals. Thus, both leadership and management are functions of results. The difference is in items mobilized and organization towards the objectives. Leadership is more people centered hence transforming problems through interactive solutions where followers are facilitated for a course. Management reinvents work by assessing the strengths, weaknesses, opportunities and threats so that subordinates are involved in clearly spelt out guidelines ("Leadership vs. Management"). It is because of his management and leadership styles that Warren Buffett became a prominent leader not just in the United States but globally.
Summary of Warren Buffett's Leadership Style's
Warren Buffett is a renowned businessman and investor in the United States and is the third richest man on Earth. The billionaire lives in Omaha, Nebraska, in the United States. He is also an outstanding philanthropist. Buffett is the Chief Executive Officer of Berkshire Hathaway Company, where he is also the largest shareholder. There are 35,000 investors who invest with the company. The company has 257, 000 employees and 21 managers under Buffett at its headquarters (Sorkin).
According to Spindler, Warren Buffett is a renowned leader based on a number of qualities. He is a learner, a communicator, adaptable and charismatic. The adaptation abilities of Buffett are manifested in the flexibility with which he navigates uncommon circumstances. Similarly, within the course of history, Buffett has improved his adaptability skills through learning, too. The learning experiences include both positive and negative occurrences. However, Buffett has been able to turn negative experiences into opportunities that he has used to build his empire. Finally, Buffett is full of charisma and able to communicate effectively so that people understand what he wants to be implemented. These characteristics have built a person with good management and good leadership skills. Buffett bears good organization, control and budgeting capabilities that are core for good management (Spindler).
Evidence for Good Leadership
According to Sorkin, Warren Buffett often motivates his company executives. His famous quote is 'do more and more because it takes three people to replace you'. Buffett has built his business empire based on trust with which he is able to convince the founders of private companies to sell their companies to him. Buffett maintains hands off policy in the management of the firms he owns and delegates full responsibility to the managers. Sorkin notes that Buffett is keen on the shares of the company, while the management of the company is responsible for its performance. Buffett is on record saying he would never buy a firm that requires him in management. According to Stern, the granted freedom allows Buffett's Chief Executive Officers to exhibit control and run companies as if they owned them. The companies' heads have developed lots of confidence. Thus, Buffett expects performance when people are given autonomy. As a result, the stocks of companies run by Buffett increased in value by 19.8% in 2009. The most critical policy is that the companies acquired by Buffett have experienced Chief Executive Officers.
Nevertheless, the management skill weakens the leadership criterion employed by Buffett. This is because there is a possibility of losing money on poorly managed companies. However, by virtue of returns reported by Buffett in the last four decades, such criticisms are underscored by the gains. At the same time, Buffett acknowledges that his company is slow in detecting management problems. According to Stern, the management style employed by Buffett is neither good nor bad. It only requires people who are motivated, confident, and who can deliver results. To the contrary, if these characteristics lack, the results are negatively adverse.
Buffett exhibits both servant and transformational leadership. Liden notes that servant leadership revolves support and empathy whenever followers face challenges. Buffet seemed to have known that leadership is a component of management and a vital pillar for business operations in the 21st century. Thus, he does not ascertain any control in the management of subsidiary companies unless he is involved. For instance, Buffett offered support to Abrams and Moore when the sales of paint went down after he was contacted. Buffett attributed this to the reduced sale of houses and expected increased results when the sales went up. In different scenarios when NetJets was performing poorly, Buffett explained that he did not know the management or where the company was located. The difference between these situations is that whenever the management realized a bad situation and consulted Buffett, he helped. According to Warren Buffettt Blog Channel, Buffettt is a very rational investor. Choudhary et al. (433) argue that transformational leadership delivers better results than servant leadership. Transformational leadership is the use of motivation to deliver results. This style is primarily employed by Buffett. It is the basis of the autonomy enjoyed by all the subsidiary firms.
In conclusion, Buffett expresses a mixture of leadership skills. It is evident that he presents more leadership than management skills. Buffett is interested in results and influences the companies' heads to work for such success. He also exhibits strong learning skills and flexibility in his management style. Buffett is more of a transformation leader who induces performance.