Warren Buffett's Management Secrets Proven Tools For Personal And Business Success, Inspirational.

Warren Buffett's Management Secrets Proven Tools For Personal And Business Success, Inspirational.

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Introduction. In. The. Chronicles, of the investment. Life of Warren Buffett, much, has been written about his investment, methods. Each. And every investment, he has ever made has been taken, apart and analyzed, in excruciating. Detail. David. And I alone, have, written the books Buffett, ology, the. Buffett ology, workbook, the. New Buffett ology, the. DAO of warren buffett and warren, buffett and the interpretation. Of financial. Statements, all. On, Warren's. Investment, methods and all, international. Bestsellers. But. What. Was sorely missing from the body of warren, buffett literature, was a book that addresses and, discusses. The brilliant, way warren. Has managed, his life his. Businesses. And the, people who managed berkshire hathaway's, two, hundred and thirty three thousand, employees, around, the globe. Besides. Being a genius at investing, warren. Buffett is also, a genius, of a manager, with. Over 88, ceos, of different companies reporting. Directly or indirectly, to him in. Modern. Business no, man has, managed, a more highly talented group, of managers in, so. Many diverse, businesses. And delivered. Such. Spectacular. Results, in. Many. Ways Buffett's. Managerial. Record surpasses. Even his amazing. Investment, record, with Berkshire, Hathaway, where. The company's, operational. Annual, net income, grew. From, $18. Share, in, 1979. To four, thousand, ninety three dollars a share in, 2007. This. Equates, to a compounding. Annual, growth rate of 21. Point, thirty nine percent a. Record. That indicates, that Warren, and his managers, are doing a fantastic job. Of minding the, store in. Comparison. Warns. Personal. Investment, portfolio, for the same period, gu, at an annual compounding. Of nineteen, point 78%. Which. Means we, can argue that as a manager, Warren. Outperformed. Himself, as an, investor, in, our. Quest to bring you all things Warren Buffett, we, have written the first ever book that takes an in-depth, look at Warren's, management. Methods. What. They are how. They work and, how you, can use them, we. Discuss, the impact, that Dale Carnegie, had on Warren's life and how, Carnegie's, teaching, help transform, Warren, into.

The Master, manager, he is today. We. Have kept the audio book easy to, listen to with short chapters. The. Methods, that Warren uses, are simple, and easy to understand. But. As you will see their, impact is powerful. We. Look to the future and, imagine. Many generations, using. Warren's. Enlightened, management. Methods, to. Inspire, and motivate people, of all ages to. Achieve their dreams and, visions. Mary. Buffett, and David, Clarke. 2009. Overview. Warren. Buffett's, management. Secrets. Once. Upon a time there, was a slightly nerdish. Young man by the name of Warren, Buffett, who. At the age of 20, was, frightened, to death to stand up in front of people and speak to them then. He, discovered, Dale Carnegie's, course on public, speaking and it, changed, his life not. Only did, he develop the courage and skill to speak in front of groups of people he. Learned how to make friends, and motivate, people, Warren. Considers, his Carnegie, education. A, life-changing. Event and. The. Most important. Diploma he has ever received. Once. Warm was comfortable, with public speaking, he. Also became, a devotee of Dale's philosophy. On interacting. With people, he. Read and reread Carnegie's, book. How to win friends and influence people, dozens. Of times, underlying. It and memorizing. Entire passages. The. Book became his Bible for dealing with people and one of the cornerstones, of his management philosophy. Was. He successful. Here. Is what a Lu. Chi the founder, and chairman, of flight safety international Inc. The, world's leading aviation. Training company, told, author Robert. P miles about, Warren as his boss. Leadership. Is really what a good manager, is about the. Letters of the words represent. The qualities, that a good manager, should have. L. Is for, loyalty and e. Is for enthusiasm. A. Stands. For attitude and, D, is for discipline. E. Stands. For example. You, have to set a good example and. R. Is for respect. S. Represents. Scholarliness, and, H. Is for honesty. InP. Stand. For integrity and, pride. The. Thing I like best about Warren Buffett, is that, he possesses, all these, qualities. We. Will examine Warren's, leadership, qualities, and how Warren synthesized, what he learned into a winning management. Formula, and became. Not only the manager, that other managers, wanted to emulate but, also the, second, richest, man in the world.

To. Facilitate the learning process, we've, broken down Warren's, management, philosophy, into, the following five segments. Or steps, each. Working. With the others to create the perfect combination of, management, skills. Number. One pick. The right business. Warren. Has figured out that not all businesses, are created, equal the. First step to success is to own manage. Or work, for the right business, with, the right economics. Working, in its favor that's. How to get ahead of the game right from the start whether. You are an owner manager. Or an, employee. Number. Two delegate. Authority. The. Second step is warns unique view on delegating. Authority, which, has allowed him to grow Berkshire Hathaway, from a small failing. Textile, company, into, a giant. Multinational. Conglomerate. Number. Three find. A manager with the right qualities. The. Third step is to know the qualities, that are needed to manage an excellent, business here. Warren is looking for integrity, intelligence. And, a. Passion, for the business which. Also happens, to be the qualities, that we need to cultivate in, ourselves to be successful. Managers. Number. Four motivate. Your workforce. Once. The excellent, business is found and the right manager, is put into place, Warren. Has the job of motivating his, managers, to be all that they can be so. That the business the, manager, and the employees. Can be as productive as possible. Here. We will spend time studying Warren's. Adaptation. And expansion. Of Carnegie's, methods, if. There, is a single, skill that, a manager, should be great at it is motivating. Others to achieve. Warren. Developed, a specific, set of motivational. Skills that have inspired his managers, to, hit one business homerun after another and helped. Him build Berkshire, Hathaway into the 150. Billion dollar market. Cap company, that it is today. Number. Five. Managerial. Axioms. For different problems and. Finally. There, are a number of specific Buffett, managerial. Axioms, for dealing with everything from managing leverage, to, handling, dishonest, employees, to, keeping costs low at. The. End of the audiobook we'll, discuss, a few Warren. Isms, that will help you manage your day-to-day life. Success. In business and life usually. Go hand in hand. And Warren, has some helpful hints that, will help us improve our life management, skills, so. Without further ado. Warren. Buffett's, management. Secrets. Step. 1. Pick. The right business, to work for. Working. For the right business, can mean the difference between a successful high-paying. Career, or a life of drudgery. It. Can also mean the difference, between a successful long, term investment. And one, that earns nothing. Warren. Has discovered, that certain kinds of companies, have inherent, business economics, so great that. Even a bad manager, will look good and working for them, these. Are the kinds of companies, that he wants to own and these, are the kinds of companies, that we want to work for. Warren. Has identified, a number, of characteristics, to, help us identify these, wonderful. Businesses, which, is where we will begin. Chapter. 1. How. To find, the kind of business, that offers, the greatest career. Opportunities. There. Is a huge difference between the, business that grows and requires, lots, of capital to do so and the, business that grows and doesn't, require capital. Warren. Buffett. This. Is one, of the keys to understanding Warren, success, as a long-term, investor, and business manager. Businesses. With superior economics. Working, in their favor tend. To burn considerably. Less capital, than they earn, this. Is, usually, because they produce a brand name product, that never has to change or because. They provide a key service, that allows them to charge higher prices, which.

Give Them better profit, margins. With. A brand name product, that never has to change a company. Doesn't have to spend large sums of, money on, research and development nor. Does it have to constantly, retool, its plant and equipment to, implement, design changes. The. For it can use the same plant and equipment over, and over again year. After year until, the equipment, finally wears out, all. Of the money it saves can, be used to expand, the business without having to burden the company, with additional, debt or the, selling of new shares, the. Capital, needed for growth is generated. Internally. All. Of this of course helps. Make the managers, of these super, companies, look brilliant an. Example. A company. Like coca-cola never. Has to spend billions of dollars redesigning. Its product, or retooling. Its manufacturing. Plans to stay ahead of the competition, this. Theives it plenty of money to spend on such fun things as buying other companies and, paying, big bonuses, to its managers, a, company. Like General Motors on the other hand which, produces, automobiles, that, have to change in style almost every, year has, to spend billions on, new designs, and retooling. Its plants, to keep its models, competitive. With, the Fords and the Toyotas, of the world. Which. One of these companies would you rather work for the, one that's internally, generating, tons of excess, cash or, the one that is internally, burning, tons of cash. The. One with the excess, cash of course because, that excess. Cash makes, management, look good which, means they get to pay themselves generous, bonuses, at the end of the year and. Getting. Paid more money is always a good thing. Companies. With the durable, competitive. Advantage. Warren. Believes, that the best company, to own invest. In or work, for the one, that offers the greatest opportunity, for career advancement job. Security, and the, long term making, of money is, a company, that has what Warren calls a durable, competitive, advantage. These. Super, companies, have a near lock down on their market, what. This means to us is that these companies have products, and services, that, never really change our easy, to sell. And own a piece of the consumers, mind. This. Equates to higher profit, margins, and inventory. Turnover which. Means these companies, are often awash, in cash on. The. Other side of the coin there are companies with lousy economics. That, are very difficult businesses. For, us ever to look good in they. Tend toward boom and bust cycles, that make you a star, one moment and out of a job the next. So. The business that offers us the greatest employment. Advantage, are the ones with some kind of durable, competitive advantage. Working in their favor. Warren. Has figured out that these super companies, come in three basic business models, they. Either one, sell, a unique product to. Sell. A unique service, or three. Are the, low cost buyer, and seller of a product, or service that the public is consistently. In need of. Let's. Take a good look at each of these three kinds of super businesses, and discover. The employment, opportunities that, they offer. Companies. That sell a unique product. This. Is the world of coca-cola. Pepsi. Wrigley. Hershey. Coors. Guiness. Kraft. American. Company, Johnson. & Johnson, Procter. & Gamble, and Philip. Morris. Through. The process, of customer, need and experience. And the, promotion, by advertising. These, companies, have established the, stories, of their products in our mind and we, immediately, think of their products when we go to satisfy. A specific. Need. Want. To chew some gum you. Might think of Wrigley feel. Like having a cold beer after a hot day on the job you might think of Budweiser or, Coors, for. The last 284. Years the, Irish on, cool, rainy evenings, have, thought of pints of Guinness and, a, warm fire at the local pub and, Philip. Morris has made a fortune selling Marlboro, cigarettes, all over, the world. Warren. Likes to think of these companies, as owning, a piece of the, Zoomers mind and when. A company, owns a piece of the consumers, mind it.

Never Has to change its products, which. As you, will find out is a good thing it. Also gets, to charge higher prices and sell, more of its products, which, means bigger. Profit, margins, and higher, inventory, turnover, which. Equates to a larger, bottom line on its income statement. These. Companies, are easy to identify because, they have consistent. And strong, yearly. Earnings and, little. Or no debt on their balance sheets. From. An employment perspective these. Special, companies, offer us, the, easiest, opportunity. To rise to managerial. Superstardom. They. Are awash in, cash which. Means they can pay generous, salaries, and huge bonuses, they. Also have the money to buy other businesses. And create new businesses. Which, means there's plenty of opportunity, for a young manager, to excel. Believe. It or not things, really, do go better with a coke, including. Your career. Companies. That sell a unique, service. This. Is the world of Moody's, H&R. Block, American. Express. Service. Master and Wells. Fargo. Like. Lawyers and doctors these, companies, sell services, that people need and are willing to pay for but. Unlike lawyers, and doctors these, companies, are institutional. Specific, as opposed, to people specific. When. You think of getting your taxes, done you think of H&R Block you don't think of Jack the guy at H&R Block who does your taxes, the. Economics, of selling a unique service can be phenomenal, a company. Doesn't have to spend a lot of money on redesigning, its products, nor. Does it have to spend a fortune building, a production plant, and warehousing its wares and. Firms. Selling unique services, that own a piece of the consumers, mind can. Produce even better margins, than, firms selling products. Being. A manager in one of these businesses, can be a high-paying, rewarding. Career. With, few of the financial, ups and downs that plagued other businesses. Just. Compare the operations. Histories, of H&R.

Block And a company like GM. No. Matter how bad the recession people. Still need help filing their taxes. There, is never a recession, in the tax filing business. But. With the company like GM the. Whims of the economy, can be devastating in, just a short amount of time the. Management, team of H&R, Block will, never stay awake at nights worrying about union, demands, too. Much debt or the. Buying whims of the public, the. Same cannot, be said for the management, team of GM. Companies. That are the low-cost buyer, and seller. This. Is the world of Walmart. Costco. Nebraska. Furniture Mart borsch. Rhymes fine jewelry, and the. Burlington, Northern Santa, Fe. Here. Big, margins, are traded for volume with. The increase in volume more. Than making up for the decrease in profit, margins. The. Key here is to be the low-cost buyer, which. Allows you to get your margins, higher than your competitors, and still. Be the low-cost seller of a product, or service. Here. The reputation of, being the best price in town lures. In, consumers. In Omaha. If you, need a new stove for your home you go to the Nebraska Furniture Mart for the best selection and the, best price. Want. To ship your goods across country, the, Burlington, Northern can, give you the best deal for your money live. In a small town and want, the best selection with the best prices you go to Walmart. Out. Of the three business models just discussed, the, low cost buyer and seller offers, the fewest opportunities. For career advancement. The. Continued, stress of having to keep costs, low puts. Great pressure on management, and tends to keep salaries, low yet. These businesses. Still offer better employment, and manage, opportunities, then, do the mediocre, businesses, that do not fit into one of these three categories. Now. That we know the general model for the perfect. Business, to work for let's. Look at their economic, picture a little more closely so that we can tell who is who and what, companies, are our tickets, to that very rewarding career, we. Have selected, three very simple economic. Tests, to, use to help determine if the, company in question is one of those special companies, with, the durable, competitive advantage. Chapter. Two. Three. Quick tests, for identifying, the best company, to work for. Number. One per. Share earnings test. One. Of the quickest ways to check, the economics, of a potential, employer is to, check the company's yearly. Per share earnings figures. This. Is easy to do if the company is a publicly, traded entity. Difficult. To do if it is not. While. No.1 yearly. Per share figure can be used to identify a, company, with a durable, competitive advantage.

Per. Share earnings for, a ten-year, period can. Give us a very clear picture of whether, or not the company has a long-term, competitive. Advantage, working, in its favor, what. Warren looks for is a per, share earnings picture. Over. A ten year period that shows. Consistency. And an upward trend. Something. That looks like this in. Ninety. Nine a per, share earning of one, dollar and thirty, cents. Two. Thousand, one. Dollar and forty eight cents, a. One. One. Dollar and sixty, cents, o -. One. Dollar and sixty five cents, o. Three. One. Dollar and ninety, five cents, o for. Two. Dollars and six, cents o five. Two. Dollars and seventeen. Oh six. Two. Dollars and thirty seven cents. Oh seven. Two, dollars and sixty, eight cents oh eight. Two. Dollars and 95, cents. This. Shows warned that, the company, has consistent. Earnings, that are showing a long-term. Upward trend. Which. Is an excellent, sign that, the company, in question has, some kind of long-term, competitive. Vantage working. In its favor and. Potentially. Would, be a great, company, to work for. Consistent. Earnings are usually. A sign that the company, is, selling a product or a mix. Of products, that don't need to go through the expensive. Process of change. The. Upward trend in earnings, means. That the company's, economics. Are strong enough to, allow it either, to make strategic, expenditures. To, increase the market share through advertising, and an. Expansion, in operations. Or. To. Increase per share earnings by. The use of stock, buybacks. The. Companies that warn stays away from and that probably, offer poor, employment, prospects, have. An erratic, yearly, earnings picture. That looks like this. Ninety. Nine per. Share earnings, eight. Dollars, and fifty three cents, two. Thousand, a loss. Of six, dollars and sixty, eight cents a one. A loss, of one, dollar and seventy, seven cents o to. Three. Dollars and 35, cents o three. Five. Dollars, and three, cents, o for. Six. Dollars and thirty nine cents. O five. A loss, of six dollars and five, cents o six. Three. Dollars and 89 cents, o, seven. A loss, of forty, five cents, o eight. Two. Dollars and fifty cents. This. Shows a downward. Trend. Punctuated. By losses. Which tells warn this company, is in a fiercely, competitive industry. Prone, to booms and, busts. The. Boom increases. Demand which. Increases, prices, to. Meet demand, the company, increases, production, which. Increases, supply which. Increases, costs, and eventually. Leads, to an excess, supply in, the industry, and to falling. Prices. The. Company, once profitable. Now. Starts, to lose money, until.

It Has to cut production and, costs. There. Are thousands, of companies like, this and they're, erratic earnings, which, in the boom years create, the illusion that the company is a winner, eventually. Make the company, a loser. It. Is hard to look like a managerial, superstar. When, every few years the company's inherently, lousy, economics, destroy, your results. The. Company, with consistent. Earnings that show an upward trend is the company that offers, the best prospects. For profitable. Long-term. Employment, and a, rewarding, career, but. The company, with the erratic, earnings. Picture, while, quick, to hire in the boom years is also, quick to fire in the lean years, this. Boom and bust pattern, makes the company difficult. To work for since, there is no long term stability, in its economic picture. Number. Two the, debt test. Another. Sign of a great business to work for is a company, with the absence, of or, low levels, of long-term. Debt. Companies. That make a lot of money don't, need to carry high debt loads, since, the surplus, of cash allows, them to be self-financing. These. Are the companies that make good long-term employers. Because, they have the cash to pay good salaries, and the financial, wherewithal to, weather a recession. With flying colors. The. Loan Odette companies, are easy, to spot as long as you can gauge the debt load of a particular, business relative. To its industry. Is a general rule a debt, load in excess, of five times its net earnings is, a good indication, that, it is not a company, with, a durable competitive. Advantage. High. Levels of debt tell, us that the. Business is in a highly competitive industry, where. Constant. Change has created, high capital demands. Or -, the. Company is highly leveraged, what. This means to us is, that if we go to work for one of these businesses. The, cost of servicing, the debt will, eat up any excess, cash and leave, little for salary, increases and bonuses. It. Also means there will be little excess, capital for growing the business or requiring new businesses, which. Means that there will be little growth in managerial.

Opportunities. And if. The economy goes into a recession these. Will be the first companies, that fire employees, in an, attempt, to cut costs, before they go under. Not. Exactly, the company, you want to be staking your career on. Number. Three the. Gross margin. Test. Another. Way to tell if a company has a durable competitive advantage. Which. Would help make it a great company to work for is, to. Look at the company's, gross profit, margin, to. Figure out the company's, gross profit, margin we. Have to look at the company's income statement. Which. Is a financial, report, for a period, of time that, shows whether the company made or lost money. Specifically. We, have to take the company's, revenue, and subtract. The company's, cost, of goods sold, which. Will give us the company's, gross, profit. Now. If we divide the company's, gross, profit, by. Its revenue, we. Will get the company's, gross, profit. Margin. Let's. Take a closer look. Income. Statement. Revenue. 10,000. Cost. Of goods sold -. 6000. And gross. Profit. 4,000. Now. If, we subtract, from, the company's, total revenue, the amount reported as, its, cost of goods sold we. Get the companies, reported. Gross profit, as an. Example. Total. Revenue, of 10. Million less. Cost. Of goods sold of, 6, million. Equals. A gross profit of 4, million. Then. To get the gross profit, margin we. Take the gross profit, of 4 thousand divided. By revenue. 10,000. Equalling. The gross profit, margin which. Equals. 40%. Warren. Is looking for companies, that have some kind of durable, competitive advantage. Business. That he can profit, from over, the long run which. Make them fantastic. Companies, to work for, what. He has found is that companies, that have excellent, long term economics. Working, in their favor, tend. To, have consistently. Higher gross, profit, margins, than. Those that don't let. Us show you. Gross. Profit, margin of, companies, that Warren has already identified as, having a durable, competitive, advantage. Coca-cola. Shows. A consistent. Gross profit, margin of 60, percent or better, the. Bond rating company, Moody's. 73. Percent the. Burlington, Northern Railroad, 61. Percent and the. Very chewable, Wrigley's, gum 51. Percent. Contrast. These excellent, businesses. With, several companies that we know have poor long term economics. Such. As the in and out of bankruptcy, United. Airlines which. Shows a gross profit margin of 14 percent. Troubled. Automaker, General Motors. Which. Comes in at a weak 21, percent. The. Once troubled, but now profitable. US Steel are not. So strong 17. Percent. And Goodyear, Tire which, runs in any weather but, a bad economy, stuck. At a not very impressive. 20%, in. The. Tech world a field, Warren stays away from because. He doesn't understand, it, Microsoft. Shows. A consistent. Gross profit, margin of, 79%, while. Apple, comes in at 33%. These. Numbers, indicate that, Microsoft, produces, better economics. Selling operating, systems, and software then. Apple, does selling, hardware, and services. What. Creates, a high gross profit, margin is the company's. Durable. Competitive, advantage. It. Allows companies the, freedom to price the products, and services, well. In excess of their cost of goods sold. Without. A competitive, advantage the companies have to compete by lowering the price of the, product, or service they are selling, which. Of course lowers. Their profit margins, and therefore, their profitability. It. Also lowers, their ability, to raise salaries and, give big bonuses, and it, diminishes the company's, capacity to, expand capital, on new businesses, and to survive a recession. In. Summary. There. Are other tests, that we can run to help us determine if the company, in question has. A durable, competitive advantage. And we. Outline, those tests, in great detail, in our book Warren, Buffett and the interpretation. Of financial, statements. But. For the quick and dirty the, three tests described, in this chapter will. Serve you well when we need to assess whether or not the company offering. You a job is one. Of those great businesses, that will take you down the path to. A successful and, very rewarding, career or if. It, is a mediocre, business, that will enslave you to a life of low wages few. Opportunities. And little. Or no job security. While. It is within the realm of possibility. For a great company, over time to, turn into a media. This. Happened, to the newspaper, industry it. Is a very rare event for, a mediocre business. To turn into a great one, so. If you find yourself working for a company with poor inherent. Economics. It is better to get out now than, to stick around year, after year waiting, for things to change. Step. 2.

Delegate. Warren. Discovered. That, his Berkshire, grew larger, and larger, and was, involved, in more and more diverse businesses. Delegating. Authority, became a necessity not only for his sanity but. To ensure that his companies, were competently. Run and that, the managers, were happy running them if. There, is a single, management skill, that is uniquely, Warren, it is. His willingness to delegate. Authority way. Beyond boundaries, that most CEOs, would be comfortable, with. Let's. Explore, Warren's, philosophy. On delegation. And how, it has allowed him to grow Berkshire, from, a small regional, textile, manufacturer. Into. The giant, multinational. Conglomerate. That it has become today. Chapter. Three, rules. For delegating. Authority. We. Delegate, almost. To the point of abdication. Warren. Buffett. Warren. Learned that, to run and grow business, one, must learn the art of delegating. Authority. The. Natural, inclination is, to try and control, every, vent and the people involved. To. Micromanage, the task venture. Business. But. Micromanaging. Too many tasks. Or businesses, leads. To too many balls in the air at once and if, you drop one you drop them all. Micromanaging. Leads to neglect. Whereas. Delegating. To a competent, manager, who is focused on just one job. Means a more thorough understanding of. The task and a, more careful execution. Of the job. Warren. Owns more, than 88, diverse, businesses. And he, has turned over the management of these companies to 88, highly. Competent, CEO, managers. Berkshire. Companies, like Johns Manville. Benjamin. Moore Fruit. Of the Loom, Clayton. Homes and, Jordans. Furniture, are all, run by CEOs, who have complete, control over the businesses. When. Berkshire, bought Forest, River Warren. Told its founder, and CEO Peter, legal, not. To expect to hear from him more than once a year. Warren. Even goes so far as to tell the CEOs, of Berkshires, companies, not, to write up anything, special, for him when. The claim company, CEO. Grady. Rozier, phoned. Him to request approval, to buy a couple of new company, jets Warren, replied, that's. Your decision it's, your company to run. Warren. Feels it would be sheer folly on his part to think he could competently, manage, each and every one of these businesses, himself. To. Get the job competently. Done Warren, delegates, not. Just a task but, the entire job as he. Says he, delicates, almost, to the point of abdication. Warren. Has developed, a set of rules to help him delegate, successfully. Rule. Number one. Every. Business culture, is unique, from. The smallest of firms to the largest of corporations. Workers. And managers, have, developed, highly specialized. Skill, sets that allow, them to accomplish their tasks, as a. Manager, Warren, has learned that he cannot perform, these highly, specialized, skill sets even remotely as well, as they can, he. Feels that his employees are the experts, and should, be allowed to do what they are good, at doing without his interference. He. Also feels, that if he has job as a manager, it. Is to inspire, his employees, to greatness at their jobs, think. Cheerleader, not, slave driver. Rule. Number two. Warren. Has discovered that competent. Managers, like to be left alone to run their, businesses. As they see fit. Warren. Encourages, his managers, to continue, to think of their businesses, as their own, the. Result is, they, work harder, and make sure, that the business does well. For. Them it's a matter of pride. Rule. Number three. Warren. Realizes. That in order for complete, delegation. Of authority to, work it, is necessary, not only that the managers, be hardworking. Passionate. And intelligent. About their businesses, they, must also have a great deal of integrity. In, other. Words they, must be as honest, as the day is long if they. Are not honest, they. Just might end up using their hard-working, passionate. And intelligent, ways to, rob us blind. In. Summary. Warren's. Rules of delegation. Are fairly simple, each. And every business is unique, your. Employees, are better at doing their individual, jobs than, you are if we. Want the business to grow we must delegate. Authority. Managers. Like to be left alone to run their. Businesses. And the. Managers, we hired need to be hard-working intelligent. And. Most, important, honest. Or. As, the, late great Berkshire. Manager, mrs., B once said regarding. The secret, to her success in, the furniture business sell. Cheap and tell the truth. Step. 3. The right manager, for the job. Once. The right business, is found or acquired and the, need for delegation. Understood, the. Next job is to hire the right manager. For. Warren the, characteristics. Of the right manager, just, happened, to be the managerial, qualities. That we should cultivate in ourselves let's. Take a look at just what those characteristics. Are. Chapter. 4. Where. Warren, starts, his search for the right manager. Management. Changes, like, marital, changes, are painful.

Time-consuming. And chauncey. Warren. Buffett. This. Is a lesson that Warren learned the hard way by. Buying businesses, that were available at, a bargain price but, were poorly run, his. Early investment. In Dempster, Mills manufacturing. Which, we'll discuss in just a minute is the, perfect, example of having to replace management. Several, times before finding, the right manager. Was. It painful yes. Was. It time-consuming. Yes. Was. It expensive. Very. Was. It necessary, most. Definitely. The. Key to making managerial. Changes, is to ask is, it absolutely. Necessary, if the. Answer is no we, are out of our minds to risk financial. Ruin by bringing in someone, completely. New to take over. But. If the business is losing money and we, think that it is due to the manager, and not to the underlying, economics. Of the business then. It is definitely, time for a change in management. Warren. Tries to avoid managerial. Changes. When. He advertises, for new companies to buy through investment, bankers, or his annual letter to Berkshire shareholders he. Insists, that the business come with competent, management already, in place. He. Requires, the key managers, of each of the companies he owns to write him a letter. Telling him who in the company would succeed them if they were to die tomorrow. These. Letters are updated, each year this. Way if something, does happen to, one of his managers time, won't be wasted, in trying to find a replacement. Warren. Gets manager, who is already familiar with the business and was. Hand chosen by the person, who best understood, the company, its people, products. And customers. If. Warren, has to look outside a company, for a manager, he, usually turns to people he has already worked with who. Have a proven track record or. He. Will ask his business associates, for a recommendation. This. Brings us to the short but remarkable, story of Dempster, Mills manufacturing. And the. Remarkable, Harry bottle. Dempster. Mills manufacturing. Was, a windmill, and water irrigation company. In Nebraska. That Warren bought into because, the stock was selling at 25%. Of its Book value. Once. He had stock in the company and had taken a seat on its board of directors he. Realized, that the reason that the company wasn't doing very well was, that it was poorly managed, so. He convinced, the board members to bring in a new manager, whom. They chose, the. New manager, proved to be even more of a disaster than, the manager they had replaced in. Desperation. Warren. Turned to his friend and counsel Charlie, Munger. He. Asked if Charlie, knew of any managerial, talent, who could save the day. Charlie. Suggested, the name of a man whom, Warren would, later refer to, as the. Remarkable. Harry bottle. Harry. Was. What is known as a turnaround, artist, a manager. Remarkably, skilled at fixing, failing, businesses. At. Warren's invitation. And for a $50,000, signing, bonus Harry, moved from warm sunny. California. To, bitterly, cold Nebraska. Where, he stepped in as the new CEO of Dempster.

The. First thing Harry did was reprice. The inventory, of spare and replacement, parts. Dempster's. Products, needed constant, upkeep which. Meant that the company, did a big business, in replacement, parts, some. Of the parts the Dempster used could be bought at any hardware store but, some were unique, to Dempster, and couldn't, be bought anywhere else. One. Of the errors that Harry discovered, was, the Dempster, had been marking, up all of its parts at the standard, forty, percent, both. The common, and unique ones. Harry. Tripled, the price of the unique parts, the Dempster, had a monopoly on and cut, back on the inventory, levels of the common parts, thereby. Increasing. Revenues, and freeing, up capital. By. Year's end Dempster. Was back in the black and on its way to becoming, one of Warren's, winning, investments. 20. Years later Warren. Had another managerial. Problem, with one of Berkshire, Hathaway's smaller manufacturing. Businesses, and guess, who he called the. Remarkable. Harry bottle, of course. The. Lesson here is this, change. Managers, only, when necessary. Promote. From within if, possible, and if. You can't look. For talent with a proven track record when. All else fails call. In the remarkable, Harry, bottle. Chapter. 5 Victor. Or victim. Warren. Secret. For picking a leader, out of the pack. Would. You rather be the world's, greatest lover, and have everyone, think that you are the world's, worst lover. Or would. You rather be the world's worst lover and have everyone, think that you are the world's, best lover. Warren. Buffett. Warren. Theorizes. That all people, have either an inner or outer scorecard. We. Are true to ourselves or. We conform, to what we think the world wishes, us to be a, true. Leader follows, the beat of his or her own drummer, while. A bureaucrat. Bends to the perceived, wishes, of others. It. Is hard to stand alone when the winds of popular, opinion are against, you, warns. Ability, to do this has made him super, rich, he. Buys stocks when, everyone, else is afraid and, sells.

When Everyone, else is enthusiastic. He. Has spent his life going. Against the herd, free. And independent, thinkers, like Warren Buffett are never, victims. They. Are masters. Of their own destiny, in. Discussing. The difference between Victor, and victim, mentality. Psychologists. Talk about the locus of control. If. You have an internal locus of control you. Blame yourself when something goes wrong you. Believe that you are in control of your fate and that you have control, of the outcome, and if. You fail it's because. Of your own actions and, no one else's. But. If you have an external, locus of control and, something, goes wrong you, blame everyone, but yourself as. A. Young man Warren, was deeply, influenced, by his father Howard. Who. Had a strong, internal, locus of control. When. The Great Depression hit. Howard, started a successful, new business, when. He disagreed, with what was going on in government he, got himself elected, to Congress, this. Taught warned, that he not, the world was, in control of his life and that he not, the world would, determine, what his life would look like. Having. An internal locus of control is, not, always easy. When. You win it. Was you who won it but, when you lose it was, you who lost it, there. Is no scapegoat, no. One other than yourself, to blame which. Can be crushing. Warren's. Failed, investments. In two, Irish banks, and his overpayment for ConocoPhillips. Are his, failures, and his alone and he, learned from them but, he, makes a special, point not to dwell in his failures, for too long by. Not dwelling on them he, avoids the crippling, fact that failure can bring to someone with, an internal, locus of control. The. Great lesson here is this, people. With an internal, locus of control take. Responsibility. For their failures, and in, the process, learn from their mistakes. They. Are in control of themselves they. Are in control of their world, they. See problems, as, challenges. To be conquered, think. Bill Gates. People. With external, locus of control don't. Believe that they have the power to solve their problems, they. Believe that they are the victims of circumstances. That are beyond their control. Think. Wall Street. Which. View do you think leads to riches, and greatness. Which. Type of person, would have the strength to lead a company or nation, through hard times are, we. Viktor or victim. Victors. Make great managers, and leaders because. They can, take responsibility, and solve, problems. Victims. On the other hand are too busy inventing, excuses and, blaming the world to. Take up challenges and. Solve, problems. Chapter. Six work. At a job you love. There. Comes a time when you ought to start doing what you want take. A job that you love you. Will jump out of bed in the morning I think. You are out of your mind if you, keep taking jobs that you don't like because, you think it will look good on your resume, isn't. That a little like saving, up sex for your old age. Warren. Buffett. In. The. Quest for wealth we, often, end up in jobs or professions, that we don't like but we stay at them day after day year, after year, until. Finally we have run out of time we delude, ourselves into, believing that a day will come when, we will finally do what we dream of doing, meantime. We, spend a life in misery, which. We bring home with us each day to share with our loved ones. This. Type of suffering in the name of a buck usually. Starts early in life and is often predicated. On need. However. Sometimes. Its foundation, is nothing more than greed. Warren. Believes that not doing what we love in the name of greed is a very poor management, of our lives it. Makes work drudgery, which, drags, us down and, destroys. Our spirit, and though. We may be making a lot of money the. Nine plus hours we are at work we, are miserable in. The. World of business the people who are most successful are, those who are doing what they love, money. Isn't what drives them, what. Drives them is the same thing that drives a great ballplayer or, a great, musician a love. Of what they do be. It a computer programmer, a Salesman. A carpenter. A nurse, a butcher. A chef, a policeman.

A Doctor. Or a lawyer, the. People who rise to the top are those, who love what they do and, they. Are usually the people who make the most money in their profession. Loving. What you do and earning, good money almost always, go hand in hand. Warren. Believes, that when we employ people to work for us we, must try to find people who are going to love what we hired them to do these. Are the people who will take pride in their work, inspire. Their fellow workers to greatness and become. The driving force behind the business. They. Are also the people who have made men like Warren look, like geniuses, in. The. Management, of our lives the, rule is love. What you do in. The, management, of our business, the rule is hire. People who love what they do, both. Will, lead you to the gold. Chapter, seven put. A winning sales team, together I. Don't. Want to be on the other side of the table from the customer. I was. Never selling, anything that I didn't believe in myself. Or use, myself. Warren. Buffett. Warren. Learned early, on that, the best salespeople, are those who believe in their products, who. Have a passion, for the products, that they are selling. If. Someone believes in and has a passion for the products, he is selling, you. Can bet that he is very interested in everything about, that product, from. The material, it's made of, to how it's manufactured, to. What are its best uses, even. More important, the, salesperson, will know the, best uses, of the product. Such. Knowledge impresses. Any customer. This. Is a quality, that Warren, is looking for in his managers. People. Who believe in their products, and businesses, so much that they love to go to work, he. Doesn't like hiring, managers, who are only interested in making money and who, would rather be somewhere else. Many. Of Warren's top managers, have spent the vast majority, of their working lives at the same company and continue. Working for them even though they are millionaires, many times over. Publisher. Stan Lipsy of the Buffalo, News has, been with the company for over 30 years. CEO. Irv blumpkin, now, in his 50s, has, been on the payroll of the Nebraska Furniture, Mart since, he was a teenager. Both. Of these super managers, are wealthy enough to retire in the morning but. They keep showing up to work and the, reason they. Love what they do. The. Lesson here is this if. We. Want to put a winning sales team, together we, must find people, who believe in and, our passion, about the products, that we are asking, them to sell a. Salesman's. Passion, for the products, he is selling, as something that Warren has learned he, can bank on. Chapter. 8. Obsession. Our. Pro. For occupational. Fervor is the, Catholic tailor who used his small savings, of many years to, finance a pilgrimage, to the Vatican, when. He returned, his parish, held a special meeting to. Get his first-hand, account, of the Pope tell. Us said, the eager faithful, just. What sort of fellow is he our, hero. Wasted, no words. He's, a 44, medium. Warren. Buffett. In. Warren's, world perfect, managers someone, who gets up in the morning thinking about the business and at night is dreaming about the business, as he. Says, obsession. Is the price for. Perfection. Warren's. Obsession, led. Him to memorize moody, stock manual, starting. At a and working, his way through Z. One. Of his favorite, all-time investors, was a guy with very, little education who, became so obsessed with water companies, that. He could tell you how much money they made every time someone, flushed the toilet. Guess. What that guy made his millions investing. In water. Companies, of course and. It. Is obsession, that Warren is looking for in his employees. He. Once said that if he could ask only one, question of. His interviewees, for a job at Berkshire, it would, be how obsessed, they are with what they do, his. Archetype, of the perfect, manager, was the famous mrs. B who. Started, and managed the Nebraska, Furniture Mart with her family, until, she reached the ripe old age of a hundred and four, there. Was no keeping the old girl away from the store which, was the love of her life, in the. 60 plus years she ran the business she. Took only one vacation, and was, miserable the entire time because she was away from her, store. She. Said that when she went home at night she couldn't wait for morning so she could get back to her customers. Her. Only hobby was, driving, around Omaha checking. On the competition. All. The warns top managers, are men and women obsessed. Tony. Knicely CEO. Of Geico, has worked for the company since, 1961. And has. No idea what, he'd do if he ever retired. Talking. About a Lu, Chi founder. And chairman of flight safety, Warren. Said I'll understood. What I was about I. Understood. What, flight safety was all about and could, tell that he loved the business. The. First question, I always ask myself, about somebody, in his position, is, do. They love the money or do they love the business but. Without the, money is totally, secondary.

He. Loves the business and that's what I need because, the day after I buy a company, if they. Only love the money they're gone a. Simple. Question that Warren uses, to determine a manager's, passion, for the business is to. Find out about their early drive, to be in business. He. Says that we can tell more about how successful a, manager, is going to be by, whether or not he. Or she had a lemonade stand as, a child, than, by where they went to college an, early. Love of being in business equates. Later in life to being successful in. Business, in. Warren's. World it is not so much how smart. We are as it. Is how obsessed, we are how. Much we love what we are doing if we, happen to be smart - well, that is just icing on the obsessively, delicious. Cake. Chapter. 9 the. Power of honesty. We. Also believe, candor. Benefits, us as managers, the. CEO who misleads, others in public may, eventually mislead. Himself, in private. Warren. Buffett. Warren. Says that a manager or an employee who, is truthful, with others about his mistakes, is more. Likely, to learn from them when. A manager or employee ignores. His mistakes, or is always trying to blame someone. Or something, else for own blunders, then. He will more likely lie, to himself about, other important, things as well. Warren. Has found this to be especially true, in all matters of accounting, and believes. That a willingness, to phuddle with one set of numbers will, eventually, lead, to a willingness, to misrepresent. All the numbers or. As, Warren, says. Managers. Who always promise, to make the numbers, will, at some point be, tempted, to make up the, numbers. Warren. Has an underlying, theme of truthfulness. In his personal, and business, lives that, he describes, as one of the key character. Traits to aspire, to as he. Says you. Don't want to be in business with people who need a contract. To be motivated. To perform, in, the. World of business a manager. Who is as honest, as the day is long as money that is already in the bank. Chapter. 10. Manage. Costs. The. Really good business manager doesn't, wake up in the morning and say this, is the day that I'm going to cut costs, any more. Than he wakes up and decides to, practice, breathing. Warren. Buffett. Profit. Is the lifeblood of a business, lack. Of profit, is the death of a business, the. Only way to make a profit in business is. To, have lower costs. Than the prices, you are charging, for the products, that you sell, the. Difference between the two is called a profit. Margin, there. Is no other way, to make money no. Other equation. You. Either make, a profit, or you don't and if. You don't make a profit you, won't stay in business very long. If. You make a lot of profit you. Can do more than just make a living, you can become, rich as. Managers. Of business, we. Have two main goals. Inspire. Our sales force to sell as much of the product as possible at the highest possible price. And, inspire. Our manufacturing. In buying teams to. Produce or acquire, the products we sell at, the, lowest possible prices. It. Takes two to tango and it takes two to make a profit, the. Task of keeping costs, low is the most important, because. It determines the, pricing, of the product. Lower. Costs. Mean that we can sell the product at a lower price which. Will make the product more desirable, and easier, to sell. The. Way to determine, whether your managers, are going to be cost conscious. Is to, look at how they handle, the seemingly, little, costs. Warren. Says if. Managers. Aren't disciplined, on the little things they. Will probably be undisciplined, on the large things as well. He. Likes to tell the story of Benjamin, Rosner, the. Owner of associated. Cotton shops who. Was so fanatical, about, keeping, costs low that. He once counted the sheets on a roll of toilet paper to, make sure that his vendor wasn't cheating him. Warren. Also likes to tell about Tom Murphy, CEO. Of capital, city's communications. Who. Was so cost conscious. That when he had his office building, painted he, didn't paint at the back wall because, no one would see it, Tom. Considered, public relations, and legal departments, to be frivolous, expenses. He. Figured that if, and when these services, were needed freelancers. Could be hired at a fraction of the cost and. When. He merged capital, cities with the ABC, television, network the. First thing he got rid of was, ABC's, private. Dining room, Warren. Love, Tom. Another. Aspect, of the cost-cutting, equation. Deals with personal savings. If. We are in a 40%. Tax bracket, we, have to earn $10, to, have six dollars to spend. So. If we reduce our living costs, by six dollars it is, actually, the same as making $10, and getting to save six dollars of it, which can then be invested. As. Benjamin. Franklin, said if. You, know how to spend less than you get you.

Have The Philosopher's, Stone, the. Philosopher's, Stone was. A tool alchemists. Used to turn lead into gold in the. Early part of Warren's life he, was fanatical. About keeping, his living costs low which. Is why he drove an old VW, Beetle, long after, he became a multimillionaire. The. Money he had saved driving. A cheap car gave, him more money to invest to. Make himself even, richer. The. Bottom line here is this, when. Warren looks for a manager, he, wants someone who is cost conscious. As a way, of life, not. Just when the business is starting to fail. Cutting. Costs, is the fastest, and easiest way to increase. The bottom line of both, our businesses, and our, personal, fortunes. Which. Means that it is the easiest way to get rich and. Easy. Is always, a good thing when it comes to making money. Chapter. 11. Have. An eye for, the long term. There's. Really a lot of overlap, between managing. And investing, being. A manager, has made me a better investor, and being. An investor, has made me a better manager. Warren. Buffett. Warren. Is a long-term, investor. His. Favorite, holding period, for companies, with exceptional. Economics, working, in their favor is forever. This. Long-term perspective, is the fountain, that produced, his great wealth but, most. Managers, of businesses tend, to have a time horizon of, under a year, they. Live in a world defined, by quarterly, and yearly results. If they. Surpass quarterly, or yearly projections. They'll, get fat bonuses, and promotions. Failed. To bring in quarterly or yearly projections. And head, start to roll, this. 10 to keep management, focused, on the short term. The. Short term focus almost, kills any long-term, planning. On the part of management. Managers. Are driven to make the short-term numbers, at the cost of long-term, planning, they. Often have no plans, to exploit, future, opportunities. Nor. Do they plan ahead for a potential, recession. This. Is reactive, management. As opposed, to the, proactive. Management that, warm practices. Warren. Learned from investing, that the long term perspective that, had served him so well personally. Would, also serve, him well in businesses. One. Of the first things that Warren, asks. His managers, to do when they join his firm is to, stop worrying about the short-term ups and downs of the business, and focus, on making the business strong, and viable for, the long term. Another. Lesson that Warren learned is that, any management's. Intense focus, on the short-term tends. To make those managers, poor, allocators. Of capital. Which. Creates, two very, big problems, the first. Is that management, may keep throwing good money after a, mediocre business. Long. After, it's time to put that capital, to use elsewhere. The. Second, is that. When management tries, to allocate, capital outside. Its core business, it. Almost, always ends. Up buying a short-sighted, promise, of prosperity. Headed, inflated, price. Warren. Often, cites coca-cola's. Failed venture, into the movie business as, a perfect. Example of a great business, throwing money after. A bad one. When. Warren bought into Berkshire Hathaway, it was a mediocre business. That. Was spending more money than. It was earning, in, a desperate attempt, to compete, with foreign textile. Manufacturers. After. Warren, acquired control, he. Had the insight, to see that. It was a dying business, so. He stopped spending Berkshires.

Working, Capital on the textile, business. And used it to acquire an insurance, company, which, is a better business, from a long-term perspective. How. Did he know that that textile. Business, wasn't going to make it and that insurance. Was going to be the better business. Warren. Had spent a great, amount of time studying, a large number of businesses, and knew, what a great long-term, business looked, like, this. Is also how he knew that the textile, company, was a lousy business and that, no matter how much money he threw at it its underlying, economics. Would never improve. Eventually. Berkshire. Had to close its, textile, operations. But. By then its insurance. Operations, were, well on their way to, helping Berkshire, blossom, into the financial, powerhouse, that it is today. The. Managers, who ran Berkshires, textile, operations, would have spent the company's, last dime trying to stay competitive, with foreign, manufacturers. It. Was, lucky for Berkshire, shareholders, that. Warren, had the clarity of vision to, see what the future of the textile, business looked, like and the, foresight, to invest the company's working capital, in a company, that had far, better long-term prospects. Ultimately. Warren. Learned when. He looks for a great manager, he, is also looking for a great investor. Whose. Responsibility. Is to invest, the firm's money in people, products. And new, businesses. Always. With, the long term perspective in mind. Chapter. 12 how. To, determine salaries. If. You have a manager, you, want to pay them very well, Warren. Buffett. Great. Managers, are like great football, coaches, they. Are few and far between. How. Do you measure whether or not a manager is great. Not. All businesses, are the same some. Business have mediocre, economics. While others have exceptional. Economics. Those. With exceptional, economics, working, in their favor are often. The types of businesses, that make, even a lousy manager look good on the. Other side even, an exceptional, manager, may, not look too, spectacular. If he or she is managing a mediocre, business. How. Do we tell the difference. Warren, examines. How well a manager, is doing by, measuring, the managers, performance, against. Others, in his industry. For. Example if. We, own a business that is earning 20%, on shareholders, equity we. Might think it is great and hand our manager a big bonus check at the end of the year, however. In truth, we, may not be doing as well as other businesses, in our industry, do. We pay our manager, a bonus, for giving us a mediocre result, compared, to others in our own industry. For. Warren the answer is no. Unexceptional. Performance, with, an exceptional. Business does, not inspire him, to dole out exceptional. Bonuses, at the end of the year. The. Opposite, is true of, a business, with mediocre, economics. If. Our business is earning 5% on, equity, we. Might correctly, conclude, that compared. To all other businesses. It is, on the low end but by. Comparing, it to other businesses. Within, our own industry, we. Might find that it is on the high end which. Would indicate that our manager, is keeping, us ahead of the pack and for. That he should be handsomely, rewarded. Warren. Is a big believer in performance-based. Pay. As long, as it is based on the value, added by the manager, and not, the inherent, economics. Of the business in. Warrens. World bonuses. Are paid according, to. How much the manager truly, improves, the underlying, economics.

Of The business not. How, much the underlying, economics. Enhances, the perceived, performance of, the manager. Step. 4, motivate. Your workforce. Warren, realized, early, on that, if he was to delegate, to the point of abdication. Motivating. His managers, to achieve exceptional, levels, of performance would, be his primary, function. Once. He found the right businesses. And put the right managers, in place all, he, had left to do was motivate, his managers, to, be all that they can be in. This. Portion of the audio book we. Present the management, motivational. Skills that, Warren uses. We. Explain what he learned from Carnegie, and others and how, he adapted. This into a winning management. Style. From. First impression. To using praise to, understanding. The dangers, of using criticism, to, the subtle use of suggestion. Warren. Is masterful. In inspiring, and, influencing. His managers. We. Begin by examining his. Use of first, impression, to set the stage. 13, make. A good first, impression. When. You meet someone for the first time, begin. The encounter, in a friendly way. Baro. Ralph was, a successful. Dallas, jewelry executive, heading, up JC Penney's, retail, jewelry division. Then. In the spring of 2009, she got, a call from a friend in the business asking. Her if she'd be interested in interviewing for the job of CEO, of, Berkshire's. Helzberg. Diamonds, shops. Hell's. Berg's, is a ninety-year-old, chain, of 240. Jewelry stores and the. Life's work of diamond. King Barnett. Helzberg. Before. He sold out to Berkshire. Beryl. Had long admired Warren, and his company, Berkshire Hathaway, she, knew the quality of the people who worked for him the, multitude, of great businesses, that he owned and his, stellar reputation, as, an enlightened CEO. She. Knew that his managers, sang his praises and, thought, the opportunity, of working for such a first-rate, outfit, might, be the chance of a lifetime. Merely. Talking, to Warren would be a highlight, of her career, what. She did not expect was to see Warren picking her up at the airport himself. In his, gold Cadillac. As. Nervous, as Beryl was Warren. Immediately. Put her at ease, she. Found him witty and charming after. Spending. A couple of hours at his office, answering, questions, about her vision for the jewelry business, Warren. Took her to a delightful lunch, at his Country Club gave. Her a tour of his hometown and then. Offered her the job. She. Thought it over for a couple of days and then, accepted. And has been happy ever since. Farrah. Says that, even after just a few months on the job she. Already feels like an adopted, member of Warren's, extended. Family. Warren. Recognizes. The importance, of making first encounters, friendly. He started his meeting, with Beryl by meeting her and offering, her a ride. He. Was light funny, friendly. And eager. To put her at ease, he. Took her to lunch and listened to her her. First impression. This. Is a guy I would love to work for and. Warren. Continues, to make her feel like a special member, of the Berkshire Hathaway family. She. Has said that her greatest fear is, disappointing. Him. Imagine. If Warren had done just the opposite, what, if he hadn't picked Beryl up at the airport, what. If he had made her take a cab instead. Imagine.

He Didn't even take her to lunch or listen to her her. First impression might, have been that Warren was a distant, billionaire, who, only cared about whether, or not she would make him more money the. Kind of boss she wouldn't like working, for and if. That had been the case she. Probably wouldn't. Have taken the job. The. Rule is simple if. You want to get your way, start. Your encounters, with other people, in a friendly way as Warren. Has discovered, it's. The only way that pays. Chapter. 14, the. Power of praise. We. All have a deep and honest, need to be appreciated. Warren. Recognizes. That we all have a need to feel important. It's. Almost, biological. Early. American, psychologist. And philosopher William. James once, said the. Deepest, principle, in human nature is the need to be appreciated. This. Is not lost on Warren. One. Of the great early managers, whom, Warren studied, was, Charles. Schwab, the. Former head of the United States steel company. Schwab. Was. The first superstar, manager. And the first CEO to be paid a million dollars a year. What. Made Schwab the most revered, manager, of his day was. Not his knowledge of the steel industry. Which. Even he admitted wasn't, extensive. But. Rather his ability, to inspire, enthusiasm. In his employees. He. Did that through appreciation. And encouragement. Schwab. Said I consider. My ability, to arouse, enthusiasm. To be my greatest asset and the. Way to develop, the best that, is in a person, is by, appreciation. And encouragement. There. Is nothing that kills, the ambitions, of a person, as much. As criticisms. From superiors, I never. Criticize, anyone, I believe. In giving people incentive. To work so. I am anxious to praise but loath to find fault. If. I like anything, I am Hardy in my appreciation. And Hardy, in my praise. Schwab. Noted, that, his boss Andrew, Carnegie, had, even gone so far as to praise, his employees, publicly. As well as privately. Warren. Follows, Schwab's advice, as if. It were Creed, praising. Employees, and managers, for the small things and gushing. Over them for the big he. Is the consummate, cheerleader, and his, employees, biggest, fan, he. Never misses a chance to praise his managers, in private, or at Berkshires, annual, meetings and in. Its annual reports. Warren. Learned from Schwab that, if he praised people, for the little things they'd. Give him even bigger things to praise them for later on down the line. For. Warren praise, truly. Is the gift that keeps on giving. Chapter. 15, the power, reputation. Give. Your employees a fine, reputation, to live up to and praise, them every chance you get. Warren. Learned the importance, of giving your employees, a fine, reputation, to, live up to from, Carnegie. Who.

Stressed The point to his readers by telling, the following, story. A manager. Worked with, a longtime, trusted, older employee who. Had become bored and lackadaisical. About his work, resulting. In a lowering, of the workers craftsmanship. And productivity. The. Manager, reviewed his options, he could, fire the older employee, but. Then he'd have to replace him he. Could threaten him with being fired but. The worker would probably resent him. Instead. He chose to talk to the employee one-on-one, friend. A friend in the. Course of the conversation, he. Told the worker he, was one of his best employees, and that. He was an inspiration to other employees, and that, many customers, in the past had complimented. His craftsmanship. But. As of late he said the. Employees, work had slipped the. Manager, said he was worried, about him and was wondering, if there was anything he could do to help, how. Did the worker respond. Realizing. He had a fine re

2020-05-20 09:16

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