There are five segments to Warren Buffett’s Management Principles:
- Pick The Right Business: own, manage, or work for the right business, you need to work for the one with the best economics.
- Delegate Authority: learn how to give up control safely.
- Find A Manager With The Right Qualities: integrity, intelligent, and a passion for the business. You need to cultivate this in yourself, and in the right candidates.
- Motivate Your Work Force: you need to motivate your managers so that they are all that they can be within your company.
- Learn The Managerial Axioms For Different Problems: there are axioms for handling dishonest employees, and keeping costs low.
4. Motivate Your Work Force: Management motivational skills that Warren uses, you need to adapt what Carnegie has taught.
Make A Good First Impression: you should begin the encounter in a friendly way. Warren knows that first encounter should be friendly, and be light. You should start with your encounters in a friendly way, because it is the only way that pays.
The Power of Praise: William James said that the need to be appreciated is essential. Charles Schwab was the first superstar manager. What made Charles Schwab a revered manager? Charles Schwab was encouraging! You need to arouse the greatest enthusiasm, you need to appreciate and encourage. You should give people the incentive to work. Schwab noted that Andrew Carnegie always praised his employees, and was a cheerleader, and would praise his managers in private. If you praise them for the little things, they will give them better things down the line.
Give Your Employees a Fine Reputation To Live Up To: the manager worked with a longtime trusted employee, and resulting in decline of productivity. Never miss an opportunity to remind your managers about their quality contributions. You should build up the expected reputation of your managers. If you play up the importance of giving people a fine reputation to live up to, you will motivate them. So Warren has some advice for Bono: don’t appeal to the conscience of American on African aid. If you appeal to a sense of right or wrong, it will not work, because we do not want to feel guilty. Bono should speak to America’s sense of greatness. America put a man on the moon, we should turn to America to save Africa. If you give a person a fine reputation to live up to, it is more effective. Using guilt is not productive.
The Dangers of Criticism: using criticism is ineffective because it arouses resentment. Uninvited criticism is something we hate to hear. We should not provide uninvited criticism of others. Instead of critcizing managers, you need to pay attention to what went wrong, and learn from it. As long as managers are making intelligent risks. We all make mistakes, and that you should learn from your errors but not make such a mistake subsequently.
Quality control of products goes hand in had with managing (growing and encouraging) the quality of your managers and employees. I really like what you’re saying about about praise, motivation, and criticism — teaching by pointing out the positives of someone’s work seems to always be more affective.