Legendary investor and CEO of Berkshire Hathaway Warren Buffett believes that long-term success depends not only on individual actions, but also on smart management decisions. And making these decisions requires modeling managerial behavior based on that of the best managers.
This manager in Buffett’s life is Tom Murphy. Although Murphy’s name is not so popular, he turned Capital Cities Communications into a telecommunications empire. In 1995, he sold the company (then Capital Cities / ABC) to Disney for approximately $ 19 billion.
Murphy, 97, a longtime friend of Buffett’s, wrote the preface to Berkshire Beyond Buffett.
In the preface, Buffett tells author Lawrence Cunningham: “Most of what I know about management, I learned from Murph. I’m angry that I didn’t apply it much earlier. ”
Murphy has taught Buffett many lessons in best management practices that the Omaha Oracle has adapted to the needs of his own companies.
One of these lessons is to loosen managerial control and provide more freedom of action and decision-making opportunities for employees.
“At its core, business is a series of small decisions combined with several big decisions that are made every day,” Murphy said.
In other words, good leaders make several big decisions that determine the desired strategic direction of development, and then give their teams the opportunity to achieve organizational goals through a series of small daily decisions. To this end, employees need considerable autonomy in their actions.
The ability to have control over what you do, when you do it and with whom is one of the main elements on which the motivation of employees and their performance at work depends.
To achieve this employee autonomy, leaders must come down from their ivory towers and create the right environment for people to make their own decisions.
Praising Buffett, Murphy wrote in the Berkshire Beyond Buffett: “We are both in favor of the philosophy of decentralized governance. This includes carefully recruiting key people, shifting decisions down the organization, setting common principles and resisting the temptation to get involved in the details. ”
Murphy warns that decentralization can come at a price, which can be high if managers do not hire the best people and delegate power based on their strengths.
Trust-based, decentralized workplaces can also save the company money, Murphy said. This is due to the fact that such a workplace does not need multiple levels of management, arranged in an inefficient hierarchy and controlling all decisions.
Murphy’s last lesson in delegating authority is that this process must always go hand in hand with responsibility. In other words, managers must be held accountable for their behavior, because delegating without responsibility is a recipe for disaster.
