Warren Buffett on hiring. What Buffett focuses on when hiring his CEOs and managers.
Difficult to Teach a New Dog Old Tricks
This unconventional quote explains
Buffett’s approach to hiring. He values age and experience greatly – unlike many others, Buffett is not afraid of hiring older mangers. Rather, he says, ‘It is difficult to teach a new dog old tricks.’ Many Berkshire managers are past 70 – and their experience allows them run their companies even better than when they were young.
For example, when Buffett invested in FlightSafety International, Albert Ueltschi was already past 70. Buffett saw this as a great value add in hiring Ueltschi, as he had a lifelong affair with aviation, piloted the Charles Lindbergh, and was extremely experienced in the business. His years of experience would allow him to run FlightSafety International very well.
One of his letter to shareholders, Buffett says that CEO selection is the most important. This is because no one is senior to the CEO, and of the performance of everyone in top management, the performance of the CEO is the hardest to measure. This is because the metrics for measuring a CEO’s performance are often vague and easy to manipulate. Furthermore, since the relations between the CEOs and boards are traditionally congenial, boards may not be able to serve that regulatory role.
Thus, the solution to the CEO problem is to take extreme care in identifying CEOs who do not require structural restraints to perform well.
Consequently, Buffett gives his CEOs a simple set of commands – they only need to run their businesses as if they are the company’s sole owner, the company is their only asset, and they can never merge or sell the company indefinitely. Thus, Buffett wants his CEOs to manage with a long-term rather than a short-term horizon.