How Do You Manage 330,000 Employees?

I have no idea, but Buffett may have it figured out and it’s all about trust.

Most know Warren Buffett as an investor.

Or a billionaire.

But what’s often forgotten is that he is a manager. His company, Berkshire Hathaway, owns and operates more than 60 individual companies. Those 60+ companies have about 330,000 total employees.

I have no idea how you manage that many employees. Do you? I went on a search to find out. The answer, in my opinion, is found in a letter he wrote to shareholders in 1999.

He takes a surprisingly simple approach. The formula is not complicated for him. If I could tell you in a single sentence it is: find the right people, trust them, and let them build. He’s hands-off. But he’s able to do that because he’s found passionate people. Mostly he’s paid them a handsome amount to acquire them or he’s found them through his unique network. But even despite that, he let’s them work.

He’s not a micromanager. He does not take credit. He writes the following:

“Berkshire’s collection of managers is unusual in several important ways. As one example, a very high percentage of these men and women are independently wealthy, having made fortunes in the businesses that they run. They work neither because they need the money nor because they are contractually obligated to — we have no contracts at Berkshire. Rather, they work long and hard because they love their businesses. And I use the word “their” advisedly, since these managers are truly in charge — there are no show-and-tell presentations in Omaha, no budgets to be approved by headquarters, no dictums issued about capital expenditures. We simply ask our managers to run their companies as if these are the sole asset of their families and will remain so for the next century.

I try to behave with our managers just as we attempt to behave with Berkshire’s shareholders, treating both groups as we would wish to be treated if our positions were reversed. Though “working” means nothing to me financially, I love doing it at Berkshire for some simple reasons: It gives me a sense of achievement, a freedom to act as I see fit and an opportunity to interact daily with people I like and trust. Why should our managers — accomplished artists at what they do — see things differently?”

To read Buffett’s entire letter, go here: Warren Buffett, 1999, Berkshire Hathaway annual shareholder letter.

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