Ethics is defined as a set of moral principles of what is right and what is wrong, while the direction is the ability to influence other people. Leadership and ethics go together where top leaders prioritize ethics as necessary for driving business. Wildly successful companies in the world are defined by having leaders who walk the talk of ethical leadership. While many leaders practice good principles, there are few cases of leaders who demonstrate moral leadership. One of such leaders is Warren Buffett, an American business investor, philanthropist and the CEO of Berkshire Hathaway ( O'Loughlin, 2011) . The success of Buffet as a top leader is more about his commitment to set core values and maintain authentic leadership. This paper discusses the biography of Warren Buffet, his leadership style and how he has managed to remain among top ethical leaders in the world.
How Warren Buffet defines leadership
Warren Buffet can be described as being a magnate, investor, and philanthropist. He has taught two generations of people about value investing which is an idea that price is what is paid and value is what is gotten. His leadership style can be described as a democratic, self-empowered and servant leader. He employs a laissez-faire leadership which allows employees to carry out tasks without strict supervision from leaders ( O'Loughlin, 2011) . As such, employees are given the freedom to make the right decisions about what they want to do and therefore allowed to solve problems on their own. His management philosophy grows from the insight that autonomy can translate to economic gain and can allow creativity in an individual
Delegate your assignment to our experts and they will do the rest.
At the same time, Buffet can be ascribed to servant leadership which entails employing fundamental negotiation skills to convince others into following a course. Servant leadership is a significant part of the ethical leadership concept that involves corporate social responsibilities and leading by example. The aspect of servant leadership has seen Buffet influence several wealthy individuals in the world to donate to charity organizations and offer part of their income for the benefit of others. Buffet has been involved in charitable donations that is considered the largest in the history of the United States ( O'Loughlin, 2011) . He started the giving pledge initiative that encourages the world’s wealthiest individuals to donate half of their fortune to charity
Why Warren Buffet is an ethical leader
Buffets traits of a moral leader include humility, dedication, self-knowledge, passion, risk-taker, and emotional resonance. He believes managers are made to be organizational, controllers and budgeters, where he occupies each of these managerial traits. Warren Buffet can also be described as an authentic leader whose foundation is built upon ethical attributes of honesty, openness, and strong ethical relationships. It is one of the newest leadership constructs where a leader is trustworthy, reliable and trustworthy. Authentic leaders are usually accurate to themselves and in what they believe ( Avolio & Gardner, 2005) . They are honest, self-aware and trustworthy, which describes the traits of Warren Buffet.
Humility is an attribute of ethical leaders which is described as the humanness and status of being humble. Moral leadership is based on true humility as well as being sincere to employees. Buffet exhibits this attribute by being open to employee’s opinions and rewarding them for their achievements (Lowenstein, 2010). Humility in leadership also involves leaders who admit their mistakes, who appreciate others and are also willing to share authority and invite feedback. Some of his ethical leadership practices include believing the rich have contributed to the economic inequality in the United States because of taking a significant share of the market. Buffet still lives in the same 3-bedroom house in Omaha despite his status among the wealthiest individuals in the world ( O'Loughlin, 2011) .
His leadership style is characterized by an internalized moral perspective where he could use the internal ethical standards and values to guide conduct and behavior. Mr. Buffet considers himself to be a true and honest man in business and daily life, guiding his life and making decisions based on what is right for business ( O'Loughlin, 2011) . He prefers to be transparent and upfront as one way of servant leadership and leading by example. There is also an aspect of balanced processing in the administration of Warren Buffet, where he analyzes information objectively and explores the opinions of other people before making a decision. Balanced processing allows a leader to consider all viewpoints and demonstrates openness with different ideas. Buffet’s ability to analyze information and explore the views of other people has made him one of the greatest world leaders.
Integrity is another value that defines Buffet and his leadership style. According to Buffet, honesty is the most critical element in an employee, since the lack of it can lead to lack of trust and poor performance (Lowenstein, 2010). He values reputation over anything else, and he believes every person should work towards their character. For example, Buffet requires everyone to keep promises, be earnest to everyone as well as treating everyone with respect. Integrity is both a moral and business value for Buffet who believes a business that loses its reputation suffers the most significant loss. For example, his emphasis on integrity and reputation was seen when one of Buffet’s most trusted colleagues was forced to resign when he allegedly violated the company’s policy regarding owning stock ( O'Loughlin, 2011).
Lessons from Warren Buffets leadership style
There are several lessons that you can learn from the leadership style of Warren Buffet. Transparency is one virtue that Buffet has maintained throughout his career which has helped grow his business. Employees love openness and honesty from their leaders and will be more likely to be loyal to a transparent leader. Buffet has been a motivating force at Berkshire Hathaway where his optimistic and positive outlook made him successful in motivating employees (Lowenstein, 2010).
Buffet has been an extraordinarily successful business leader due to his standout traits. He is a true leader who learns from his mistakes and turns them into positive results and does not shy from acknowledging errors and make appropriate measures to avoid repeating them (Lowenstein, 2010). Buffet is a positive person and is comfortable telling others even when things are going poorly. As such, he can manage the business world with a positive message to shareholders also when markets are undervalued. His positivity is powerful and essential in driving his business. Employees tend to respect a leader who is forward thinking, open and honest even when things are potentially going south. He is someone who admits mistakes and looks for a solution instead of sugarcoating them. For example, he has disclosed severe errors he made in his job of capital allocation as well as when evaluating the fidelity or ability of incumbent managers ( O'Loughlin, 2011) . According to Buffet, the mistakes makes him confident as he learns from them.
Buffets require employees who can strategically solve problems on their own, giving them the autonomy to do it. He motivates his employees with respect while showing them trust and forgiveness while seeking to build a relationship. Buffet also believes in creating an emotional bond with employees and making them feel connected and appreciated in the company (Lowenstein, 2010). This helps them think strongly identified to the company and allows them to create a more active commitment to production. Trust is another attribute of ethical leadership that is shared between leaders and associates. Trust is a crucial feature of a successful working relationship that inspires loyalty and transparency (Lowenstein, 2010). It is also something that defines the philosophy of Buffet, where he trusts his people and empowers them to make decisions at every level of the company
Warren Buffet ascribes to the principle of being honest and sincere to others while upholding respect. Respect is illustrated by listening to others and valuing their contributions, as well as being compassionate to them. Ethical leaders demonstrate respect for human dignity including respecting the privacy of other people (Lowenstein, 2010). Visionary is also an aspect of moral leadership where a manager strives to keep the organization focused on the mission and vision. They exercise self-reflection and stay true to their internal beliefs and motives. Ethical leaders can influence others through example, acting as role models in their behavior and conduct. Warren Buffet exhibits traits of accountability, responsibility, and commitment by setting ethical standards and enforcing transparency (Lowenstein, 2010). He values a rational approach to issues that encourages flexibility and open-mindedness, as well as values of accountability and responsibility.
Conclusion
In conclusion, ethical leadership continues to be a novel theory of leadership that is proving to be sufficient for running organizations. It incorporates charismatic, servant, transformational and other forms of decisive leadership that can make an individual stand out among others. Leaders have a role in influencing ethical behavior based on their style of leadership and should aspire to set the best example to employees. Many reasons explain why Buffet is a successful leader, top among them being the principle of understanding the value of values. Buffet believes it takes 20 years to build a reputation and only five minutes to ruin it. In this regard, he emphasizes the importance of ethics and doing the right thing, a concept that has elevated him to the top level in the ranking of the world’s best leaders.
References
Lowenstein, R. (2010). Buffett, the Biography: The Extraordinary Story of the Richest Man in the World . Gerald Duckworth & Co.
O'Loughlin, J. (2011). The real Warren Buffett: Managing capital, leading people . Nicholas Brealey.
