Warren Buffett: Watch Out For This Kind of Boss

Warren Buffett: Watch Out For This Kind of Boss

Navigating the professional career landscape is as much about aligning with exemplary leadership as one’s skills and determination. Bosses are pivotal in shaping our careers, influencing our job satisfaction, and even affecting our personal growth. Yet, not all bosses are created equal. Drawing insights from one of the most successful investors of our time, Warren Buffett, this article delves into the subtle warning signs that may indicate you’re dealing with a boss that could hamper your professional journey. Unpacking Buffett’s rich wisdom can equip you with the discernment needed to make informed career decisions. Discover the characteristics of Bosses you might want to be cautious of and why Buffett’s advice is indispensable for career longevity and satisfaction.

Warren Buffett on CEO Incentives

Below is a transcript where Buffett warns about the dangers of incentives for CEOs, managers, and bosses that can lead to unintended consequences. This is from one of his question-and-answer sessions for the Berkshire Hathaway shareholder annual meeting.

“We really believe in the power of incentives, and there are these hidden incentives that we try to avoid. We have seen, both of us, more than once, really decent people misbehave because they felt that there was a loyalty to their CEO to present certain numbers, to deliver certain numbers because the CEO went out and made a lot of forecasts about what the company would earn. And I’ve seen a lot of misbehavior that actually doesn’t profit anybody financially, but it’s been done merely because they don’t want to make the CEO look bad in terms of his forecast. Or, he’s done it because he doesn’t want to look bad when they get their ego involved people do things that they shouldn’t do. So, we try to eliminate incentives that would cause people to misbehave, not only for financial rewards but for ego satisfaction. I think that’s probably pretty unusual to even be considering that in business, but we’ve seen it enough, so we do consider it.”

“We had a case at National. This is interesting. You really have to understand human behavior if you’re going to run a business. When National Indemnity, going back to the late 1960s, Jack Ringwalt was a marvelous man; he ran it. He had another marvelous man who worked for him as his tennis partner, and that fellow was in charge of claims. When the claims man would come into Jack and say, ‘I just received a claim for twenty-five thousand dollars or something for some long-haul truck,’ or something. Jack would say it was just his personality, would start berating the fellow and saying, ‘How can you do this to me? These claims are killing me,’ and all of that. He was joking, but the fellow he was joking with couldn’t take it, really, and he started hiding claims. He just stuck them in a drawer. That caused us to not only misreport fairly minor figures, but it also caused us to misinform our reinsurers because they had an interest in the size of claims.”

“The fellow who was hiding the claims had no financial interest in doing it at all, but he just didn’t like to walk into the office and have Jack kid him about the fact that he was failing him. You really have to be very careful in the messages you send as a CEO. If you tell your managers you never want to disappoint Wall Street and you want to report X per share, you may find that they start fudging figures to protect your predictions. We try to avoid all that kind of behavior at Berkshire. We’ve just seen too much trouble with it.” – Warren Buffett.[1]

Warren Buffett on Bosses

Warren Buffett’s teachings, writings, speeches, and Q&A sessions reveal many insights into business, investments, and human behavior. Drawing from the discussion about hidden incentives and the larger body of Buffett’s work, one could infer several characteristics of a boss that Buffett might advise someone to be wary of:

  1. The Over-Promiser: Buffett has consistently warned against CEOs making bold and specific earnings forecasts. Such behavior can pressure employees to deliver results at any cost, even if it means fudging numbers. A boss who consistently over-promises might cultivate a culture of short-termism and potentially unethical behavior.
  2. The Ego-driven Leader: As highlighted in the previous discussion, when ego becomes a driving factor, it can lead to misguided decisions. A boss whose decisions are heavily influenced by personal ego or the desire for personal recognition rather than the company’s good can be a red flag.
  3. Poor Communicator: Communication is vital in leadership. Buffett’s example of the National Indemnity case illustrates how even light-hearted comments can have unintended consequences. A boss who doesn’t communicate clearly or sends mixed messages can inadvertently lead the team astray.
  4. The Short-Term Thinker: Buffett is known for his long-term investment strategy. Similarly, in leadership, focusing solely on short-term gains without a vision for the future can lead to instability and reactive decision-making. A boss who’s always chasing the next quarter’s results at the expense of long-term growth might be one to approach cautiously.
  5. Lack of Integrity: One of Buffett’s most famous quotes is, “It takes 20 years to build a reputation and five minutes to ruin it.” He values integrity immensely. A boss who cuts corners behaves unethically, or doesn’t uphold the values they preach is one Buffett would advise avoiding.
  6. Inflexibility: While Buffett values sticking to one’s principles, he also recognizes the importance of adaptability. A boss unwilling to change or adapt, even when presented with new information or changing circumstances, can be detrimental to growth.
  7. Lack of Value for Employees: Buffett believes in the value of his team and often credits his success to the people he works with. A boss who doesn’t value, respect, or treat their employees well is likely not one he’d endorse.

While Buffett might not have a definitive checklist of ‘boss red flags,’ his teachings suggest that integrity, long-term vision, clear communication, humility, and adaptability are essential traits in good leadership. The absence of these traits might be a sign to reconsider one’s association with such a leader.

Key Takeaways

  • Beware of the Grand Promisor: Avoid leaders who habitually set grand expectations, possibly leading to a pressure-cooker environment.
  • Guard Against Ego-Centricity: Leaders driven primarily by vanity can cloud their judgment, making decisions detrimental to the organization.
  • Value Transparent Dialogue: Leadership clarity is crucial. Ambiguous or mixed signals can unintentionally misguide teams.
  • The Peril of Myopic Vision: Steer clear of bosses focused solely on immediate gains, neglecting future growth.
  • The Essence of Honesty: A leader’s ethical core is vital. Those who compromise on integrity can erode the organization’s foundation.
  • Rigidity Can be Restrictive: A successful leader should be adaptive, embracing change when necessary.
  • Cherish Employee Respect: Effective bosses recognize the worth of their workforce and treat them with dignity.


In the vast expanse of professional environments, navigating leadership styles becomes a cornerstone for individual and organizational success. Warren Buffett’s insights remind us of the importance of aligning with visionary leaders who uphold transparency, embrace adaptability, and champion integrity. By recognizing the red flags in potential bosses, one can make informed decisions that pave the way for a more fulfilling career trajectory in the right work environment.