How do you balance trusting your people with stepping in and asking more detailed questions? Ask legendary billionaire, Warren Buffett. Buffett has recently come under scrutiny when his former lieutenant, David Sokol at Berkshire Hathaway Inc., resigned.
As the Wall Street Journal reported, it turns out that Sokol was buying shares of a chemical company one week before he suggested that Berkshire Hathaway buy the company, which they later did.
Improper action? Depends who you ask. Sokol said carefully that he didn’t think he did anything wrong and the trades were not a part of his decision to resign. Mr. Buffett echoed Sokol’s sentiments.
Buffett is coming under fire from those who believe he may have been too trusting of Sokol and did not ask enough tough questions when presented the opportunity to purchase Lubrizol Corp and when Sokol divulged that he owned shares of the company. Berkshire Hathaway is a company known for high ethics and integrity, and as the Wall Street Journal reported, even Buffett “once told government-securities regulators that company directors should be “Dobermans” in demanding financial disclosure from managers and auditors.”
Buffett selects his people carefully and then let’s them do what they do best. This makes sense, however when does a leader step in and ask more questions and take responsibility for a potential risk to the organization? Checks and balances work in large-scale organizations when the systems and processes hold risks at their minimum. However when the systems are faulty then the risks are greater. Sometimes the system can simply be, “did we ask enough of the right questions to understand all sides?”
Careful and continuous examination and re-examination of your systems, processes and procedures allows you to propel forward rather than be slowed down. Perhaps this incident at Berkshire Hathaway is a wake up call for such a re-examination to take place and signals to all wise leaders that you are as good as your last question.
No comments:
Post a Comment