When Warren Buffett Hires, He Looks For These 3 Key Traits
January 10, 2017
As #2 on Forbes 400: The Wealthiest in America list for 15 years straight and a net worth of $73 billion, Warren Buffett (aka the Oracle of Omaha) seems to know what he’s doing in the business world (to say the least). The chairman, CEO and largest shareholder of Berkshire Hathaway, Buffett is one of the most successful investors in the world.
But, his cleverness goes beyond smart investing – he’s also an incredible manager and has been able to recruit and build a team of people that have helped lead his company to success. And, he’s done this by focusing on three particular traits in potential hires:
“If you don't have the first, the other two will kill you,” Buffet has famously said. “If you hire somebody without [integrity], you really want them to be dumb and lazy.”
Why having each of these traits is so important
Think about it – if just one of these traits is missing, here’s what happens:
Low integrity with high energy and high intelligence gives you someone who is fast, smart…and will cheat you.
Low energy and high intelligence and integrity and you have someone who will never take initiative and really add value.
Low intelligence and high energy and integrity and you have someone who works hard...but won’t be a great problem solver or visionary.
The next question is, how exactly do you figure out if a candidate has these traits by looking at a resume and talking to them for 30 minutes? Well the truth is, you’ll probably have to dig a little deeper. Here’s are some things you can do to discover each trait:
How to determine intelligence
Figuring out how intelligent someone is can be tricky, as there are different types of intelligence. Traditionally, many look to the big name schools the candidate attended or the glitzy brands they worked for as a filter, but this often can lead to screening out brilliant candidates who have the potential to help lead your company to success.
Because of that, you have to be creative with your approach in order to get real answers.
Penny Herscher, Former President and CEO of FirstRain and current Board Director at Lumentum and Lambus, is a firm believer that the traits Buffett looks for in candidates are essential. And to figure out if a candidate possess each, she asks very direct questions.
"I want to figure out what the person is made of right off the bat,” she says. So to determine intelligence, she asks them to give her a ‘short version’ of their career path. “Many people fail this because they'll end up talking for 10 or 15 minutes,” she says. "They miss the 'short' part of the request entirely."
In addition, she asks every candidate to tell her about a time they failed, why, and what he or she would do differently in the future. "Someone who can't think of a time they failed, or has no weaknesses, doesn't pass the IQ test," she says.
Talking and testing can only tell you so much. So, using a mixture of behavioral questions, standardized tests, along with exercises and assignments is ideal to get a clear picture of the candidate.
How to determine energy
Someone’s energy level is hard to determine with a question. "It's about how they behave in the room," says Herscher. “Are they engaged? Do they lean into the conversation? What is the pace of the discussion? Do they do extreme sports, or run, or chase young children all weekend? And how do they talk about that? These are all indications of their energy levels,” she says.
Another way to assess a candidate’s energy level is by asking them to talk about something they are really passionate about. How do they discuss this topic? Are they energetic and excited to share more? You can also ask them for examples of where they have taken initiative and lead projects against adverse odds. Both passion and initiative show that a candidate has the energy level needed to be successful.
How to determine integrity
It’s not easy to determine if someone is a cheat or liar during an interview...especially if they are good at it! That’s why reference checks are so important along with some research on the individual.
To determine integrity, Herscher challenges candidates on why they switched jobs. "I test for how they made their decisions to move," she says. "Were they running to something or from something? Do they trash their prior manager or previous companies? I'm looking for people who managed their choices, moved to grow their skills and experience, and respect the places they have worked and people they have worked for. No company is perfect, and it's a sign of integrity to me whether the candidate can be fair and reasonable about their past."
While looking for intelligence and energy in a candidate is obvious, it’s the third ingredient - integrity - that really sets Buffett’s approach to hiring apart. By finding and hiring people with all three qualities, Buffett has been able to hire people that have helped him lead Berkshire Hathaway to success and maintain its reputation.
"IQ, integrity, and energy cannot be taught,” says Herscher. “I believe these are innate attributes found within certain individuals. So if these attributes are not easily noticeable early during the interviewing process, then they most likely won't be there once the person is on board.”
*Image by Fortune Live Media
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