Thursday, June 13, 2013
Buffett’s financial assistant Tracy Britt is making it happen. The 28-year-old Harvard MBA has worked by the legendary investor’s side since 2009, and is taking on more responsibility within Berkshire, including the chairmanship of four of its subsidiaries.
One of her goals is to increase interaction among the managers of Berkshire’s 80-odd businesses. She travels frequently to the far-flung units to visit Berkshire executives and learn about their business challenges and practices, often using that knowledge to put CEOs in touch with each other.
Last month, dozens of Berkshire managers gathered in Omaha, Neb. on the sidelines of the conglomerate’s annual meeting to socialize and discuss everything from employee incentive plans to the health of the economy — a CEO roundtable that was the first of its kind.
The event was informal and attendance was optional. Some top executives, such as reinsurance business chief Ajit Jain and Matt Rose, CEO of railroad operator Burlington Northern Santa Fe, did not attend. Tony Nicely, the CEO of Geico, did.
“This was her brainchild,” said Sam Taylor, the CEO of Berkshire subsidiary Oriental Trading.
In all, more than 40 executives participated, meeting for dinner and following up with a discussion the next morning. Britt also organized hour-long breakout sessions for the CEOs, so that the executives could talk more at length about their businesses and how they were faring during the economic recovery.
Some CEOs discussed how to create long-term incentive plans for their senior executives, since Berkshire doesn’t give out stock options. Others shared their ideas of what it meant to be a Berkshire company, with no financial reporting requirements and near-complete freedom to run their businesses as though they were owners. Executives also discussed the possibility of partnering on business purchases and sharing communication budgets.
“It was really more of a nuts-and-bolts thing, lot of good interaction and good social time,” said Terry Kroeger, publisher of the Omaha World-Herald, a Berkshire-owned paper.
Buffett and Britt declined to comment.
The plan is to make the CEO roundtable an annual event.
Such types of engagements among Berkshire chiefs have been rare in the conglomerate’s history. Berkshire, one of the world’s five largest companies by market value, is unique in that it owns over 80 different businesses, each of which operates as an independent entity with its own manager.
Buffett and Munger have eschewed the hierarchical reporting structure with divisional or regional heads that’s typical of U.S. corporations, instead encouraging “decentralization to the point of abdication,” as Munger said at this year’s annual meeting on May 4.
Chief executives call Buffett as often as they want his advice, and send periodic updates about their businesses, including acquisition and succession plans. “My job is to stay out of their way,” Buffett wrote in his 2002 letter to shareholders. The strategy has worked; no Berkshire CEO has left the company.
Executives who attended the dinner and roundtable in Omaha ahead of the annual meeting, said the event does not indicate a big change the way things are run at Berkshire.
“There’s no change in the general philosophy” of Buffett, said Jordan Hansell, CEO of private aviation company NetJets, adding that the event could best be described as an “information exchange.”
It came together because some managers felt they should tap other Berkshire executives as a resource and share their thinking about management, business and the economic recovery. Berkshire is often seen as a microcosm of the U.S. economy because its businesses are diverse in size and sector, including insurance, railroads, home builders and shoemakers.
“We’re interested in each other’s businesses… Always interested in what everyone is seeing,” said Brad Kinstler, CEO of See’s Candies and a 26-year veteran. He added that it was useful to discuss with other Berkshire-owned retailers how they fared during the recession, and how malls around the country were doing.