Warren Buffett stepped down as CEO of Berkshire Hathaway on December 31st, but he still works there every day with his colleagues.
The 95-year-old, who has led the Omaha, Nebraska-based holding company for 60 years, is effectively retired but still serves as chairman. He comes into the office every day and continues to be included in investment decisions, he told CNBC’s Becky Quick in a March 31 interview on “Squawk Box.” The company’s current CEO is his hand-picked successor, Greg Abel. “I don’t make any (investments) that Greg thinks are wrong,” Buffett said.
During his tenure as CEO, Buffett grew Berkshire Hathaway from a declining textile company into a global conglomerate with gross profit margins exceeding 5 million percent. Abel told Squawk Box on March 5 that he and his successor speak almost daily. “If I’m in Omaha, I’m always connected,” Abel said. “When I’m traveling, I often check in, like yesterday, to see what he’s seeing, what he’s hearing, what I’m feeling. So if not every day, then every few days.”
Mr. Buffett and Mr. Abel did not immediately respond to CNBC Make It’s request for further comment on their working relationship, but their situation highlights an unusual dynamic in which leaders act second-guess within the company. Amy Gallo, a speaker on global workplace dynamics and author of the book Getting Within: How to Work with Everyone (Even Difficult People) published in September 2022, says having a former company leader reporting to you can come with both challenges and great benefits.
Don’t miss: Leadership skills that will help you stand out at work
“You never lose organizational knowledge,” Gallo says. “We have a leader at the helm of the organization who knows what it takes to run this organization and who knows what has worked and what hasn’t worked in the past.”
If your former boss now reports to you, and of course they’re happy with that arrangement, they can help position you as “the right person to take over, someone who has the skills and can take the organization to the next level of success,” Gallo says.
On the other hand, she notes, you may have a hard time showing other employees that you are truly in charge. “You’re going to feel undervalued. You’re going to feel undervalued. You’re going to feel like people don’t respect you,” Gallo says. “You may feel like you’re not doing as good a job as your former leader.”
For most people, she says, the key to effectively dealing with this situation, and perhaps becoming a better leader in the process, is to maximize the advantages while mitigating the disadvantages.
Treat relationships like any other work dynamic
Just like getting a promotion over a friend or giving your boss constructive feedback, being your boss’s boss can be difficult. Zoe Fragot, an organizational psychologist and leadership development expert, says that in many situations, this dynamic is “more likely to be destructive and problematic than actually helpful.”
Former bosses may experience sadness, loss of identity, anxiety, or an overwhelming feeling of being lost, while new leaders may suffer from excessive compensation or a “recalibration” of professional relationships, Flagoo says. “The dangers lie in both extremes: asserting dominance and overcompensating too quickly can undermine trust; on the other hand, avoiding or delaying tough demands to protect old connections can affect trust,” she added.
Additionally, former CEOs may not be able to simply abandon their managerial mindset overnight, says Muriel Wilkins, CEO of leadership advisory firm Paravis Partners and author of Leadership Unblocked.
“There are two big things it can get in the way of,” Wilkins said. “One, you’re establishing your name as the new CEO. And two, you might be delayed in some of the decisions you want to make. Or you might feel pressured to make certain decisions that, frankly, you don’t think you need to make at the time.”
Flagger says the best way for former leaders to cope with reporting to them is to maintain a healthy sense of self, “rooted in true self-awareness, self-esteem, and proven competency.” If you’re both up to it, you’ll probably have a great deal, she says.
Wilkins advises thinking of your direct reports as partners, teammates, or aides rather than competitors. “I don’t think there’s any need to treat this issue any differently than in a proper working relationship, where it’s important to figure out what the relationship is going to be before the problem arises,” she says.
Wilkins points out that there is no one-size-fits-all approach to leading your former boss. “Great leaders have the ability to transform themselves because they understand that their ability to transform their organization is limited by their ability to transform themselves,” she says.
Want to lead with confidence and bring out the best in your team? Take CNBC’s new online course, How to Become an Exceptional Leader. Expert instructors share practical strategies to help you build trust, communicate clearly, and motivate others to do their best work. Sign up now!
