Category: Business Essay

The personality of a CEO affects the work of any company, especially, if it is a leader that takes the position for many years. The aim of this paper is to analyze changes in leadership and CEO succession in Berkshire Hathaway. The current leader of the company is Warren Buffet. His golden touch allowed him to make wise and profitable investment decisions. Thus, Buffet has earned about $40 billion. Nevertheless, he is over eighty years old now, so he will have to leave Berkshire Hathaway soon. Therefore, it is time for the company to prepare a succession plan. There are different ideas of how it should look like. For example, some experts say that Buffet’s leadership style and decision-making processes have to be kept after appointing a new CEO but there opinions that Warren Buffet could not be replaced by somebody else. The following paper will have two parts. The first part is a discussion of preparation for succession; particularly it will analyze whether Berkshire Hathaway has done enough to prepare for new CEO nominating or preparation processes had to be started much earlier. The second part of the paper is researching what succession plan is the most efficient for the company.

The Analysis of the Preparation for Succession

Most boards spend significant time on succession planning but Berkshire invested less time in this, which has raised criticism from the side of experts. On the other hand, specialists admitted that the succession plan of Berkshire includes other aspects than traditional plans. In particular, most boards concentrate on the process of succession too narrowly, whereas Berkshire’s board has created the plan with multiple directions for further company’s leadership. Therefore, in this aspect, the top management of Berkshire Hathaway has done enough to prepare for succession. In addition, the company has sixty subsidiaries and many of them have a positive experience of succession. Moreover, many businesses significantly evolved due to multiple successions. For example, this happened in such family dynasties as Clayton Homes, Jordan’s Furniture, Justin Brands, the Marmon Group, McLane and RC Willey. All this demonstrates that despite spending insignificant time on preparation for succession, the company’s board has done enough to keep the leading position of Berkshire Hathaway after changes in leadership.

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The Most Efficient Variants of Succession Plan

There are different variants of a succession plan for Berkshire. Particularly, the company’s board could put Buffet’s son in charge, choose someone of the top executives from the Berkshire Hathaway, search a qualified CEO from some other company or sell off its subsidiaries to other companies. The last option has many supportive arguments because even a well-developed succession plan may not protect Berkshire’s board from continuous debates, especially, if Warren Buffet is replaced by his son, and board of directors includes such determined executives as Bill Gates. In fact, it is common for companies to have a loss in their revenues after leaving of “long-serving star boss” like Buffet even in case of a well-chosen successor. Experts give similar negative predictions about Berkshire, too. Therefore, Warren Buffet could use the experience of James Hanson from Hanson Trust and Henry Singleton from Teledyne. These two men founded their conglomerates, which operated on the market from the 1960s to 1980s. In the end, despite stellar careers, Hanson and Singleton decided to sell off parts of their empires to other companies. They explained their decision by the fact that “an orderly sale” would bring them more money than the long decline of their empires. As for Berkshire Hathaway, it has enough subsidiaries that could operate on their own, so they can be easily sold. Smaller businesses could be strengthened before a sale or auctioned off to competitors or private-eq