Research the Internet for recent litigation, censures, and fines involving national public accounting
firms. Examples of litigation cases against national public accounting firms include fines by regulatory
authorities and censures by professional societies.
Write a three to four (3-4) page paper in which you:
1.Analyze the primary accounting issues which form the crux of the litigation or fine for the firm, and
indicate the impact to the firm as a result of litigation or fine. Provide support for your rationale.
2.Examine the key inferences of corporate ethics related to internal controls and accounting principles
which lead to the litigation or fine for the accounting firm.
3.Evaluate the primary ethical standards of the accounting organization�s leadership and values
which contributed to approval of the accounting issues and thus created the litigation or fines in
question.
4.Identify specific conduct violations committed by the organization and accounting firm in question.
Next, create an argument supporting the actions against the organization and accounting firm, based
on the current professional code of conduct for independent auditors and management accountants.
5.Make a recommendation as to how regulators and professional societies may prevent this type of
behavior in question for the future. Provide support for your rationale.
6.Use two (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do
not qualify as academic resources.
2
Your assignment must follow these formatting requirements:
�Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all
sides; citations and references must follow APA or school-specific format.
�Include a cover page containing the title of the assignment, the student�s name, the professor�s
name, the course title, and the date. The cover page and the reference page are not included in the
required assignment page length.
The specific course learning outcomes associated with this assignment are:
�Analyze business situations to determine the appropriateness of decision making in terms of
professional standards and ethics.
�Use technology and information resources to research issues in accounting.
�Write clearly and concisely about accounting using proper writing mechanics.
Berkshire Hathaway
Abstract
3
Berkshire Hathaway International has succeeded in branching itself enormously since its
beginning. The company started as a textile company, and currently is has been able to
dominate almost every sector in the business world. The focus of this paper is to address the
impacts that can result when a new CEO replaces Warren Buffett. The paper will address
how the new CEO will ensure that the success of Berkshire Hathaway is sustained. The paper
conclude by emphasizing that a succession plan is a crucial aspect to ensure that investments
are fostered as well as making sure that subsidiary companies are controlled effectively. The
succession plan will revolve around HR branding, selection for the future, and creating a
culture for the future.
Introduction
Who will become the next CEO (chief executive officer) at Berkshire Hathaway remains one
of the million-dollar questions being asked by many corporatists. This is after Warren Buffett
4
(the now CEO of Berkshire Hathaway) announced in 2010 that his position will be succeeded
by team composed of senior CEO and approximately four key investment managers. He
critically pointed out that, the newly selected managing team would have each of its members
being responsible for an impeccable part of the company’s investment portfolio (Avolio,
Fred, & Todd 2009). By the fifth month after Warren announced the statement, Berkshire
Company gave that Todd Combs, who was then manager at Hedge Fund Castle Point Capital,
would become one of the investment managers. Four months later, the company suggested
that the fifty years old Ted Weschler (from Peninsula Capital Advisors) would also join the
team of investment managers. The bigger question was who was to become the CEO, and
Warren gave a slight relief to most Americans by giving a suggestion that, the CEO had been
internally chosen, but was publicly unnamed. This was a suggestion that received a lot of
criticism from business analysts who contended that the succession plan by Buffett lacked an
exit-strategy, and that it often leaves a firm with lesser long-term alternatives. Therefore, the
critics try to recommend successful CEOs should not be allowed to choose their successors.
Therefore, the following paper will engage in portraying how a succession plan for Berkshire
should look like by discussing several issues involving business process. A flow chart
demonstrating an organizational chart with possible development career paths from a low-
/entry-level position will conclude the discussion.
Part 1
Berkshire Hathaway HR branding
Recruitment strategy
HR branding involve all those processes aiming at altering human resource practices of
company such as training recruitment, and compensation to perfect succession planning.
5
Based from the stressed indication that the next CEO will come from the top-most portfolio
companies, the most indispensible recruitment strategy for this position as well as for the
investment managers is the use of poaching. Poaching can only be perfected if referrals are
used together. Already, candidates for the position of Berkshire Hathaway’s next chief
executive embrace the leaders of GEICO, and BNSF BNSF, and Berkshire Hathaway
Reinsurance,. Considering this factor, what remains is just to confirm the best among the
three to succeed Buffett. Using referral on poaching, several qualitative aspects of the
candidate will be given by those who know each one of them. Even before interviews are
scheduled to capture the personalities of the candidates, getting their attributes from the board
at Berkshire will guarantee that next CEO of the Berkshire Hathaway will be of the
employee’ most preferred candidate (Sosik & Jung 2010). Borrowing from the fact that
Buffett is one of the most inspirational leaders, the next CEO therefore ought to have extra
personal values. Such characters as longevity, frugality, and benevolence can only be
observed and given by those nearest to the person (candidate). These qualities, which have
made Buffett, excel in insurance, selling cars, and selling houses ‘are needed by the incoming
CEO to exemplify the same’ (Bennis & Joan 2010). The efficacy of poaching is that it
reflects the generic skill set of an applicant, which is not specific to the company. Poaching is
more readily productive to the apprentice model (which gives promoting somebody within
the organization to CEO level) as it is disastrous in practice. This is because the former CEO
keeps mentoring the new CEO. Bennis & Joan (2010) and Sosik & Jung (2010) gives that the
apprentice model creates the impression that the new CEO is still incompetent to handle the
position thereby undermining his authority. The other reason why poaching is the best
recruitment strategy is that Berkshire Hathaway is changing its business to consumer
branding. Berkshire Hathaway under Buffett’s management has been re-branding the energy
companies, certain insurance holdings, and real estate brokerages using the Berkshire
6
Hathaway name. Therefore, launching a consumer brand with a global target will attract
celebrity endorsement. The rationale behind celebrity endorsement on Berkshire products is
meant to assist consumers to absorb that the brand is all about borrowing some qualities from
their celebrities.
Diversity and legal consideration
Although poaching seems to be the best strategy for recruitment at the Berkshire Hathaway
for the excellent succession planning, the method most of the times lead to lack of diversity
and management issues at the workplaces. This is because practices such nepotism, which is
the preference for hiring a relative of the current employee and decrease diversity in an
organization is felt. Diversity at Berkshire therefore should aim at getting the right candidate
who can add intellectual diversity and cultural opulence to personal attributes correlated to
the HR branding. This condition of non-diversity is most likely to develop at Berkshire
Hathaway as it is projected that Buffett is more likely to pick his son (Howard Buffett) as his
successor (Sosik & Jung 2010). Taking into focus that Warren is eying his son to be his
successor, it might raise many legal issues. Therefore, legal considerations have to be put in
place to promote diversity at Berkshire Hathaway as far as HR branding is concerned.
Relevant employment laws and standards strive to ensure that human rights are protected at
work places irrespective of color, race, religion, or any other personal attributes. The laws
also aim at guaranteeing equal treatment of candidates during recruitment with outlining legal
rights of employees.
It can be stressed that legislations does not necessarily entails compliance to the laws, but
nurturing a culture of acceptance in the workplace. Therefore, any appointment and
recruitment should be approved and welcomed by all the concerned parties. Considering that
there are mild conflicts with Berkshire of who will be the next CEO and investment
7
managers, legal considerations have to be taken with keen. The Employment Equity Act, for
instance, can help Berkshire to see that it gets the right candidate to be the CEO of the
company (Sosik & Jung 2010). Other ACTS that can work for Berkshire Hathaway
comprises of Equality Act 2010, Work and Families Act 2006, and Equality Act 2006. These
Acts unanimously gives provisions that underline the prohibition of discrimination in
employment (comprising recruitment and selection methodology) to aspects of race,
nationality, sexual orientation, and religion and belief. Talking about sexual orientation is a
sensitive matter towards Berkshire HR branding. This is because it clearly gives that the next
CEO will automatically be a man (Avolio, Fred and Todd 2009, p. 432). This is against
legislation regarding recruitment, which prohibits such kind of selection. Both males and
females should be treated fairly and equally. For that reason, Berkshire can attract and retain
the best candidate who is most competitive during this process of HR branding. Moreover, to
fulfill a responsibility to treat candidates ethically and confidentially, the company should
make available a search environment that respects the dignity and rights of all people.
Berkshire should also put aside all personal agendas, biases, or political statements to give a
justified evaluation to each candidate. Taking into account there is rivalry at the company
regarding the successor of Warren Buffett, all the recruitment members should disclose all
conflicts of interest to each other. Berkshire Hathaway can only achieve its goal in getting the
right candidate by its members representing the company as a whole rather than group
stakeholder.
Part 2: Selecting for future
legal and ethical concerns in succession planning development
Selecting for future entail consolidating those products from HR branding to a common pool
where a company will have ample time to pick the next successors easily. A successful
8
succession planning will promise that the board at Berkshire Hathaway will have a better
understanding and absorption of the skills and competencies mandatory to lead the company.
Apart from this importance, the board will also enjoy a massive position in deciding whether
to choose an insider or an outsider to head the company. On top of that, succession planning
will assist in determining the ideal qualifications that are needed one to be the next CEO of
Berkshire Hathaway international (Bennis and Joan 2010). In short, a successful succession
planning provides the board with insights in making informed decisions among prospects and
dilates its portfolio of alternatives. However, legal and ethical issues arise during succession
planning. One of the ethical issues that arises is that a lack of board preparedness.
The lack of board preparedness Bennis and Joan (2010) can be correlated to the emotions
prevail during succession planning. By now, there are minor conflicts and disagreements over
who will be the next CEO to succeed Warren Buffett. Although there is an announcement
that the CEO has been determined, failure to name him has raised many confrontations
between board members. Some of the board members feel that Warren is making his
appointment based on emotions or feelings rather than on competencies. The board also
suggests that Buffett might be silent all this period about his successor due to the main
precipitation of his son becoming his successor. Warren Buffett on his side feels that
immediately he leaves his position and hands it to another person, detrimental effects will
prevail (Avolio, Fred and Todd 2009, p. 445). That is why he is reluctant to quit his position.
The board has been trying acting in response to non-ending media pressures and financial
analysts’ inquiry. Therefore, out of emotions, the members will end up choosing a famous
person rather than engaging in a holistic examination of particular traits, experiences, and
competencies related for the post.
9
The second ethical issue that can arise from succession planning is a critical lack of
knowledge regarding what works and what does not work. This can be given by the actions
of Berkshire Hathaway projecting that the next CEO will come out of their portfolio
companies. These types of CEO are known as prior CEO. What the board believes is that
prior CEOs have massive experience during their tenure as heads of other companies. The
board also has in mind that prior CEOs have a perpetual excellence in creating shareholder
value, and have already established communication connections with investors and security
analysts. However, the ethical issue that can arise from such picking is that rather than prior
CEO performs better as expected, they result to become worse and act no better. On the other
hand, Bennis & Joan (2010) legal issues present themselves in succession planning. One of
the legal issues involves employment contracts. In simple terms, any existing employment
contract at Berkshire Hathaway must be honored to avoid any employment law disputes after
succession. Considering that Berkshire is going to a management alteration, which is one
CEO and three to four investment managers, it must take into considerations the provisions
given in contracts. Another legal issue, which can also be mirrored in the mirror of unethical
factor, is unlawful age discrimination. From a legal perceptive, succession planning should be
based on merit. Avoidance of unlawful age discrimination promotes diversity. The tendency
of companies filling their replacement with people based on gender race, and nationality can
lead to allegations of discrimination.
Skills and talent for a CEO at Berkshire Hathaway
Getting the impeccable replacement for Buffet remains a difficult task for Berkshire
Hathaway’s board to decide. Investors, suppliers, customers, and every member of the
company focus on the outgoing Warren. Therefore, there is need to capture a CEO with
outstanding qualities to perfect the position held by Buffett (Lombardo & Robert 2009). Not
10
only should the board focus on getting the right candidate at this current time, but also to set
grounds at which future leaders should encompass. The skills and talents for a successful
succession planning should comprise both short and long-term objectives, but not on
replacing position. One of the distinguished skills that can be also a talent is the ability to be
innovative. This skill is needed in the long-term, as the world today is becoming more and
more globalised. Taking into account that Berkshire Hathaway is turning to consumer brands,
the next CEO ought to have the skills needed to market these brands in the form of celebrity
endorsement as this has become the more stylish, recommended, and accepted forms of
advertising consumer brands (Weldon 2008). The modern globalised business is
characterized with ‘increasing inflation and robust technological improvement’ calling
Berkshire Hathaway to be faced by the rapidly business setting (Birdi, Clegg, Patterson,
Robinson, Stride, Wall & Wood). The next CEO and investment managers at Berkshire
Hathaway must exemplify the skills and talent to innovate on a continuous basis and deliver a
variety of characteristics in the upcoming consumer brands and services in the field of
insurance and house as well as car selling. The CEO will demonstrate the skills to anticipate
the future and design a set of unsullied methodologies to affectively and efficiently address
change and realize profitability in the long-term.
Being an indispensible risk taker is another skill needed for the short term and long-term
realization of Berkshire Hathaway international goals. This entails that the prospective CEO
must exemplify the ability to calculate risks after engaging in a deep evaluation of
probabilities correlated with the profit and losses’ realizations of the decisions made. The
next CEO of Berkshire Hathaway must dance to the tunes of the company developing the
quest of owning the full of a company. Failure to possess this skill will make the company to
lag behind against its competitions (Birdi, Clegg, Patterson, Robinson, Stride, Wall & Wood
11
2008, p. 469). However, a point of concern is that the ability to take risks should not
jeopardize the survival or the overall profitability of an organization, but should be twisted
toward increasing the profits of a firm.
The most essential skill that guarantees that a CEO will be productive at this time and in the
future is being optimistic by nature. Being optimistic by nature is itself a talent. A CEO
therefore must demonstrate the ability to think outside the box and design and formulate
strategies that can efficiently solve the problems faced by Berkshire Hathaway. At the same
time, the optimistic CEO must inspire the juniors and struggle hard to get through harder
times. The ability to take action goes hand in hand with being optimistic (Sosik & Jung
2010). This is because it is when chasing a positive impact that CEO results to unleash an
action. Taking action entails taking timely calculated action based on environmental aspects
at work. However, this skill is restrained to impulsiveness. Therefore, the next CEO or
investment managers at Berkshire Hathaway must not be impulsive, and an action must be
constructed after careful thought and analysis. On other explanation, the action should not
only be designed strategically to address change, but also on accepting those strategies in a
way that they collectively foster the profitability of the company.
The prospective CEO at all cost must exhibit communication effectiveness. No business
whatsoever can excel if there exist no convivial communication between CEO, employees
below him, investors, and customers. Therefore, a CEO must effectively demonstrate the
ability to communicate effectively with fellow employees while at the same time expands
ideas and suggestions put forward by his associates. Having excellent communication skills is
being correlated to inherence. Birdi, Clegg, Patterson, Robinson, Stride, Wall & Wood (2008)
argue that CEO must be an open-minded person with ideas, and accept proposals fronted by
the team members, rather than entirely focusing on proposals designed only by him.
12
Communication with diverse people such as investors and other varied stakeholders requires
an excellence in vocabulary skills. Having excellent vocabulary promises effective
communication with employees that have diverse cultural values as in Berkshire Hathaway.
Humility as well as controlled emotion forms one of the immaculate skills for an effective
CEO. Although CEOs should be aggressive in achieving goals, it should not be extended in
losing temper when unpleasant issues arise in an organization. Nevertheless, a CEO should
not remain rigid in behavior and fall short in pointing out failures that may arise. In short, a
CEO should be placed at equilibrium when emotions are on focus (Saba & Martin 2008).
This means that the officer should not be angered by small mistakes, but on the other hand,
the CEO should not be overexcited by small wins. Rather, the CEO should exemplarily know
how to appreciate employees and head them toward the right direction, which ultimately
allows them to achieve the corporate aim of Berkshire Hathaway.
How interviews will be conducted
Interviews for a CEO are distinct to those conducted to any other employee of an
organization. This is because CEOs are the top-most employees to oversee the operations of a
firm. Hence, a comprehensive interview that will address personality issues, cultural richness,
and intellectual multiplicity should be enhanced. Getting an excellent CEO at Berkshire
Hathaway can only be perfected if structured interviews are conducted. The benefit of
conducting this type of interview is that it gives precision and accuracy. This is because the
questions asked during the interview are connected to job-related competencies, thereby
enabling prediction on the job performance of the candidates (Caldwell. Dixonl, Joe Jonathan
& Gaynor 2012, p. 178). Berkshire also ought for a structured interview due to legal
considerations associated with it as when they are conducted; they are more likely to be
13
legally defensible. Asking the same questions to all candidates during the interview enhances
objectivity. Fairness is also enhanced as one of the ethical considerations as finally consensus
on a final evaluation is reached. The following steps give insights about how an interview
should be conducted:
- Before the interview-, the interviewer should decide what kind of questions to be
asked during the interview. Job descriptions, competency profiles, as well as merit
criteria should be reviewed at this step (Lombardo & Robert 2009). Information
should be made available to the candidates before the interview, giving the location
for the interviews, welcoming interviewees for the interview, and arrange matters of
accommodation if needed. - During the interview-, the interviewer introduces the interviewer not limited to the
format of the interview, expected questions, and recording of the responses. Follow-
up questions should be used question after question to enable the interviewer to elicit
more data necessary to assess the applicant’s qualifications (Sosik & Jung 2010).
Thanking of the interviewee after the interview comes last at this step, as well as
giving an opportunity for the interviewed person to ask question. - After the interview- interviewer (s) analyses each candidate’s performance against the
qualifications required to perform at that position. By reviewing the responses,
interviewers are able to reach a consensus that the best candidate fits the vacancy.
Job descriptions and the flexibility needed for succession planning
Job descriptions provide the flexibility needed for successful succession planning. Job
descriptions aim at bringing together the right people and the right job in which possibilities
are endless. One of the ways in which job descriptions lead to flexibility in succession
14
planning is by providing comparative analysis. Job descriptions aim at getting the right
person for the complete understanding of its supply chains. This can only be realized if the
recruiters exhibit the availability of talents and through the organization’s ability to attract
these talents. Another avenue in which job descriptions achieves flexibility in succession
planning is by talent planning (Chopra & Kanji 2010). Job description has to make a
company to be engaged in talent planning whether at division, a unit, or corporate level. Job
description aims at retaining good talents in an organization because in the modern day
scarcity of talent and cost prevails. The first part of talent planning is talent identification,
which mainly deals with looking for skills and competencies necessarily for a transfer. The
second part engages the combination of comparative analysis and talent identification to
show that the more the scarcer a talent is, the more effort should be garnered to retain and
train internally. The third part of talent planning that is an amicable factor in flexibility in
succession planning is scenario planning, primarily indispensible to future planning. The
more possible future directions given to managers, the more talents are identified and
nurtured in a pool of talents (Cameron & Robert 2011). The third way in which job
description leads to flexibility in succession planning is by the creation of a pool of talents.
Because a company cannot be able to detect and establish what kind of talents it needs over a
period, it needs to emerge itself in construction, maintenance, and modification of a pool of
varied candidates with a variety of skills. Therefore, the three approaches will make sure that
job description satisfy its role in making succession planning flexible.
Part 3: Establishing a Culture and Structure for the Future
Training programs that must be in place and will they be conducted by internal or
external providers
15
After a company has selected the best for future, the remaining thing to do is to establish a
culture that there is a repetition of such practice. This is done by considering such aspects as
training programs, performance appraisals, and compensation methods. For Berkshire
Hathaway, the type of training program depends on the position of the employee. Taking into
focus that the trending topic now is on CEO and investment managers, the type of training
needed is of concerned. Types of training programs that is appropriate for this group is
leadership and management training programs. Leadership training programs will be most
appropriate for the next CEO of the company. Having Warren Buffett as a mentor to the
upcoming CEO will encompass internal training with internal providers. Internal providers
will act as a supervisor to the new CEO to train him or her to identify employee-training
needs. Management training programs are also mandatory to the new CEO. The coming
CEO, if coming out of the portfolio company, has the skills on how to manage an
organization (Connors & Smith 2011). What remains is just introduction to the existing HR
departments at Berkshire Hathaway. Management training programs should be provided by
internal providers to ensure that the newly recruited CEO have an orientation to the general
Human Resources Department in order to continue with the already started succession
planning.
How performance reviews can be used for succession planning and training?
Performance reviews, succession planning, and training are intertwined. What this point
means is that performance review/appraisal provides a suggestion of employees with
leadership prospective as well as with development demands. Therefore, a CEO at Berkshire
Hathaway ought to develop programs and interventions, which either offers employees with
training or an opportunity to regenerate their skills. Thus, Chopra & Kanji (2010)
performance appraisal works as an input to succession planning by spotting those employees
16
with varied or specific competencies that Berkshire Hathaway knows that it will need in the
future due to actions of turnover or retirement. In addition, performance appraisal strives to
highlight the external factors influencing the demand of new skills. One recommendation to
perfect performance appraisal on succession planning is by standardizing the appraisal, to be
reviewed, assessed, and analyzed to underline competencies and development demands
across all departments at Berkshire Hathaway (Jones-Burbridge 2012, p. 47). On matters of
training, performance appraisal gives the CEO with an indication of the gaps between
training and development by giving specifics where employees are scoring low on matters
concerning the misapplication of technology. This immediately becomes the target area for
creation and implementation of training programs, which progressively strive to amplify
employee competencies and output.
Which performance review methods would best support succession-planning strategies?
Future oriented performance appraisal method is best for succession planning strategies. One
of the methods under this group is management by objectives, which predominantly rates
performance against the achievement of goals set by management. It has an advantage of
evaluating managerial positions as those of CEOs. Apart from management by objectives,
psychological evaluation comes vital when the future target of a company like Berkshire
Hathaway is concerned. It is normally done on terms of unstructured interviews,
psychological tests, or a depth discussion with supervisors. This type of performance
evaluation method majorly focuses on emotional, motivational, intellectual attributes
affecting performance of employees. The final performance evaluation method that is useful
in succession planning is 360-degree feedback (Martin & Lombardi 2009). The future of
Berkshire Hathaway is very important and CEO can implement this method with
summarizing performance information on an individual from such stakeholders as
17
supervisors, peers, customers, and team members. The advantage of these appraisals is that
every employee is an appraiser to his or colleague. Inter-personal skills, team building
capabilities, and customer satisfaction are some of the attributes analyzed by 360-degree
feedback.
Compensation strategy and succession planning
Apart from training, compensation strategy becomes one of the indispensable tools in
succession planning. Compensation strategy helps to create the effective and competitive
firm, and the wrong setting of it destroys a company within the shortest time possible. Direct
financial compensation is the ultimate compensation strategy that can best suit succession
planning. Increase in direct financial compensation help to induce employees to stay longer in
a company. Pay on performance falls under this group and it calls for an increase
performance (Lombardo & Robert 2009). Non-financial compensation strategy can also work
best for succession planning. This is because, even though there is no monetary value
connected to it, the employee feels appreciated by the company. Berkshire Hathaway, for
instance, in implementing its succession plan, should create job responsibilities that hold
importance to the employees. Employees on this type of scheme are provided with more
autonomy as well as provision of prompt and constructive feedback to the employee.
How might affirmative action considerations affect training and development
strategies?
A diversified workforce is known to be the one that comprise three principles: affirmative
action, equal employment opportunity, and diversity. A company as Berkshire Hathaway will
find its training and development strategies being affected by affirmative action
considerations. Berkshire Hathaway may be compelled to observe affirmative action to create
18
diversity at the workplace (Algera and Marjolein 2012). Affirmative action will force
Berkshire to introduce more training or complex development strategies to accommodate
affirmative action. Training and development strategies that can be used to train and develop
male trainees cannot work the same to their female counterparts. Therefore, a diverse
workforce means diverse training and development strategy (Luthans & Bruce 2009, p. 293).
The process of hiring a strong pool of women, minorities, and people with disabilities calls
for extensive training and development requirement. This is opposed to well-trained
personnel who will only need orientation to the setup of an organization, and start working.
Apart from training programs, follow up after training also become expensive when
affirmative action is put into consideration.
Summary
Succession planning has been seen as the process by which a business prepares for the
unknown future. The future can in some of the times be emergency as the when death of a
CEO occurs or a CEO becomes disabled. Hence, there is need to nurture skills and talents and
assemble them in a pool so that when such emergencies occur, a company is not caught
unaware. Training of employees is very important, and above all, compensation strategy
conquers all in motivating and retaining employees. What brings lagging behind in
succession planning is the issue of affirmative action, which dictates equality to all people
including people with disabilities and women. However, when a smooth succession planning
is perfected, a company is promised development.
Berkshire Succession plan
Business and succession detail
19
Business name: Berkshire Hathaway international
Business structure: Corporation
Current Owner: Warren Buffett
Planned succession type: a CEO who will work together with four other investment managers
will replace Warren Buffet. He will be partially removed from the business, and will act as a
mentor to the new CEO.
Successor details: the successor will come from one of the portfolio companies. Another
prospective successor of warren Buffett will be his son.
Succession timeframe: immediately
Restrictions: the successor will be restrained by Berkshire Hathaway’s principles and policies
Proposed organization structure
Warren Buffett’s successor (CEO)
Todd Combs Ted Weschler Vacant Vacant
20
(investment
manager)
(investment
manager)
(investme
nt
manager)
(investment
manager)
Donald Wurster
Senior executive
management
Randy Zuke
(manager)
Bev ward
(office
manager)
Dick Dalzell
(operation
manager)
Rob
Cunningham
(director
information
and
technology)
Forrest
krutter
(secretary)
Kevin
Jackson
(network
support)
Jennifer
Tselentis
(assistant
controller)
Joe Rieck
(treasurer)
Joahnne
Manhart
(executive
assistant tax
and internal)
Rebecca
Amick
(director
internal
audit)
Skill retention strategies:
The new administration employees will be introduced in a concept of skill retention
atmosphere by mentoring and coaching. Roles and responsibilities will be allocated on the
type of skills one possesses. Performance appraisal will be done to ensure that current skills
still match with the business.
21
Training programs:
The possible successors will be introduced to leadership and management training programs.
External providers will be invited to add more skills on the ones acquired internally through
coaching and mentoring. Rather than the company has one vice person, that four investment
managers will replace position.
Analysis of the chart
CEO is the top-most officers who make decisions affecting the whole of the firm. In addition,
they set goals for the firm and direct the company to achieve its goals on top of managing the
daily-to-daily activities of the firm (Chopra & Kanji 2010). The best form of recruitment on
this level is internal as due to succession planning, the person to succeed CEO is already
chosen or projected. The type of skills and training required for the CEO is both leadership
and management training. This form of training should be reinforced by communication
skills to perfect the roles at this position.
Investment managers, on the other hand, have the responsibility to carry out the goals set by
the CEO. They also have the mandate to assist and motivate the first line mangers to
accomplish the objectives of the firm. Middle level managers still need leadership and
management skills and training (Luthans & Bruce 2009). They can be poached from other
firms or being promoted from first-line managers. Due to succession planning, middle level
managers strive to become CEOs one day.
First level managers or first line managers foresee the daily management of line workers.
They interact with employees on a daily basis and report to middle level managers. It is very
advisable to do internal recruitment to first line managers. They can be promoted from line
22
positions such as clerical and production levels. The production level comprises those
employees who execute roles from first line managers. The best avenue to recruit members of
this level is by external recruitment (Lombardo & Robert 2009). College recruitment, use of
professional bodies, and use of Social media can be used to absorb the qualified personnel to
do clerical and production jobs at this level.
Annotated bibliography
ALGERA, PUCK M., AND MARJOLEIN LIPS-WIERSMA. (2012). Radical Authentic
Leadership: Co-creating the Conditions Under Which All Members of the Organization
Can be Authentic. Leadership Quarterly 23/1: 118-131.
23
Abstract: Recently, in response to ethical challenges and loss of meaning within business,
leadership theory and research has seen a proliferation of literature on ‘Authentic
Leadership’. In this paper we argue that Authentic Leadership (AL), in the way it is currently
theorized, is in danger of not reaching its stated objectives. We systematically address the
“paradoxes” and shortcomings in current theory and suggest an extended focus Leadership
Annotated Bibliography Page 18 of study. To do so, we draw on four existential authenticity
themes: 1) inauthenticity is inevitable; 2) authenticity requires creating one’s own meaning;
3) authenticity does not imply goal and value congruence, 4) authenticity is not intrinsically
ethical. We systematically pursue the implications of these themes for the future b of
Authentic Leadership theory and propose a more radical form of AL in which the focus of
study shifts from the individual leader to understanding the conditions under which all
members of the organization behave authentically. We suggest this is more likely to achieve
the objectives of Authentic Leadership theory. [Copyright by Elsevier]
AVOLIO, BRUCE, J., FRED, O. WALUMBWA., AND TODD, J. WEBER. (2009).
Leadership: Current Theories, Research, and Future Directions. The Annual Review of
Psychology 60/1: 421-449.
This review examines recent theoretical and empirical developments in the leadership
literature, beginning with topics that are currently receiving attention in terms of research,
theory, and practice. We begin by examining authentic leadership and its development,
followed by work that takes a cognitive science approach. We then examine new-genre
leadership theories, complexity leadership, and leadership that is shared, collective, or
distributed. We examine the role of relationships through our review of leader member
exchange and the emerging work on followership. Finally, we examine work that has been
done on substitutes for leadership, servant leadership, spirituality and leadership, cross-
24
cultural leadership, and e-leadership. This structure has the benefit of creating a future focus
as well as providing an interesting way to examine the development of the field. Each section
ends with an identification of issues to be addressed in the future, in addition to the overall
integration of the literature we provide at the end of the article. [ABSTRACT FROM
AUTHOR]
BENNIS, W., AND JOAN, G. (2010). Learning to Lead: A Workbook on Becoming a
Leader. Philadelphia, PA: Basic Books.
Leading an organization is different from managing it. Managers want to be efficient.
Leaders want to be effective. If you want to develop your leadership skills, the first step is
Learning to Lead … Using wisdom from the world’s best leaders, helpful self-assessments,
and dozens of one-day skill-building exercises, Learning to Lead invites you to discover the
joy of leadership”. From www.Amazon.com
BIRDI, K., CLEGG, C., PATTERSON, M., ROBINSON, A., STRIDE, C. B., WALL, T.
D., & WOOD, S. J. (2008). The impact of human resource and operational management
practices on company productivity: A longitudinal study. Personnel Psychology, 61,
467‐501.
Authors investigated the merits of human resource and operational management practices
with 308 companies over 22 years.
• Empowerment positively impacts organizational productivity, as well as the adoption of
teamwork and extensive training (beyond simply job training).
• Operational practices (e.g., TQM) did not did not relate to organizational productivity.
25
CALDWELL. CAM, ROLF, DIXON., LARRY FLOYD., JOE CHAUDOIN.,
JONATHAN, POST. AND GAYNOR, CHEOKAS. 2012. “Transformative Leadership:
Achieving Unparalleled Excellence.” Journal of Business Ethics 109/2: 175-187.
The ongoing cynicism about leaders and organizations calls for a new standard of ethical
leadership that we have labeled ‘transformative leadership.’ This new leadership model
integrates ethically-based features of six other well-regarded leadership perspectives and
combines key normative and instrumental elements of each of those six perspectives.
Transformative leadership honors the governance obligations of leaders by demonstrating a
commitment to the welfare of all stakeholders and by seeking to optimize long-term wealth
creation. Citing the scholarly literature about leadership theory, we identify key elements of
the six leadership perspectives that make up transformative leadership. It also suggest leaders
who exemplify each perspective, describe the ethical foundations and message of each
perspective, and offer ten propositions that scholars and practitioners Leadership Annotated
Bibliography Page 6 can use to test the dimensions of this new transformative leadership
model. [ABSTRACT FROM AUTHOR]
CAMERON, KIM, S., AND ROBERT E. QUINN. (2011). Diagnosing and Changing
Organizational Culture: Based on the Competing Values Framework. San Francisco:
Jossey-Bass/John Wiley & Sons.
The Third Edition of this key resource provides a means of understanding and changing
organizational culture in order to make organizations more effective. It provides validated
instruments for diagnosing organizational culture and management competency; a theoretical
framework (competing values) for understanding organizational culture; and a systematic
strategy and methodology for changing organizational culture and personal behavior. New
26
edition includes online versions of the MSAI and OCAI assessments and new discussions of
the implications of national cultural profiles.
CHOPRA, PARVESH, K., KANJI, GOPAL, K. (2010). Emotional intelligence: A
Catalyst for Inspirational Leadership and Management Excellence. Total Quality
Management & Business Excellence 21/10: 971-1004.
Although a centuries-old phenomenon, emotional intelligence has received an enormous
amount of attention and popularity in various academic and non-academic circles during the
last two decades. Emotionally intelligent abilities, capacities and skills are increasingly
becoming significant and inevitable almost in all works of life ranging from effective
leadership, building teams, to the globe-spanning network of communication, development of
human potential and performance, social skills and economic and political life. In this
dynamic and complexly integrated international economic system, tomorrow’s leaders will
have to facilitate others to develop their own leadership, skills, and potential with the help of
emotional intelligence. Nevertheless, there still exists continuing debate among researchers
pertaining to the best method for measuring this construct of emotional intelligence. Keeping
this in view, the present paper aims to introduce a new measure, based on a holistic and
system modeling approach, to conceptualize and measure the phenomenon of emotional
intelligence. It develops, constructs, and validates a model that conceptualizes and measures
the phenomenon of emotional intelligence by constructing and using a latent variable
structural equation model within the certain boundaries of the psychosocial system. It will
provide us with a measurement or index of emotional intelligence at individual level. An
emotional intelligence index will indicate the extent to which a particular individual or a
group of people is emotionally intelligent and which areas lack this intelligence, if any.
Strengths and weaknesses of various components of the model will also indicate
27
characteristics at a certain level in order to pinpoint what exactly an individual or group of
individuals requires to improve its emotionally intelligent capabilities. [ABSTRACT FROM
AUTHOR]
CONNORS, ROGER., AND TOM, SMITH. Change the Culture, Change the Game.
(2011). (Roger Connors & Tom Smith.)
Based on an earlier book, Journey to the Emerald City, this fully revised installment captures
what the authors have learned while working with the hundreds of thousands of people on
using organizational culture as a strategic advantage.
JONES-BURBRIDGE, JO ANN. (2012). Servant Leadership. Corrections Today 73/6:
45-47.
Participants usually walk away with an awareness of the values of servant leadership and
develop skills to practice the principles of servant leadership. Since research has shown that
servant leadership actually works for individuals and for group settings, how does one ask
followers and subordinates to display the characteristics of a servant leader? […] the notion of
servant leadership has evolved over time to mean that the servant leader not only cares about
what he or she does, but also about his or her followers.
MARTIN, K., SABA, J. & LOMBARDI, M. (2009 December). The 2009 HR Executive’s
Agenda: Driving Business Execution and Employee Engagement. Aberdeen research
report available online at www.Aberdeen.com
The data from this report is a compilation of surveys and interviews with more than 400 HR
Executives and line of business managers. This report compares Best‐in‐Class companies,
which is based on employee performance, engagement and retention, to Laggards in those
areas. Some highlights include:
28
• 42% of Best‐in‐Class (BiC) organizations expect a budgetary increase for HCM (includes
processes, programs, and technology) in 2009.
• BiC are 55% more likely than all other organizations to anticipate a budgetary increase for
HCM in 2009.
• Core competencies have been defined for all job roles in 59% of BiC compared to only 26%
of laggards.
• 79% of BiC formally review or assess the effectiveness of the organization’s HCM strategy
at least once a year compared to 55% of laggards.
• 48% of BiC utilize executive/leadership development services compared to 28% of
laggards.
LOMBARDO, MICHAEL, M., AND ROBERT, W. EICHINGER. (2009). FYI: for
Your Improvement: A Guide for Development and Coaching, 5th ed. Los Angeles, CA:
Korn/Ferry Company.
FYI For Your Improvement™ 5th Edition is an easy-to-use development tool that features a
chapter of actionable tips for each of 67 Leadership Architect® Competencies, 19 Career
Stallers and Stoppers and 7 Global Focus Areas. (PUBLICATION ABSTRACT)
LUTHANS, FRED AND BRUCE J. AVOLIO. (2009). The Point of Positive
Organizational Behavior. Journal of Organizational Behavior 30(2): 291-307.
Perhaps the most important “Point” we would like to make in this “Point-Counterpoint” on
positive organizational behavior is the role that research must play in this evolving area of
study. We follow this point on the importance of research by drawing from recent findings
that indicate in discussions such as this point and counterpoint, that taking a positive
29
approach leads to more in-depth inquiry, whereas a negative perspective leads to advocacy
and in our view less learning potential. Thus, the positive perspective we take in this “Point”
piece is to identify and make a deep inquiry into the major issues and questions surrounding
positive organizational behavior (POB). We consciously try to avoid taking an advocacy
position. Specifically, after first setting the stage with the background and status of POB, we
draw from the lessons that can be learned from positive psychology and then make an inquiry
into “Why POB?” and exactly “What is POB?” The article concludes with further inquiry
into the role the negative does and can play, and finally how POB relates to our recent work
in authentic leadership development. Copyright © 2009 John Wiley & Sons, Ltd.
[ABSTRACT FROM AUTHOR]
SABA, J. & MARTIN, K. (2008 October) Succession Management: Addressing the
Leadership Development Challenge. Aberdeen Group research report available online
at www.Aberdeen.com
This report was compiled from a survey of over 310 organizations looking at how they
develop their leadership pipeline and how they implement best practices to improve leaders
in key positions. The study breaks the participants into 3 specific groups (Best‐in‐Class,
Average, and Laggards) based on Percentage of key vacancies filled by internal candidates,
job performance successors, bench strength, and employee engagement.
• Best‐in‐Class organizations are 40% more likely to focus on developing a leadership
pipeline across all levels of the organization.
• Best‐in‐Class are 64% more likely than the industry average and more than twice as likely
as laggards to have a formal process for identifying high potential workers.
30
• 59% of Best‐in‐Class organizations have established clear linkages between leadership
development programs and overall business objectives.
• Best‐in‐Class organizations are 178% more likely than other organizations to utilize gap
analysis or competency variance tools to compare candidates when determining promotion
readiness.
SOSIK, J.J. AND JUNG, D.I. (2010). Full range leadership development: pathways for
people, profit, and planet. New York: Psychology Press.
The Full Range Leadership Development (FRLD) model has become the premier leadership
research paradigm. This book is written with the objective of demonstrating how ordinary
people in all walks of life have used FRLD to achieve extraordinary results of developing
people to their full potential, boosting company profits, and creating sustainable business
practices. [FROM PREFACE]
WELDON, D. (2008 August) Strategies in Workforce Planning: Using Talent
Acquisition and Performance Management Programs to Meet Tomorrow’s Business
Needs. Aberdeen Group Research Report available online at www.Aberdeen.com
The data in this report was compiled from survey responses from over 200 organizations
from various industries and geographies. The organizations were broken into 3 classes
(Best‐in‐Class, Average, and Laggard) based on employee retention, workforce capacity
utilization, employee performance, and skills ability.
• Best‐in‐Class companies are two times more likely than Laggards to form partnerships with
local colleges, universities, and other training institutions to help develop worker’s skills and
capabilities.
31
• 71% of Best‐in‐class companies understand the core competencies required in key job roles
compared to 55% of industry average companies.
