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Warren Buffett’s 3 Simple Tips On Who To Hire

I’ve been thinking a lot about hiring lately.

I’m working on starting a new business and I also coach others on starting their own businesses – and hiring is perhaps the most important decision a business leader can make (you may recall how I previously wrote about a mishire costing you a cool $1 million).

This article was inspired by Quote #47 from The Tao Of Warren Buffett

 

I like formulas & frameworks and I’ve been keeping my eye out for a good one for hiring –  I found a simple one from investor Warren Buffett.

He says there are just 3 criteria that every good hire should have: Integrity, Intelligence and Energy.

1) Integrity

Does this person consistently exhibit a soundness of character? Are they, in a word, honest?

One good tip on figuring this out is to use Warren Buffett’s “newspaper front page” test.

Let’s pretend the potential hire is named Bernard.

If a New York Times reporter had access to the work that Bernard did for you, would you comfortable opening up the paper tomorrow and reading their analysis of Bernard?

If the answer is yes, Bernard is probably of good integrity…if you’re thinking too much about that, you might have a problem with old Bernie.

A favorite quote of mine on honesty/integrity comes from Mark Twain:

“If you tell the truth you don’t have to remember anything.”

Another good quote from unknown sources is:

“Hire for character, don’t hire characters

2) Intelligence

Raw intelligence is important.

Did a person test well in a competitive environment (such as grades in University or on a standardized test like the SATs).

I just met with one engineer today in part because he scored a 1,480 on his SATs and that’s higher than most people I know.

But it doesn’t have to be academic intelligence.

It can be “Street Smarts” – The ability to quickly read situations and people.

Or it could be “Emotional Intelligence” – the skills to create optimal results in your relationship with yourself and others.

3) Energy

By energy, I couldn’t find Buffett’s definition of it but here’s mine:

Good energy in a hire is when they feel motivated about a task at hand.

For example, most people consider me high-energy about most things: I care deeply about new Internet businesses, hiring & making the world a better place – so when I’m working on those things, you’ll find me at a high-energy level.

But there are tasks that you’ll find me much lower energy on, such as paying my bills or filling out a rebate form to get $100 back for my contact lenses.

So, if you need help with your paperwork, please do not consider me a good candidate!

But If They Don’t Have Integrity, The Other Two Will Kill You

Now, ideally you want all three criteria — Integrity, Intelligence and Energy — to be met when hiring employees.

But there is one that trumps them all: Integrity.

Why?

The reason, as Buffett explains, is that if you have the other two: an intelligent person who is high-energy about what they’re doing, but they’re missing the third (they are low-integrity (e.g. dishonest)), then that is a Perfect Storm of financial disaster.

Case in point: Bernie Madoff (you like how I moved to the real -life Bernie from the hypothetical “Bernard”?).

Clearly, Bernie was an intelligent man – he had the respect of a Who’s Who of Wall Street people.

And he was high-energy at what he did– was able to talk 1,000’s of people into hiring him to manage their savings; and hid his fraud for what investigators believe was over 30 years!

He even duped a couple of very smart people I know.

And Bernie served on a number of boards (including Yeshiva University’s Business School and Gift of Life Bone Marrow Foundation) and was clearly a high-energy multi-tasker.

So, I think Bernie qualifes as an intelligent and energized person…but he was low-integrity…and he robbed people blind.

To recap, there are three things that a good hire (or anyone you work with) should possess:

  1. Integrity
  2. Intelligence
  3. Energy

But to save yourself time, make sure they have the first (Integrity) because the next two don’t matter without it.

4 Comments

  • Ddostal

    Hi Rob,
    Thank you for sharing that. As a longtime headhunter, I have watched companies measure, compare, contrast, analyze, and even graph who was or is the best talent. Getting some simple judging measurements, as you did, is the key.

    Take some time exploring a persons background in a comfortable setting with the intention of revealing your measurements with questions as simple as “What is the greatest accomplishment in your current position?” and follow up with why and how and all the questions as you explore the accomplishment. As they talk, they will reveal their passion or energy, exhibit their intelligence (watch to see if they measure their results), and will show hints of integrity. If they dance and twist with their words, well…big red flag fro me….

    Thanks again!

    Derek Dostal
    YouStartMonday.com

  • Zbentley16

    Hi Rob,
    Is there anyway I could find the actual source of Warren Buffett’s criteria? I’m writing an essay for school on the necessity of a college education and one of the points is about what employers look for other than just intelligence and I would love to use a quote from Mr. Buffett.

  • http://www.robdkelly.com Rob Kelly

    The source came from Quote No. 47 (p. 58 of the hardcover edition) of the book The Tao of Warren Buffett by Mary Buffett.

    In it, Buffett states:

    “In looking for someone to hire, you look for three qualities: integrity, intelligence and energy. But the most important is integrity, because if they don’t have that, the other two qualities, intelligence and energy, are going to kill you.”

    Hope that helps your essay!

  • http://robdkelly.com/career-advice/charisma-based-narcissistic-leader/ 7 Signs Of A Charisma-Based Narcissistic Leader | Rob Kelly

    [...] and high energy) — it’s the third one (high integrity) they have a problem with (see Warren Buffett’s 3 Simple Steps On Who To Hire for more on that).Ok, so on with it — here are 7 signs that you work with one of these [...]