Warren Buffett: 7 things to avoid in management

Warren Buffett's annual letters to Berkshire Hathaway shareholders are chock full of financial and management advice — the do's and don'ts for a more stable life alongside information on company performance.

With Mr. Buffett's annual letter due Saturday, Bloomberg revisited some of the 85-year-old self-made billionaire's wisdom from years past. Here are seven management behaviors Mr. Buffett warns against.

1. Don't torture yourself over mistakes. Do take responsibility for them. "Agonizing over errors is a mistake. But acknowledging and analyzing them can be useful, though that practice is rare in corporate boardrooms. ... When it comes to corporate blunders, CEOs invoke the concept of the Virgin Birth."

2. Don't enforce mandatory retirement ages. In 1992, a Harvard Business School student asked Mr. Buffett when he planned to retire. "I replied, 'About five to 10 years after I die.'"

3. "Don't ask the barber whether you need a haircut." The man holding the scissors will give you the answer that benefits him. Instead, CEOs should seek feedback from outside counsel about deals, since "friendly investment bankers will reassure him as to the soundness of his actions."

4. Don't procrastinate. When there is a problem, the time to act is now. As Mr. Buffett said in 2006: "The time to have considered — and improved — the reliability of New Orleans' levees was before Katrina."

5. Don't disturb great managers. "At Berkshire, we do not tell .400 hitters how to swing." Mr. Buffett takes great pride in his managers, as evidenced by notes like this in his 2015 letter: "They are truly AllStars who run their businesses as if they were the only asset owned by their families."

6. Don't be greedy about pay. Referring to his one-day successor, Mr. Buffet said, "It's important that neither ego nor avarice motivate him to reach for pay matching his most lavishly-compensated peers, even if his achievements far exceed theirs." He also reinforces the importance of intrinsic reward, noting that most of Berkshire's managers have no financial need to work. "The joy of hitting business 'home runs' means as much to them as their paycheck," he said in 2015.

7. Don't let attitude problems ruin your business. Mr. Buffett has said when he does retire, his successor will need the strength to combat the ABCs of business decay: arrogance, bureaucracy and complacency. "When these corporate cancers metastasize, even the strongest of companies can falter," he said in 2015.

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