HIMACHAL PRADESH NATIONAL LAW UNIVERSITY, SHIMLA

Organization Behaviour & Behavioural Psychology

TITLE- ROLE OF WARREN BUFFET TOWARDS ORGANIZATION

BEHAVIOUR

SUBMITTED TO- Dr. Esha Sharma Bhagra

Assistant Professor of Management

SUBMITTED BY

NAMAN AGRAWAL
1ST YEAR BBA-LLB 1120220069

TABLE OF CONTENTS

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S. No. Particulars Page No.

1. Acknowledgement 3
2. Introduction 4
3. Organizational Behaviour Origins 5

4. Warren Buffet 6

8. Conclusion 13

9. Bibliography 14

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 ACKNOWLEDGEMENT

Every project, however big or small it may be and however important it is, is successful
largely due to the efforts and dedication of a number of persons who have helped in whatever
way they can, by providing information related to it or by giving advice that is essential in the
completion of the project. I sincerely appreciate the assistance of these people and thank them
for their support and guidance that was instrumental in making this project a success.

I, Naman Agrawal, a student of Himachal Pradesh National Law University (Shimla), am

grateful to the University for the confidence bestowed in me and entrusting my ability. I also
appreciate and extend my thanks to my project guide, - Dr. Esha Sharma Bhagra who
mentored me while compiling the project. His insight has been extremely valuable in the
completion of this project.

I would like to extend my last word of gratitude to everyone else involved in helping me with
the assignment.

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 INTRODUCTION

Meaning: - Organizational behaviour is the study of how individuals and groups interact
within an organization and how these interactions affect an organization’s performance
toward its goal or goals. The field examines the impact of various factors on behaviour within
an organization.

 Organisational behaviour is a subset of management activities concerned with

understanding, predicting and influencing individual behaviour in organisational
setting.”—Callahan, Fleenor and Kudson.

 “Organisational behaviour is a branch of the Social Sciences that seeks to build

theories that can be applied” to predicting, understanding and controlling behaviour in
work organisations.”—Raman J. Aldag.

 “Organisational behaviour is the study and application of knowledge about how

people act within an organisation. It is a human tool for human benefit. It applies
broadly to the behaviour of people in all types of organisations.”— Newstrom and
Davis.

 Organisational behaviour is directly concerned with the understanding, production

and control of human behaviour in organisations.”—Fred Luthans.

 “Organisational behaviour is a field of study that investigates the impact that

individuals, groups and structure have on behaviour within the organisations for the
purpose of applying such knowledge toward improving an organization’s
effectiveness.”

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 ORGANIZATIONAL BEHAVIOUR ORIGINS

The study of organizational behaviour has its roots in the late 1920s, when the Western
Electric Company launched a now-famous series of studies of the behaviour of workers at its
Hawthorne Works plant in Cicero.
Researchers there set out to determine whether workers could be made to be more productive
if their environment was upgraded with better lighting and other design improvements. To
their surprise, the researchers found that the environment was less important than social
factors. It was more important, for example, that people got along with their co-workers and
felt their bosses appreciated them.
Those initial findings inspired a series of wide-ranging studies between 1924 and 1933.They
included the effects on productivity of work breaks, isolation, and lighting, among many
other factors.
The Hawthorne Effect—which describes the way test subjects' behaviour may change when
they know they are being observed—is the best-known study of organizational behaviour.
Researchers are taught to consider whether or not (and to what degree) the Hawthorne Effect
may skew their findings on human behaviour.
Organizational behaviour was not fully recognized by the American Psychological
Association as a field of academic study until the 1970s. However, the Hawthorne research is
credited for validating organizational behaviour as a legitimate field of study, and it's the
foundation of the human resources (HR) profession as we now know it.

Evolution of Organization Behaviour

The leaders of the Hawthorne study had a couple of radical notions. They thought they could
use the techniques of scientific observation to increase an employee's amount and quality of
work, and they did not look at workers as interchangeable resources. Workers, they thought,
were unique in terms of their psychology and potential fit within a company.
Over the following years, the concept of organizational behaviour widened. Beginning with
World War II, researchers began focusing on logistics and management science. Studies by
the Carnegie School in the 1950s and 1960s solidified these rationalist approaches to
decision-making.
Today, those and other studies have evolved into modern theories of business structure and
decision-making. The new frontiers of organizational behaviour are the cultural components
of organizations, such as how race, class, and gender roles affect group building and
productivity. These studies take into account how identity and background inform decision-
making.

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Organizational behaviour is no different than other forms of psychological behaviour
analysis. It simply emphasizes how individuals operate and work together within a business
setting.
Learning Organizational Behaviour
Academic programs focusing on organizational behaviour are found in business schools, as
well as at schools of social work and psychology. These programs draw from the fields of
anthropology, ethnography, and leadership studies, and use quantitative, qualitative, and
computer models as methods to explore and test ideas.
Depending on the program, one can study specific topics within organizational behaviour or
broader fields within it. Specific topics covered include cognition, decision-making, learning,
motivation, negotiation, impressions, group process, stereotyping, and power and
influence. The broader study areas include social systems, the dynamics of change, markets,
relationships between organizations and their environments, how social movements influence
markets, and the power of social networks.

What Is Organizational Behaviour (OB)?

Organizational behaviour is the academic study of how people interact within groups. The
principles of the study of organizational behaviour are applied primarily in attempts to make
businesses operate more effectively.

Key Takeaways
 Organizational behaviour is the academic study of how people interact within groups
and its principles are applied primarily in attempts to make businesses operate more
effectively.
 The study of organizational behaviour includes areas of research dedicated to
improving job performance, increasing job satisfaction, promoting innovation, and
encouraging leadership and is a foundation of corporate human resources.
 The Hawthorne Effect, which describes the way test subjects' behaviour may change
when they know they are being observed, is the best-known study of organizational
behaviour.
 Organizational behaviour is embedded in human resources such as employee
retention, engagement, training, and culture.
 Organizational behaviour is a subset of organizational theory which studies a more
holistic way of structuring a company and managing its resources.

Organisational behaviour revolves around two fundamental components:

1. The nature of the man.
2. The nature of the organisation.

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In other words, organisational behaviour may be organisation of individual’s behaviour in
relation to physical means and resources so as to achieve the desired objective of the
organisation.

Characteristics of Organisational Behaviour

1. Behavioural Approach to Management:

Organisational behaviour is that part of whole management which represents the behavioural
approach to management. Organisational behaviour has emerged as a distinct field of study
because of the importance of human behaviour in organisations.
2. Cause and Effect Relationship:
Human behaviour is generally taken in terms of cause and effect relationship and not in
philosophical terms. It helps in predicting the behaviour of individuals. It provides
generalizations that managers can use to anticipate the effect of certain activities on human
behaviour.
3. Organisational Behaviour is a Branch of Social Sciences:
Organisational behaviour is heavily influenced by several other social sciences viz.
psychology, sociology and anthropology. It draws a rich array of research from these
disciplines.
4. Three Levels of Analysis:
Organisational behaviour encompasses the study of three levels of analysis namely individual
behaviour, inter-individual behaviour and the behaviour of organisations themselves. The
field of organisational behaviour embraces all these levels as being complementary to each
other.
5. A Science as well as an Art:
Organisational behaviour is a science as well as an art. The systematic knowledge about
human behaviour is a science and the application of behavioural knowledge and skills is an
art. Organisational behaviour is not an exact science because it cannot exactly predict the
behaviour of people in organisations. At best a manager can generalize to a limited extent and
in many cases, he has to act on the basis of partial information.
6. A Body of Theory, Research and Application:
Organisational behaviour consists of a body of theory, research and application which helps
in understanding the human behaviour in organisation. All these techniques help the
managers to solve human problems in organisations.
7. Beneficial to both Organisation and Individuals:

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Organisational behaviour creates an atmosphere whereby both organisation and individuals
are benefitted by each other. A reasonable climate is created so that employees may get much
needed satisfaction and the organisation may attain its objectives.
8. Rational Thinking:
Organisational behaviour provides a rational thinking about people and their behaviour. The
major objective of organisational behaviour is to explain and predict human behaviour in
organisations, so that result yielding situations can be created.

Nature of Organisational Behaviour

Organisational behaviour in the study of human behaviour in the organisations. Whenever an
individual joins an organisation he brings with him unique set of personal characteristics,
experiences from other organisations and a personal background. At the first stage
organisational behaviour must look at the unique perspective that each individual brings to
the work setting.
The second stage of organisational behaviour is to study the dynamics of how the incoming
individuals interact with the broader organisation. No individual can work in isolation. He
comes into contact with other individuals and the organisation in a variety of ways. The
individual who joins a new organisation has to come into contact with the co-workers,
managers, formal policies and procedures of the organisation etc.

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 WARREN BUFFET

Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is

currently the chairman and CEO of Berkshire Hathaway. He is one of the best-
known fundamental investors in the world as a result of his immense investment
success possessing a net worth of $104 billion as of March 2023, [5] making him the fifth-
richest person in the world.
Buffett was born in 1930 in Omaha, Nebraska, the second of three children and the only son
of Leila and Congressman Howard Buffett. He began his education at Rose Hill Elementary
School. In 1942, his father was elected to the first of four terms in the United States
Congress, and after moving with his family to Washington, D.C., Warren finished elementary
school, attended Alice Deal Junior High School and graduated from what was then Woodrow
Wilson High School in 1947, where his senior yearbook picture reads: "likes math; a future
stockbroker”. After finishing high school and finding success with his side entrepreneurial
and investment ventures, Buffett wanted to skip college to go directly into business but was
overruled by his father.

Leadership Lessons from Warren Buffett’s Leadership Style

One of the richest men on the planet, Warren Buffett has assets worth up to $113 billion as of
June 2022. His multinational holding company Berkshire Hathaway, with its headquarters in
Omaha, Nebraska, is his principal source of fortune. His emphasis on prudence and value
investing has impacted many investors all around the globe.
If you believe that leadership and investment have nothing in common, you need to
reconsider. The man that is labelled as the “greatest successful investor of the 20th century,”
Warren Buffet, is well-versed in the skills necessary to excel as a corporate leader. He’s one
of the wealthiest persons in the world and has promised to give 99.9% of his fortune to
charity. In this blog, we will look at some of the popular leadership styles of Warren Buffett.

Warren Buffett’s Leadership Style

Laissez-Faire is commonly referred to as “delegative leadership,” and is the leadership
approach popularised by Buffett. It is believed to result in reduced productivity but also rises
in plenty of other resources for team members and employees.

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Individuals who are competent and driven can succeed under this style of leadership, but less
skilled employees frequently struggle and miss necessary deadlines. In this instance, Buffett
chooses employees who are highly skilled and dedicated since he relies on their performance.
Laissez-faire leadership style is a type of hands-off leadership style where the leaders tend
not to micromanage their employees, nor get too involved in tasks already assigned to
employees. They allow the employees to take the lead on projects, trusting their creativity,
training, and experience, and are often confident about the employees' capabilities.
Though delegation leaders tend not to get involved in employees' decision-making, they
provide guidance in the form of mentorship and take responsibility when needed. This
leadership style is best suited to an organization with professional, skilled, and motivated
labour.
Even with the risk that comes with this leadership style, Warren Buffett believes that giving
autonomy to managers to manage tasks efficiently without being bothered about watching
how they perform and constantly checking their work quality will help the managers perform
better.
In addition to practising the laissez-faire leadership style, Warren Buffet is also
an authentic leader. Authentic leaders are leaders who have clear values and an understanding
of their values. Their attitude towards life is based on this value, and they have a clear picture
of who they are, the goals they chase, and the right way of doing things. This is particularly
evident in Warren Buffett's company, Berkshire Hathaway.
His leadership has a focus on the fundamentals, like investing in a good company that makes
good products at a fair price. This shows his value-oriented behaviour as he seeks to create
value from wealth. He is also a self-disciplined man, choosing to live frugally and donate
from his wealth, demonstrating his moral values. He also demonstrates transparency in his
relationships and trusts his managers by letting them lead his companies and succeed in their
own way.

Warren Buffett’s 9 essential rules for running a business

1. Keep calm in the face of volatility.

Buffett writes that earnings gyrations “don’t bother us in the least.” After all, “Charlie
(Munger) and I would much rather earn a lumpy 15 percent over time than a smooth 12
percent.”
2. Keep good company.
Berkshire has never split its Class A shares. As a result, one share is prohibitively expensive
for many retail investors. That discouraged people from rapidly moving into and out of the
stock, and that’s exactly the way Buffett likes it. He wants shareholders who share his long-
term view.

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All the way back in 1979, he wrote: “In large part, companies obtain the shareholder
constituency that they seek and deserve. If they focus their thinking and communications on
short-term results or short-term stock market consequences, they will, in large part, attract
shareholders who focus on the same factors.”
3. Keep your focus.
In that same letter, Buffett warns that even a great company can see its “value stagnate in the
presence of hubris or of boredom that caused the attention of managers to wander.” The
result: A “side-tracked” leadership that “neglects its wonderful base business while
purchasing other businesses that are so-so or worse.”
In this area, Buffett argues that “inactivity strikes us as intelligent behaviour.” In 1982, a year
that saw a number of corporate deals, Buffett thought that in many of them, “managerial
intellect wilted in competition with managerial adrenaline. The thrill of the chase blinded the
pursuers to the consequences of the catch. “Warren Buffett makes long-term investments
4. Keep costs low.
In his 1996 letter, Buffett wrote that being a “low-cost operator” is directly responsible for
the success of Berkshire’s GEICO auto insurance subsidiary. “Low costs permit low prices,
and low prices attract and retain good policyholders.” And when those customers recommend
GEICO to their friends, the company gets an “enormous savings in acquisition expenses, and
that makes our costs still lower.”
5. Keep employee incentives simple.
Buffett doesn’t like what he calls “lottery ticket” arrangements, such as stock options, in
which the ultimate value could range from “zero to huge” and is “totally out of the control of
the person whose behaviour we would like to affect.” Instead, goals should be “tailored to the
economics” of the business, simple and measurable, and be “directly related to the daily
activities of plan participants.”
6. Keep out of trouble.
Buffett tries to “reverse engineer” the future at Berkshire. “If we can’t tolerate a possible
consequence, remote though it may be, we steer clear of planting its seeds.” (Buffett notes
that his partner Munger often says, “All I want to know is where I’m going to die so I’ll never
go there.”)
7. Keep your undervalued stock to yourself.
Buffett is especially critical of a company using its stock to make a purchase when that stock
isn’t being fully valued by the market. “Under such circumstances, a marvellous business
purchased at a fair sales price becomes a terrible buy. For gold valued as gold cannot be
purchased intelligently through the utilization of gold — or even silver — valued as lead.”
8. Keep it small.
In 2006, Buffett wrote that he’s sceptical “about the ability of big entities of any type to
function well.” In his opinion, “size seems to make many organizations slow-thinking,
resistant to change and smug.”

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That’s one reason Berkshire’s corporate headquarters still has only a handful of employees,
with almost all the managing work left to its unit’s managers. “It is a real pleasure to work
with managers who enjoy coming to work each morning and, once there, instinctively and
unerringly think like owners.”
9. Keep your reputation.
In Buffett’s mind, perhaps the most important piece of advice for businesses, and for
everyone else, is to maintain a sterling reputation for honesty by never doing something you
wouldn’t want to see reported on the front page of your local newspaper.

Six Lessons on Building Corporate Culture

1) Written in Plain English: The memo is personable and straightforward. Authenticity
and readability are critical in ethics and compliance communications, helping create trust and
transparency.
2) Reflects Deep Commitment to Fostering a “Speak-Up” Culture: The memo underscores
Buffett’s commitment to a speak-up culture. In fact, he invites his managers to notify him
personally at the first suspicion of a potential misdeed. “If you see anything whose propriety
or legality causes you to hesitate, be sure to give me a call,” he says.
3) Underscores Strong “Tone from the Top”: Buffett challenges his senior staff to embrace
the idea that their actions should be born out of not only what’s legal and ethical, but also
what’s right and good—actions they would “be happy to have written about on the front page
of a national newspaper.”
4) Puts Ethical Practices Ahead of Profit: In saying, “we can afford to lose money—even a lot
of money. But we can’t afford to lose reputation—even a shred of reputation,” Buffett clearly
sends a clear message to his senior and middle managers about where the organization’s
priorities lie.
5) Underscores the Business Value of a Strong Culture: The memo also emphasizes the
business value of a strong culture. His own portfolio would underline that fact; supported by
his emphasis on corporate culture, it’s estimated to be worth $73.1B. In the note, Buffett says
that “culture, more than rule books, determines how an organization behaves.”
6) Short and to the Point: Finally, the note is concise and targeted. It delivers its strong
message to a specific audience quickly and in only a couple of pages. It’s immediately clear
that Buffett has high expectations of his employees—and specifically places a high level of
trust on his senior leaders.

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 CONCLUSION

Warren Buffet, also known as Oracle of Omaha, is one of the finest investors in the world and
he is the chair and CEO of Berkshire Hathaway.
Berkshire Hathaway is a financial service and public organization that started as a textile
company but now has over 60 companies under it including Duracell, Dairy Queen, and
Geico.
Warren Buffet practices the laissez-faire leadership style.
The laissez-faire leadership style is also called delegative leadership style or hands-free
leadership style.
Warren Buffet is also an authentic leader.

BIBLIOGRAPHY

1. BOOKS

 Organizational Behaviour Managing People in Dynamic Organizations

BY:- Paul E. Smith, Wendy Yellowley, Christopher J. McLachlan
 Organisational Behaviour
BY: - S. S. Khanka
 Leadership Lessons of Warren Buffett
BY: - Will Peters

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 2. WEBSITES

https://www.forbes.com/advisor/business/what-is-organizational-behavior/
https://www.mygreatlearning.com/blog/warren-buffett-leadership-style/
https://financhill.com/blog/investing/warren-buffett-leadership-style

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