In 1956 stock analyst Warren Buffett formed what he called Buffett Partnership and in 1970 acquired a textile company called Berkshire Hathaway.  The company assumed that name and went on to become a diversified holding company with Buffett as the main stockholder and Chairman of the Board.  He’s ran that company with a “value investment” philosophy in both purchasing stock and purchasing and operating whole companies.

 

On Saturday at the company’s annual shareholders’ meeting he announced his retirment come the end of the year.  He will have served as Chairman of the company for over 55 years at that time and will be 95 years of age.  In the meantime he has become the 5th wealthiest American according to this Forbes listing and the 5th wealthiest person in the world according to this “real-time” wealth indicator list by Forbes as of Sunday as I write this article.

 

Back in 2014 Buffett wrote a letter to his shareholders about what has made Berkshire Hathaway the success that it is today.  I’ve taken that letter and tried to decipher what I think it is that Buffett tries to get across about business leadership and success.  And I believe, these characteristics are universal and would apply in the Death Care business whether you are Tom Ryan, CEO of Service Corporation International (SCI) and oversee a $4 billion budget and the largest Death Care company in the world, or you operate a 40-call rural funeral home, or you operate a supply company to the industry/profession.

 

In my opinion, these criteria are just good, solid, business traits that any successful business needs to build value over time.

 

• Character — Buffett says “Character is crucial” and  “A CEO needs to be all in for the company, not for himself“.

• Calm and Decisive —  Buffett says “(A CEO) . . .has to be a rational, calm and decisive individual who has a broad understanding of business and good insights into human behavior.  It’s important as well that he knows his limits.

• Humility —  Buffett says that a CEO needs  “. . .the ability to fight off the ABCs of business decay, which are arrogance, bureaucracy and complacency.”

• Culture and Values — Buffett says “If our non-economic values were to be lost, much of Berkshire’s economic value would collapse as well. ‘Tone at the top’ will be key to maintaining Berkshire’s special culture. . . . . A CEO’s behavior has a huge impact on managers down the line. . . ”

 

Buffett also says that “Managing Berkshire (or any other company) is primarily a job of capital allocation, coupled with the selection and retention of outstanding managers to captain our operating subsidiaries.”

 

I think that statement really resonates with Death Care businesses, especially funeral homes. When one is operating a funeral home how you allocate your capital. . .whether you choose to add on to your structure, build a new structure, acquire another location, pay staff, increase benefits, or increase marketing is an extremely important decision one needs to make from time to time. . . . and, can have positive or negative consequences.

 

For instance, getting the allocation of capital wrong by building an additional facility which may increase the work load of staff and not giving pay or benefit increases to that staff could have dire consequences.  One needs to look at all of the options and probably get advice from your own staff and mentors so you have differing options to look at.  A new facility with a loss of well-known and well-thought of staff could become a big drain on financial resources, especially if they take with them some of the business you were counting on.

 

And that second point, about selecting and retention of outstanding managers is really about who you hire to carry out your business philosophies.  Again, whether you are SCI and hiring your management team or you are a single-operator firm going out to hire that first employee the choice is crucial.  It is imperative that one not make mistakes in hiring.

 

My experience also leads me to agree with Buffett that “Culture and Values” are extememly important.  When I began my career in owning a funeral home I had $30 between twice monthly paychecks for discretionary personal purchases.  However, our funeral home values at the time were to give unwavering personal service, to admit if we were wrong about something and refund money back if our service was not up to the level the client family expected, to serve without requiring payment — even offering free services if necessary, no questions asked, to those that could not pay, to never “up-sell” client families, and to take care of families first and worry about our business and personal situations later.

 

When I left the business 33 years later those were our same values and I’m of the opinion that it was those rock-solid values that built the business during those times.  Even though there were lean times at the start the foundation of never changing our values, or losing our humility and empathy as our success grew,  and providing the services that clientele expected regardless of their financial situation and our business situation, these values paid off over time.

 

Related — Warren Buffet Wikipedia page

 

Funeral Director Daily take:  I found it interesting that when I wrote this article I started to get a thought process on why America has such political dysfunction.  I realized that “our politics” have none of the values that Buffett says are needed for building value-increasing, stable companies.

Let’s look at politics. . .

Character:  Most of us agree that character is lacking.  Most of our politicians will go against their own beliefs to simply vote with their party and stop the movement of another party or to save their own seat in Congress.  i.e. most of us believe that politicians don’t have the “Character” to stand up for their own convictions when in the minority of their party.

Calm and Decisive:  There is no way you could describe most politicians as “calm”. . . . .They are out speaking against their opponents, in whatever way possible, to try to win favor with voters. . . .it is certainly more calamity than calm.

Humility:  This speaks for itself. . . .every politician has “their” answer and will not ever give an opposition politician the compliment that “their idea might be a good one” for the country.  “Their idea” is always the best (in their own mind).

Culture and Values:  Again, this speaks for itself. . . . Over and over again each party talks about “paring the budget” when they are in power or running for office.  But when the other party suggests it, they then call it a “cutting of services”.  It’s ironic how that happens over and over and over again. . . i.e. one’s culture and values change with the leadership.  With the culture and values changing so drastically every four years (or so) at the top it is impossible to build a value oriented culture.

 

Maybe it would be smart if our policital leaders looked to 95-year old Warren Buffett on how to build our country for value and growth.

 

More news from the world of Death Care:

• Business Update:  Century old Phoenix funeral home to close.  Oswego County Business (NY)
• Mortuaries overcrowded due to death certificate delays.  BBC News (Great Britain)
• South St. Louis County woman says vases were stolen from headstones at cemetery.  Video news story and print article.  5 on Your Side – NBC St. Louis (MO)
• Why failing to plan for death could leave your loved ones facing massive costs.  ABC Money (Great Britain)
• State of Melbourne funeral home “disgraceful, appalling” experts tell court.  Western Australia Today (Australia)
• Funeral worker breaks stereotypes of  “taboo” job.  BBC News (Great Britain)

 

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