According to dailyfinance.com, CEO of Berkshire Hathaway Warren Buffett is as good a CEO as he is a savvy investor. He bought Clayton Homes, the largest producer of manufactured homes (MH) in North America, in 2003 because Clayton incentivizes its dealers, rewarding them by splitting the profit 50/50 with the company. If the home has to be repossessed, the dealer has to pursue it, MHProNews has learned, which discourages sales to unqualified borrowers and leads to a low default rate. Buffett says, “This is unlike what was going on in the industry a few years ago, whereby dealers would have a floor plan and the company would finance 130% of the purchase price, so the dealer would bring in any warm body. The system was designed for disaster.” Align the interests of the employees with those of the owner and in the long run the company will outlast the competition, he adds, despite bad years.
He acquired National Indemnity in 1967, steadily growing the company until 1986, when revenue eventually dropped 80 percent by 1999, and no one lost their job. He says employees could have written bad policies just to create revenue, but it’s better to pay them to do nothing than make poor decisions.

(Photo credit: The Motley Fool/Warren Buffett and President Barack Obama)