How to hire like Warren Buffett

SUN VALLEY, ID - JULY 07: Warren Buffett, chairman of Berkshire Hathaway, attends the Allen & Company Sun Valley Conference on July 7, 2011 in Sun Valley, Idaho. The conference has been hosted annually by the investment firm Allen & Company each July since 1983 and is typically attended by many of the world's most powerful media executives. Scott Olson/Getty Images

Warren Buffett, chairman of Berkshire Hathaway, in July 2011.
Scott Olson/Getty Images
Warren Buffett has said that when he is looking at his leaders for companies, he evaluates three categories of characteristics:

-- Intelligence

-- Energy

-- Integrity

His fundamental belief is that if a person has 2 of these, the lack of the third can kill a business. Do the fast math on the negative side of the equation:

-- Low integrity, high energy and high intelligence and you have a smart, fast-moving thief

-- Low energy, high intelligence and integrity and you have a shop keeper, not an engine of growth

-- Low intelligence, high energy and integrity and you have strong functionary, but not a great problem solver or visionary

As you look at potential hires, how are you assessing these three categories of characteristics? Behavioral questions are good and standardized tests can be insightful. I like both and use both in my selection processes. In addition, I like exercises and assignments in interviews to provide a clearer picture. Here are some ideas to consider adding to your selection process:

How to find out intelligence -- Tests, puzzles and games are good ways to learn about a person's practical intelligence.

Problem Solving -- Give a candidate five flashlights, one working and four not working. Ask the candidate to take what is available and make as many working flashlights in a 90 second period of time as the candidate can. The point of the exercise is not necessarily how many flashlights that they can get working. It is to see how they solve the problem with a limited amount of instructions and a short time frame.

Strategy -- I know a Sr. VP who won't hire anyone who can't beat him at least one out of three in "Connect Four." Simple game of strategy, easy test. If the job requires thinking ahead as well as responding to change and adjusting approach, this works.

Ingenuity -- A summer intern wanted a job, working full time for my company upon graduation. When we were in London on client assignment, I handed him $100 and a list of specialty items to pick up. They were diverse enough that they could not be picked up in the neighborhood. I told him he had to get the items and be back in 2 hours if he wanted the job. (Side note; He'd never been to London, ridden a subway or exchanged money before). He did well.

You can create your own approaches. My point is that testing and talking only tells you so much. Stretch your approach to get to the real answers.

How to find energy --

Physical -- What physical regimens does the person have? Athletic, eating, meditating? Many jobs require energy and it is great to know the capacity and endurance of your candidates.

Mental -- Ask a candidate to prepare and give you a 10 minute presentation on a relevant topic. Examples include a case study of a past success, a service to sell or a resolution to a common business problem. After they have given it, ask them to take 2 minutes to prepare and re-give the presentation, but in only 5 minutes. After they have given it the second time, have them prepare for 1 minute and then give the presentation in 1 minute.

How to find integrity --

Liars, thieves and the morally deficient are often hard to identify through the interview process. Typically, extensive reference review and digital research can give you a picture. If the person is mission critical and officer level, a full dossier prepared by an investigative service can be of great benefit. No, I'm not kidding.

When you are hiring key people, the cost of mistakes can be terminal to your business. Dig hard to get the answers you need to feel confident that your best candidates have the necessary energy, intelligence and integrity to succeed.

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