Buffett's Simple Test for People: What It Means for Your Business

Warren Buffett's most enduring advice on judging people is disarmingly simple. He measures them by whether people are kind, a quality he says everyone can choose. This isn't just a personal virtue; it's a practical, actionable signal for business decisions. For Buffett, kindness is costless but also priceless, acting as a universal guide to behavior that transcends religion or creed.

The relevance to business is direct. In the complex world of hiring, partnerships, and acquisitions, Buffett's own hiring priority provides the framework. He famously said: "In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don't have the first, the other two will kill you." Kindness, in his view, is a fundamental expression of that first, non-negotiable quality: integrity. It's the outward behavior that signals an internal compass.

Buffett's own mentor, the late Tom Murphy, embodied this principle. Murphy's most prescient advice, as Buffett recalled, was that "You can always tell someone to go to hell tomorrow." Yet Buffett questions the payoff: "What have you ever gained?" The answer, from a business perspective, is clear. Treating people with respect and decency builds trust, fosters collaboration, and creates a positive reputation-assets that compound over time. It's the opposite of a short-term power move that damages long-term relationships.

So, when Buffett urges shareholders to act kindly in an increasingly greedy world, he's not offering abstract philosophy. He's applying the same rule of thumb that built Berkshire Hathaway: the people you choose to work with, buy from, or partner with should be kind. It's a low-cost, high-reward signal that cuts through the noise of intelligence and energy to reveal the character that truly matters.

Why Kindness Matters More Than IQ in Business

Warren Buffett's famous classroom game reveals the hard truth about predicting success. When he asks students to pick a classmate they'd want to own 10% of for life, the answer is never the highest IQ or the best grades. People pick based on generosity, kindness, and integrity. This isn't just a feel-good choice; it's a bet on future cash flows. The person with the most integrity is the one most likely to act in ways that build lasting value-whether that's through honest partnerships, loyal employees, or reliable suppliers. In business, that consistency translates directly to a lower-risk, more predictable operation.

The operational impact is clear. Treating people well isn't a side project; it's a core strategy for attracting top talent and sellers. As Buffett notes, if you treat people well, they'll often sell their companies to you and work for you for less than they would the competition. This principle has played out with Berkshire's own portfolio managers. Todd Combs and Ted Weschler, both hired for their investment acumen, have delivered portfolios exceeding $7 billion that have consistently outperformed the market. More importantly, they've chosen to work for Berkshire at a significant personal cost. Their compensation structure is designed to align them with shareholders, paying them a modest base and bonuses only after beating the S&P 500 over multiple years. This pattern of integrity-choosing to do the right thing even when it costs them-is what makes them reliable partners.

This reliability is the real financial advantage. A pattern of integrity, as Buffett's five-lens method suggests, is about alignment between words and actions and transparency under pressure. It creates a lower-risk business partner because you can trust their word. In contrast, a brilliant but untrustworthy person is a liability. Their intelligence and energy can be weaponized against the company, creating internal friction, damaging relationships, and ultimately destroying value. Buffett's rule of thumb is a simple cost-benefit analysis: the cost of hiring someone with integrity is low (it's a choice), while the cost of hiring someone without it is potentially catastrophic. In the end, kindness and integrity are the cheapest, most powerful signals for building a business that compounds over time.

Applying the Test: From Hiring to Investing

The beauty of Buffett's kindness principle is that it's not just a vague ideal. It's a practical lens for making concrete decisions. The key is to move from the abstract to the observable. As a mentor once said, "Most leaders nod, then go back to trusting their gut. But gut checks aren't enough." To operationalize this, we need a repeatable method. That's where a five-lens integrity check comes in, a framework that turns character into a business signal.

First, look for consistency over time. Integrity isn't a one-off act; it's a pattern. Watch how someone behaves in small, unguarded moments-when they're not trying to impress. Do their actions align with their words in routine situations? This is the default mode, not a performance. A person who is kind in a minor interaction is more likely to be kind under the stress of a business crisis. This consistency builds a reputation for reliability, which is a form of low-cost insurance for any partnership.

Second, demand transparency under pressure. Mistakes happen. The real test is how someone owns up to them. A kind person doesn't deflect blame or hide errors; they acknowledge them. This transparency signals a focus on fixing the problem, not protecting their ego. In business, this trait is invaluable. It fosters a culture of accountability and speeds up problem resolution, preventing small issues from becoming major crises.

Third, examine the values-behavior fit. What do they claim to value, and how do they act? A leader who says they value collaboration but consistently hoards information is sending a clear signal. This lens cuts through corporate jargon. When values and actions match, it indicates a person is guided by principle, not just convenience. This alignment is the foundation for trustworthy decision-making.

Now, apply this to the real world of business. In acquisitions, this test pays off directly. As Buffett notes, "If you treat people well, they'll often sell their companies to you and work for you for less than they would the competition." This isn't just anecdotal. It's a pattern with his own portfolio managers, Todd Combs and Ted Weschler. They've chosen to work for Berkshire at a significant personal financial cost, accepting a compensation structure that requires them to earn every dollar. Their decision reflects a deep alignment with Berkshire's values and a pattern of integrity that Buffett trusts implicitly. Their willingness to work for less is a direct result of the trust and respect built through a kind, transparent partnership.

The bottom line is that kindness, when tested through these lenses, becomes a powerful, low-cost filter. It's a signal that someone is likely to act in ways that build long-term value. For investors and business leaders, the question isn't just "Can they do the job?" It's "Will they do the right thing when no one is looking?" By applying this five-lens method, you're not just hiring a person; you're securing a partner whose integrity is proven, not presumed.

Catalysts and Risks: When the Test Fails

The kindness test is powerful, but it's not a magic shield. It assumes a world where decency is a choice, not a cost. The real risk is that the signal can be corrupted by a culture that rewards ruthlessness. In such an environment, a person might appear kind in a transactional way-polite, agreeable, even generous in small doses-while their core actions are driven by self-interest. The test, in this case, becomes a mask. The business implication is clear: you're not getting a reliable partner, you're getting someone who knows how to play the game.

This is why Buffett's warning about intelligence without integrity is so critical. As he put it, "Those who don't have the third quality but have the first two can be very malicious." A brilliant, energetic person without a moral compass can be far more damaging than an average one. Their intelligence can be weaponized to exploit systems, manipulate people, and create complex schemes that destroy value. The initial screening for integrity is therefore not just a preference; it's a fundamental risk control. Skipping it is like doing business with a skilled thief who has a charming smile.

So, what are the warning signs that the kindness signal is broken? Look for a shift in tone. Buffett's recent, pointed call for shareholders to act "kindly and decently in an increasingly greedy world" is itself a red flag. It's a rare, direct intervention, suggesting he sees a drift. When a leader who has championed decency for decades feels the need to remind people, it often means the culture is under pressure or has already changed. Watch for a rise in backstabbing, a focus on short-term wins at any cost, or a general cynicism that replaces collaboration.

The bottom line is that the kindness test works best in a healthy ecosystem. When the environment rewards cutthroat behavior, the signal gets noisy. The savvy investor or business leader must then dig deeper, using the five-lens method to look for patterns of alignment, consistency, and transparency. It's about verifying the choice behind the behavior. Because in the end, the cost of a broken signal-lost trust, damaged partnerships, and destroyed value-is far too high to ignore.