Good read from Stanford Closer Look Series: Corporate Governance According to Charles T. Munger. (Charlie Munger is Vice Chairman of Berkshire Hathaway, and partner of Warren Buffett.)
A lot of people think [that] if you just had more process and more compliance –checks and doble-checks and so forth– you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust.
The right culture, the highest and best culture, is a seamless web of deserved trust1.
Good character is very efficient. If you can trust people, your system can be way simpler. There’s enourmous efficiency in good character and dis-efficiency in bad character2
(Don’t miss Exhibit 1 and 2 at the end of the document: CEO Compensation at Costco, and Director Compensation at Berkshire Hathaway.)
Via Farnam Street.