To keep his best talents motivated, he follows some basic rules. Top managers are free to take all business decisions. He has liberal incentive schemes to reward those who perform well. Whereas many of the companies provide incentives to their employees based on overall performance of the company, Warren Buffet prefers incentives to be directly linked to the business or section that is separately operated by a manager. He keeps these incentives based on return on invested capital, that is his primary yardstick, instead of increase in sales or growth in profits.
