Human Relations

The following insights were lifted from Buffett and Munger’s writings, Peter Bevelin’s Seeking Wisdom, remarks made by entrepreneurs, and my own observations.


  • Praise is more effective in changing behaviour than punishment
  • Pressuring people or giving them orders often does not work; it’s better to convince people by asking questions which illuminate consequences
  • Don’t let money be the only motivating factor; people are better persuaded by reasons for doing something themselves than by an outside party
  • If you can get people committed in advance, they tend to live up to their commitment; if someone takes a public position on an issue, they’ll likely be committed to that issue due to the inconsistency-avoidance tendency
  • When communicating with other people, you want to include the five w’s (who, what, when, where, and why); people are far more likely to comply if they know why they are being asked to do a certain task
  • When dealing with talented individuals, make them feel like they are running their own show within the company
  • We are disliked if we don’t allow people to give back what we’ve given them
  • A favour or gift is most effective when it’s personal, significant, and unexpected

Changing Behaviour

  • People are hard to change, but we stand a better chance of changing people by appealing to their fear of losing something they value
  • People respond to immediate crisis and threats; anything which happens gradually, people tend to put off; if we want people to take a risk, we should make them feel like they are behind (losing); if we want them to stay with the status-quo, we should make them feel safe
  • Make undesirable behaviour extremely costly (e.g. Singaporean law)
  • Punish bad behaviour quickly and severely because terrible behaviour tends to spread and becomes reinforced through social proof tendency

Management / Employee Relations

  • Make people share in both the upside and downside
  • Tie manager compensation to gains in business value less a cost factor for the capital employed to produce such gains
  • Decision-makers should be held accountable for the consequences of their actions
  • When part of a group, participants may have different information, goals, information and interpretation; appoint someone in the group to question things and point out risks and pitfalls
  • When designing systems, it’s much better to let some things go uncompensated – to let life be hard – than to create systems which are easy to cheat (e.g. workers compensation)
  • Studies show that groups of 150 are ideal for an organization or group


  • Don’t have preconceived ideas about anyone based on race, religion, or occupation
  • Consider people’s actual accomplishments and past behaviour over a long period of time rather than just first impressions
  • When looking to hire someone, evaluate the total lifetime cost of the employee rather than just the salary