Warren Buffett says this simple test can keep leaders from making a career-ending mistake

This simple reputation test can help leaders recognize ethical problems before they become public crises, according to Warren Buffett.

Before making a difficult decision, ask yourself one question: Would you be comfortable seeing it reported on the front page tomorrow? Warren Buffett calls it the “newspaper test.”

During a 2005 question-and-answer session at the University of Nebraska–Lincoln, Buffett was asked how people should approach ethical decisions during difficult circumstances.

His answer centered on something more valuable than money: reputation.

Buffett explained that he (and his buddy Bill Gates) had enough money to withstand financial losses. What they could not afford to lose, he said, was their reputation—“not a shred.”

That distinction matters for every senior leader.

Revenue can recover and a bad financial quarter can be corrected. But once employees, customers, or colleagues stop trusting you, rebuilding that trust can take years.

The ‘newspaper test’

When Buffett was CEO, he asked Berkshire Hathaway managers to evaluate their actions using two standards to protect that trust.

The first is obvious: Is it legal? But legality is only the starting point.

The second question is more revealing: How would they feel about any given action if they know it was to be written up the next day in their local newspaper?”

Buffett adds a few conditions. Imagine that the story is written by “a smart but pretty unfriendly reporter.” Then imagine it being read by your family, friends, employees, and neighbors.

Would you still be comfortable defending the decision? If the answer is yes, the action probably passes the test.

If the decision sits too close to the ethical line, Buffett’s guidance is straightforward: It is out.

There are three ways leaders can apply the newspaper test in their daily decision-making.

1. Test the explanation, not only the decision

Before acting, describe the decision in plain language. Explain what you are doing, who benefits, who carries the risk, and why you believe it is justified. Are the people hearing it firmly on board, or does your decision sound troubling?

2. Consider the people with the least power

Senior leaders often evaluate decisions from the organization’s perspective. Ethical judgment also requires seeing the decision through the eyes of the people most affected by it.

Ask: How will this affect employees who cannot challenge the decision? Are we asking frontline workers to absorb consequences that senior leaders would reject for themselves? Would we make the same choice if our own position, pay, or security were at risk?

A decision may look reasonable from the executive floor and deeply unfair from everywhere else.

3. Create a culture where people can raise concerns

Buffett would tell his Berkshire Hathaway managers they could call him when they were uncertain about making a decision.

That availability sends an important message: Ethical questions should be discussed before a decision is made, not buried after damage occurs. That means people shouldn’t be punished for questioning decisions because when they are, silence becomes the safest option. And silence is where bad judgment spreads.

Senior leaders should make it safe for employees and managers to express concerns like:

“This does not feel right.”

“We may be following the policy, but I think we are violating its purpose.”

“How would we explain this publicly?”

Your reputation is built one decision at a time

Buffett’s newspaper test works because it cuts through complexity. It forces leaders to consider whether their private reasoning can withstand public scrutiny.

Before your next difficult decision, imagine the headline. And imagine the article. Now imagine the people you respect most reading every detail. Then ask yourself: Would I still be proud to put my name on this decision?

If you hesitate, you may already have your answer.

Like this article? Subscribe here for more related content and exclusive insights from executive coach and global speaker Marcel Schwantes.

This post originally appeared at inc.com.

“Click here to subscribe to the Inc. newsletter: inc.com/newsletters"