No longer CEO, Warren Buffett still goes into the office daily—what to do when a former boss now reports to you, work experts say

Warren Buffett stepped down as Berkshire Hathaway CEO on December 31, but he still works alongside his colleagues every day.

The 95-year-old, who helmed the Omaha, Nebraska-based holding company for six decades, is technically retired but still serves as chairman. He goes into the office daily and remains included in investment decisions, he told CNBC's Becky Quick in a March 31 interview on "Squawk Box." The company's CEO now is his handpicked successor, Greg Abel. "I won't make any [investments] that Greg thinks are wrong," said Buffett.

While CEO, Buffett grew Berkshire Hathaway from a declining textile company into a global conglomerate with an overall return of over five million percent during his tenure. He and his successor talk nearly every day, Abel told "Squawk Box" on March 5. "If I'm in Omaha, we're always connecting," said Abel. "If I'm traveling, like I was yesterday, I often check in just to catch up on what he's seeing, what he's hearing, what am I feeling. So if it's not every day, it's every couple days."

Buffett and Abel didn't immediately respond to CNBC Make It's request for further comment on their working relationship, but their situation highlights an unusual dynamic: a leader having a second act within their company. A former company leader reporting to you can come with both challenges and significant advantages, says Amy Gallo, a global workplace dynamics speaker and author of the September 2022 book "Getting Along: How to Work with Anyone (Even Difficult People)."

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"You don't lose that institutional knowledge," Gallo says. "You have a leader who has been at the helm of the organization, who knows what it takes to run this organization, knows what's worked in the past and what hasn't."

If your former boss now reports to you — and, of course, they're comfortable with the arrangement — they can help position you as "the right person to take over, who has the skills, who's going to lead the organization to the next level of success," says Gallo.

On the other hand, you might struggle to show your other employees that you're really the one in charge, she notes. "You will feel possibly undermined. You will feel underestimated. You'll feel like people don't respect you," says Gallo. "You might feel like you're not doing as good a job as the former leader did."

For most people, the key to handling this situation effectively — and likely becoming becoming a better leader in the process — is mitigating the cons while making the best use of the pros, she says.

Just like getting promoted over your friend, or giving your manager some constructive feedback, becoming your boss' boss can be tricky. In many situations, the dynamic is "more probable to prove disruptive and problematic than actually helpful," says organizational psychologist and leadership development expert Zoe Fragou.

A former boss may experience grief, identity loss, anxiety or an overwhelming sense of limbo, and a new leader may struggle with overcompensation and "recalibrating" their professional relationships, Fragou says. "The danger lies at either extreme: overcompensating by asserting dominance too quickly can fracture trust, while avoidance and delaying tough calls to protect old connections affects credibility," she adds.

Moreover, a former CEO may not easily drop their executive mindset overnight, says Muriel Wilkins, CEO of leadership advisory firm Paravis Partners and author of "Leadership Unblocked."

"What it can get in the way of are two big things," Wilkins says. "One is establishing your own name as the new CEO. And two, it can delay some of the decisions that you would like to make, or, quite frankly, you might feel pressured to make certain decisions that you don't feel you know are necessary at that point in time."

The best way to handle a former leader reporting to you, Fragou says: maintain a healthy ego, "rooted in genuine self-awareness, self-respect, and proven ability." If both of you can do that, you'll probably create a great arrangement, she says.

Think of your direct report as a partner, teammate or close advisor instead of your competition, advises Wilkins. "I don't think you ought to treat it any differently than you would in another work relationship where the proper hygiene is you contract around what the relationship is going to look like before the trouble spots hit," she says.

There's no one-size-fits all approach to leading a former boss, Wilkins notes. "The best leaders have the capacity to transform themselves because they understand that their ability to transform an organization is limited by the capacity to transform themselves," she says.

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