CEO succession can be a tricky business, and not just on TV
The pending departure of JPMorgan Chase boss Jaime Dimon highlights the difficulties of replacing the person at the top.
The end of the Jamie Dimon era at JPMorgan Chase & Co. appears to be on the horizon. The long-serving CEO hinted during the bank’s Investor Day on Monday that his tenure would be something less than “five more years.” Dimon has led the company for 18 years, longer than any of his peers. Under his guidance, JPMorgan Chase has become the biggest bank in the country. The exact succession timeline is still vague, but with such big shoes to fill, it’s likely to get complicated.
Replacing a vaunted veteran CEO can be a messy process — that’s why the topic made for four seasons of delightfully dramatic prestige TV. Like HBO’s Logan Roy, long-running CEOs often take on larger-than-life dimensions, said business professor Yo-Jud Cheng at the University of Virginia.
“The personality of the CEO becomes so deeply intertwined with the external image of a company,” Cheng said. “They’re not only financially invested, but also likely very much emotionally invested.”
Which can make it hard for a company to move on.
Charles Elson, the founding director of the Weinberg Center for Corporate Governance at the University of Delaware, said keeping an outgoing CEO too close can lead to a Disney-type scenario.
“Hello, goodbye, hello, goodbye,” Elson said.
In late 2021, Walt Disney Co. CEO Bob Iger handed the reins to his chosen successor, Bob Chapek, only to take them back less than a year later.
“That process seems to have been much more CEO-driven than board-driven, and I think that’s the fatal mistake,” Elson said.
Because what a CEO looks for in a trusted lieutenant, and what the company needs to carry it into the future, might be very different, said David Larcker, an emeritus professor at Stanford.
“You have to ask the question, ‘Do you want somebody just like that, only younger? Or do you want somebody quite different?'” said Larcker.
Plus, long-running CEOs will often stay on as an executive director or member of the board, as three-time Starbucks CEO Howard Schultz has done. That can inhibit a new CEO, said Jeffrey Sonnenfeld, a professor of management at Yale.
“Sometimes the new person learning to walk, they wobble a little bit,” said Sonnenfeld.
Boards of directors, he said, have to give the company’s new leader enough space to find their own path.