When Goldman Sachs’ then-senior partner, Gus Levy, suffered a stroke in the middle of a client meeting in 1976 and died shortly after, the bank’s management didn’t know who would lead the firm. No one, it seemed, had planned for succession.
What happened next is not entirely clear. As Roy Smith, a former Goldman partner, tells the story, Levy had left a note in the top drawer of his desk in the office. It said if anything were to happen to him, the management committee should name John Whitehead and John Weinberg as co-senior partners, and so Goldman did that, Smith said.
Whitehead said he never saw the letter. He said both Weinberg, who died in 2006, and he knew they were next in line and proposed to the committee that they share the title equally.
“It was a very short period of people not knowing,” Whitehead said.
Succession planning at most major U.S. companies has evolved considerably since then. When JPMorgan Chase & Co Chairman and Chief Executive Jamie Dimon announced this week that he had been diagnosed with throat cancer, the largest U.S. bank said its board already had plans for a full-range of scenarios in place.
Sudden, life-threatening ailments such as cancer present unique management challenges, which can throw a company into limbo and need more than the typical succession planning that boards do.
Companies must decide how much to tell investors while balancing disclosure with privacy of the CEO and his or her family. They have to accelerate their succession planning, while remembering that the person can fully recover and continue to do the job. They must ensure day-to-day management can continue smoothly, but also be prepared to deal with the situation if a crisis suddenly hits the company while its chief is out of commission.
Treatment for an ailment like throat cancer can be very debilitating, sometimes leaving the patient with mouth sores, and difficulty swallowing and speaking, according to doctors. There is often also residual damage from the radiation, which means recovery takes time.
“The real question is, how much distraction and energy and focus do you still have to keep running the company effectively?” Smith said. “If you’re worried about whether you’re going to die, the affairs of the bank become less interesting but to the shareholder they’re as important as they were before.”