JPMorgan Chase's (JPM) announcement that its top executive, Jamie Dimon, will undergo eight weeks of chemotherapy for throat cancer should make banks from Main Street to Wall Street ask themselves an important question: what would we do if our leader got sick?
It's a more frequent problem than many realize, as only the most high-profile cases get attention and many of those quickly fade from memory except among those who had to battle illness or its effects on business operations.
The leaders of several banking companies HSBC, Synovus Financial (SNV) and Hudson City Bancorp (HCBK) have confronted health problems in recent years, often while facing tremendous business challenges.
The cases of JPMorgan and these other companies provide important lessons in how banks should prepare for, and react to, similar unfortunate circumstances. These include the need for succession plans and transparency once problems surface.
Here are four broad takeaways to guide bankers' self-analysis.
1) Disclose Quickly and Hide Nothing
JPMorgan seems to have learned from the sins of other big corporations in handling emergencies and the case studies are not limited to the banking industry nor to health matters.
It should be commended for how it handled Dimon's announcement, says Bob Chlopak, a partner with CLS Strategies, a crisis-management firm in Washington. JPMorgan "communicated to shareholders and employees on a timely basis," he says. Further, it gave details on the length of Dimon's treatment period and alluded to the succession plans it has in place.
"Chase is a good model for how this ought to be done," Chlopak says.
In contrast, Apple and Target poorly handled their similar crisis-level events.
"Apple, unfortunately, is the poster child for how not to handle it," Chlopak says, referring to how the tech company responded to market speculation about the health of its founder and CEO, Steve Jobs.
Rumors about Jobs' health persisted in the years before his death in October 2011. He was first diagnosed with pancreatic cancer in 2003, but neither Jobs nor Apple publicly discussed the diagnosis until years later, after Jobs had made public appearances in which he appeared frail and gaunt.
"They were not timely, they were not transparent, they didn't address the periods that Jobs would be in treatment," Chlopak says. "The stock took some hits during that period as a result."
There are comparable lessons, too, in how Target handled the news of its data breach. It slowly released information and gave few details about the extent of the problem, Chlopak says.
"Target is going to be the poster child for what everyone ought to learn about how to handle a data breach, about what not to do," Chlopak says.
2) Expect Crises When You Are Most Vulnerable
JPMorgan is exhibit A of this maxim, following several years of controversy and questions about its succession planning.
Its bad headlines have included, but are not limited to: billions of dollars to settle investigations into mortgage practices and other allegations; the London Whale affair; and persistent, strong criticism of Dimon.
When JPMorgan announced late Tuesday that Dimon would undergo cancer treatment, it made clear that he would continue to run the company as normal except that he would cut back on travel during his two-month treatment schedule.
Yet the sudden news revived succession questions that have dogged JPMorgan because several up-and-coming executives have left in recent years.
Mike Cavanagh, the co-head of JPMorgan's corporate and investment bank, left the company in March to join Carlyle Group as co-president and co-chief operating officer. Frank Bisignano left his job as JPMorgan's co-COO last year to run payments processor First Data. Former consumer bank head Charlie Scharf left to become CEO of Visa (NYSE:V) in 2012.
Other big departures Chief Investment Officer Ina Drew, former Chief Risk Officer Barry Zubrow and former investment bank head Jes Staley followed the London Whale affair that began two years ago.
The company sought to put out the word Tuesday that it has solid succession plans. "The board had already established a short-term, medium-term and longer-term succession plan," a JPMorgan spokesman, Joseph Evangelisti, told the New York Times.
Time will tell.
The more recent exits had seemed to burnish the rising star of Matt Zames, who took full control of the COO job after Bisignano left. Notably, Zames had been sent in 2012 to mop up the bank's chief investment office after the London Whale scandal.
Several other names of possible successors were sprinkled throughout news coverage. Gordon Smith, the head of consumer and community banking, was mentioned, especially in case of a short-term need.
For the long term, those frequently mentioned include COO Zames; Mary Erdoes, the CEO of asset management; Daniel Pinto, the CEO of the corporate and investment bank; Doug Petno, the CEO of commercial banking; and Chief Financial Officer Marianne Lake.
3) Even Small Banks Have to Make Formal Preparations