🖤 Donations of all sizes power our public service journalism Give Now

CEO succession can be a tricky business, and not just on TV

Meghan McCarty Carino May 21, 2024
Heard on:
HTML EMBED:
COPY
Jamie Dimon, the outspoken CEO of banking giant JPMorgan Chase, signaled his retirement in the next few years. Win McNamee/Getty Images

CEO succession can be a tricky business, and not just on TV

Meghan McCarty Carino May 21, 2024
Heard on:
Jamie Dimon, the outspoken CEO of banking giant JPMorgan Chase, signaled his retirement in the next few years. Win McNamee/Getty Images
HTML EMBED:
COPY

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.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.