Smith Thomas was a highly successful CEO whose firm was a leader in its industry. He was a robust man, supremely self-confident, gregarious, passionate about his work, devoted to his family. A college athlete, he remained faithful to a strict workout and nutritional regimen. Seeing himself as invulnerable, he rarely visited his physician and ignored urinary symptoms when they arose.
By the time the diagnosis of bladder cancer was made, the cancer had spread and surgery and chemotherapy were necessary. While Thomas worked whenever possible, he needed to be away for days at a time for treatment. At the office, he was often preoccupied with the physical and emotional toll the illness was having on him and his family. He had little sense how his condition was affecting his business, his employees, and the company’s productivity. His management team would fill in for him whenever he was absent or too ill to be at work. The board of directors was reassured by Smith that he was able to function and perform all necessary duties. This reassurance flew in the face of the company’s declining revenues.
Loyal employees felt in an impossible position, as it became apparent that the company was suffering. Gradually, it became more difficult for them to cover for Smith’s lapses. His team and the board felt conflicted as well. They tried to overlook Smith’s forgetfulness, lateness, becoming ill on the job, and his lack of attention to detail.
Although there was a succession plan in place, Thomas would not step down, even temporarily. The board held out hope he would quickly recover and resume his position. In the meantime, the company was in a state of paralysis and facing additional losses.
The paucity of literature on the subject of CEO illness mirrors the fantasy of invincibility we attribute to our CEOs. We like to think of them as forces of nature, able to overcome all obstacles, super humans able to conquer any adversity. We prefer to see them the way they often see themselves. We rarely anticipate or prepare for any key executive becoming ill, let alone the CEO. And even if illness is evident, it may well create discomfort or be ignored for a variety of reasons by those close to the situation. Directors, as well as senior management, may be deeply affected by the illness they witness in their friend, colleague or boss. Not infrequently, their response may be guided by concerns about their own mortality, concerns triggered by changes they observe as the illness progresses.
The consequences of avoiding the illness may be felt throughout the company. Issues such as whether to disclose the illness, succession planning, the effect on public perception and valuation of the company and ethical and legal responsibility to employees and shareholders must be addressed. If a leadership and or succession plan is not put in place in a timely manner, it can lead to a great deal of wealth destruction. Whether the illness is temporary, chronic, life threatening, medical, psychiatric, or related to substance abuse, companies must find ways to deal with the consequences. The Board must concern itself with the sustainability of the company at a time of great personal distress, when the CEO’s wishes may be markedly different from the shareholder’s interests.
Obviously there are many factors to consider when assessing if a material event is occurring. Such factors include the seriousness of the illness; whether it will make it difficult or impossible for the executive to continue his daily leadership duties and responsibilities; whether there will be a brief or prolonged absence from the company; and the impact of the treatment on the executive’s daily functioning. It is up to company directors to determine if an event is material. In practice, however, the decision made by the board assessing materiality is often one based on emotion and interpersonal dynamics, rather than objective facts.
Apple’s Steve Jobs was secretive about his pancreatic cancer and later took a leave of absence; more recently, JPMorgan Chase’s Jamie Dimon disclosed his diagnosis of throat cancer to the public. In his direct and straightforward manner, he made it clear the company would continue under his leadership during his medical treatment. Similarly, Lloyd Blankfein of Goldman Sachs revealed his recent diagnosis of lymphoma and his determination to work throughout his treatment.
Steve Jobs’ struggle with his illness, his refusal to accept both appropriate treatment, and counsel from his board (including Art Levinson, CEO of Genentech at the time, and Andy Grove, CEO of Intel, himself a cancer survivor), is well documented in Walter Isaacson’s biography of Jobs. It was clear the board was divided about how much to disclose: Al Gore felt they followed advice of counsel and respected Jobs’ wishes for privacy; Jerry York on the other hand, confided to the WSJ, comments that were only revealed after his death, that he was “disgusted” by the extent of company concealment with regard to Jobs’ health problems.
The decision regarding how much information to reveal may be unwittingly based on complex emotional factors, rather than what is materially in the best interests of the company.
Since a CEO’s and a company’s reaction to a health crisis cannot be predicted—none of us truly knows how we would cope with a serious illness—companies should have plans and policies in place to handle the possibility of a leader’s infirmity. Companies can do a great deal to prepare for inevitable traumas such as serious illness in the CEO.
In addition to having contingency and succession plans and updating them annually—many companies do not—it is critical to create a climate in which discussing “undiscussable” matters is firmly rooted as part of board and company culture.
The board must value and model transparency and “walk the talk”—by demonstrating in its board process and in its everyday work with the CEO—that transparency and honest collaboration are essential to its work and to the culture of the company.
This dialogue generally only takes place when the board has engaged in a serious and robust evaluation process of its own that acknowledges the critical importance of an open and collaborative board dynamic.
Fortunately there does appear to be a trend toward greater transparency and discussing illness openly. This shift has come to a great extent from the start-up world. In particular, Brad Feld of Foundry Group has inspired many with his forthright account of his repeated battles with depression, an illness he believes, with good evidence, is prevalent in entrepreneurs.
Jobs’ approach to his illness contrasts sharply with that of Eugene O’Kelly, former CEO of KPMG who, together with his wife, wrote a remarkable book, Chasing Daylight, a forthright account of their last months together following O’Kelly’s diagnosis of an inoperable brain tumor. O’Kelly was transparent with his board, notifying them immediately of his intention to step down. This was the prelude to his approach of facing death directly and planning, as a CEO might, for the weeks and months he had remaining, determined to make the most of the daylight left.
In the spring of 2015, Mary Powell, CEO of Green Mountain Power, shortly after being named Power-Gen Woman of the Year, spoke openly to her family and colleagues, including 600 employees, about her decision to undergo a prophylactic bilateral mastectomy. The procedure ultimately revealed she was cancer positive in both breasts. As Powell tells it, sharing her story had a profound positive effect. Not only did she receive an outpouring of support, but she began a public health conversation that enabled many to speak up about their own private battles with illness and encouraged people to be proactive about seeking medical attention.
Powell attributes much of her ability to speak frankly about her illness to a board that mirrors her strong values of openness, authenticity and fidelity. It is the emotional resonance, she emphasizes, between the CEO and board that affirms the value of transparency and vulnerability that is the key to meaningful exchange and effective leadership of a crisis induced by illness in the leader.
No matter what plan is adopted by the board to deal with CEO illness, the plan must be informed by an acknowledgment of the profound emotional impact the illness of the CEO will have on the company. While concepts like emotional intelligence have become commonplace in business school and in leadership training programs, all too often the pressure remains to keep emotional life out of the boardroom. This is often to the company’s detriment.
A reluctance or inability to deal with such inevitable emotional reactions cannot but have a profound effect on leadership, decision making and business outcomes.
The best laid succession plans are rarely followed as envisioned under the best of circumstances. When illness enters the picture, the dynamics between the CEO and the board are affected in often unpredictable and surprising ways.
How to allow for the mourning of the CEO is one concern creating the most effective succession process, another. In Jobs’ case, his illness and his idiosyncratic means of coping with it, fortunately did not prevent a successful succession outcome, based on the quality of the successor and the minimal disruption to the business around the transition period. This argues for the usefulness of having the CEO involved in the successor process to whatever extent possible.
An advisor may play a particularly useful role in succession conversations. An advisor may prevent or mitigate the effects of a board’s unconscious group reaction that leads them to make poor choices in CEO succession. Dysfunctional dynamics such as “groupthink” in a board often operate outside the awareness of individual board members and may result in the wrong successor being chosen.
When the CEO is ill, the board may cede all control of choosing the successor to the CEO, or alternately, keep the CEO out of the decision making process entirely. Either reaction—which may be due to the board’s unresolved, anticipatory feelings regarding loss of the leader—has a negative effect on the succession process. and may lead to poor decisions. When adequate advance preparation is done,and the above mentioned dynamics considered, the best decisions can be made for the health and success of the company.