The Unseen Outcomes of the JP Morgan Chase Loss

WASHINGTON, DC - JUNE 13:  President and CEO o...

WASHINGTON, DC - JUNE 13: President and CEO of JPMorgan Chase Co. Jamie Dimon testifies before a Senate Banking Committee hearing on Capitol Hill June 13, 2012 in Washington, DC. The committee is hearing testimony from Mr. Dimon on how JP Morgan Chase lost over’s two billion dollars in stock market trades. (Image credit: Getty Images via @daylife)

Tom Monahan, Chairman & CEO, Corporate Executive Board writes that succession is key

The sudden disclosure of trading losses at JP Morgan Chase has generated a predictable firestorm of media coverage. Beyond the normal set of "who, what, when," questions, much attention has been focused on the event's impact on financial services reform. JP Morgan's boss Jamie Dimon has been the most powerful, and to date, effective spokesperson for the industry in trying to prevent (over?)regulation of the business. And even his most intense rivals in the sector concede that should his public presence be diminished, the industry as a whole will lose an important counterweight to those pushing for more severe regulation.

While much of the coverage has focused on the policy implications of this story, a more subtle story is emerging, with implications far beyond the financial services sector and Capitol Hill. Several news outlets have seized on various aspects of the story which surround management of human capital. Publications have noted that the treasury position at the corporate headquarters was unfilled for nearly 8 months, and others have mooted that the company fears strong successors.

Quick disclosure -- my company does business with JP Morgan Chase, I've had the chance to meet Mr. Dimon, and we have served multiple executives across the enterprise. The idea that the company, or Mr. Dimon, doesn't cultivate strong leadership pipelines is plain nutty. The company is widely perceived to have not only a strong CEO but a deep and wide leadership bench.

That said, the episode is yet another example of the demands on public companies to manage executive development and succession as a public process -- this furor is not so much about the quality of JP Morgan Chase' s bench, but the visibility of the process and people. Scared by some very public succession debacles, shareholders are now looking for deeper insight into companies' processes for developing leaders. The real lasting impact of the JP Morgan Chase loss may not be regulatory reform, but a stepped up demand on companies of all types to disclose more about how they develop, select, and transition leaders.

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