Originally published in SmartCEO.com.
What do the CEOs of Overstock.com, Level 3 Communications and Valeant Pharmaceuticals all have in common?
In the past year, they have all taken a medical leave. While their medical problems are different and unquestionably unfortunate, the impact on their companies could be far-reaching and, if not handled properly, devastating.
The reality of medical leave among CEOs really came to the forefront in the case of Steve Jobs. In January 2011, The Wall Street Journal reported that Jobs was taking “another unexpected leave from running Apple Inc., raising uncertainty over his health and the future of the world’s most valuable company.”
Whether it’s the world’s most valuable company or the company down the street, there are numerous dilemmas and challenges when the most senior leader in the organization becomes so ill that he or she must take a leave of absence. Firstly, well before they get to the point of medical leave, executives who have a medical problem are adjusting to their circumstances and perhaps visiting doctors, taking new medications and even staying in the hospital on occasion. All of this is of course sad, and one’s health should always come first. However, while a leader with health problems is unsettled, the responsibility of running the business is ongoing and unchanged.
It is at this point, well before a medical leave is even in the purview, that the executive and the board should begin a dialogue about succession, just in case! In reality, succession planning should already have been a topic of conversation, but no matter what the prior level of attention to the subject has been, once a medical problem is chronic or recurring, it should serve as a warning signal that succession planning cannot be ignored.
Who needs to know, and when?
However, any discussion of illness and corporate leadership begs the question of confidentiality. How much needs to be revealed, to whom and when? Jamie Dimon, chairman and CEO of JP Morgan Chase was diagnosed with throat cancer in 2014 and went public with the information quickly. The bank was praised for its candor, but nevertheless, its share price fell 1 percent on the news. Warren Buffet announced a cancer diagnosis in a letter to shareholders in 2012. At that time, he also stated that the board of Berkshire Hathaway had identified an eventual successor, although this successor was not identified and, interestingly, not notified.
Speaking of successors, long before the public and even the board is alerted, those who work closely with the CEO will be aware that there is a problem. Initially, they may not grasp the details, but they will quickly discern something is amiss if their boss is grappling with a serious health issue. Some of the apprehension that this causes can be mitigated by the knowledge that there is a succession plan in place and leadership continuity is not an issue.
The urgency of the succession question does somewhat depend on the nature and severity of the illness. Nevertheless, as much as we think we know about various health problems and specific diseases, the fact of the matter is they are unpredictable. Therefore, boards had best prepare accordingly. Not having a succession plan is never a good thing, but when your top leader is ill, it is simple irresponsible.
All of this does require an element of sensitivity. The CEO with the health problem needs support and understanding on the one hand and, on the other, the discipline to continue to get the job done and plan for succession if that ceases to be possible. It is incumbent on the board to make sure all of this happens. It is very easy to get distracted by bravado and reassurances. Keeping the priorities and demands of all the stakeholders in mind will go a long way to successfully navigating through this type of circumstance.