Investors will literally beg Jamie Dimon not to retire: One did so at JPMorgan Chase & Co.’s investor day last year. But the chairman and chief executive officer of America’s biggest bank can’t do his job forever.
Now, succession is back on the agenda after a round of senior executive moves late on Thursday that will give the frontrunners more experience across the bank’s businesses. Investors should not be too nervous. If Dimon and the board have done their job well, it won’t much matter which contender wins. They will each be equally capable; the real deciding factor will be who can take the weight of making the hardest decisions and of managing inevitable mistakes.
There are three main candidates. Marianne Lake and Jennifer Piepszak have both spent years in finance and leadership roles across the bank’s business lines. Troy Rohrbaugh has only worked for JPMorgan in its markets division, but is seen internally as a strong risk manager in the mold of Daniel Pinto.
Pinto is already the emergency stand-in CEO, but has also been taking on more of the burden of running JPMorgan alongside Dimon for a couple of years. He led last year’s investor day for example, with Dimon only going on stage for the final Q&A session. Pinto is relinquishing leadership of the corporate and investment bank so that he can focus on this chief operating officer role. As Dimon put it in a memo to staff: “Now his extraordinary capabilities can increasingly be used across the firm as he and I continue to jointly manage our company.”
Shareholders get antsy about Dimon’s retirement because of his reputation for being one of the most hands-on and detail-oriented leaders perhaps in any industry. But Dimon is no control freak involved in every decision. It’s impossible for any executive to be cognizant of everything happening in any very large company, but especially in a mega bank with a multitrillion-dollar balance sheet and hundreds of thousands of employees. CEOs aren’t really in full control of such vast machines — not even Dimon.
Dimon does do regular business reviews with his leaders, which are legendary internally for the depth of his questioning. But these are bursts of intensity designed to ensure those executives are keeping up their own knowledge and discipline — and demanding the same of their people. Business leaders will feel Dimon’s glare most when they are being considered for or tested in a new position. Former senior staff have told me about experiences of being quizzed mercilessly with only a few minutes’ notice: If you fail to have the right answers, you will be asked again and again until either you make the grade or you no longer have the job.
The flip side of this is that the survivors are given a lot of latitude to run their businesses and make their own decisions. Pinto is doing so at the scale of the entire firm with things like technology budgets, for example.
Dimon has written that when companies become large and complex, CEOs need to be more like coaches and conductors than players. They should set the direction and let executives to get on with it, including allowing them to make their own mistakes. Soft power can be more important than the hard power of direct oversight, he wrote in his 2020 letter to shareholders. “Soft power creates respect among team members, with the coach offering honest assessment and support while allowing flexibility,” he wrote. “Here the boss makes fewer but tougher decisions, such as removing people —when it must be done.”
Dimon’s other key skill by his own telling is risk management. Strategy involves low-frequency decisions that emerge from widespread discussion and analysis of a business and its environment. Growth and sales are aims that should be pursued only when they are right. At a financial services conference last year, Dimon reminded the audience of a Warren Buffett line that sometimes it’s better to pay your salespeople just to play golf because there is such a thing as bad revenue. Lending too much too quickly to the wrong clients is a recipe for losses.
But risk management in banking needs to be at the top of the CEO’s mind every day: They need a very strong sense of where problems might arise, which activities or exposures need triple checking again, and how to ensure that the bank’s people and finances have the capacity to cope with disasters large or small. This is behind his Fortress Balance Sheet dictum, but it’s also why Dimon talks about the importance of taking time to visit all levels of staff everywhere and demanding honest feedback. It’s a way of uncovering dysfunction, frustration and therefore risk.
None of this is foolproof, and Dimon’s distributed responsibility and trust has caused big problems in the past. The $6 billion “ London Whale” trading losses of 2012 could be put down to too much trust in the head of JPMorgan’s internal chief investment office. The scandal surrounding JPMorgan’s involvement with the sex trafficker Jeffrey Epstein has also exposed at least a massive blind spot.
Whoever takes the top job eventually will make mistakes — they should be prepared to do so and more importantly to recognize them. Dimon himself hasn’t always done that immediately, but he typically does in the end. And according to him, none of the individual skills of being a banker — even risk — is as important as this for his successor.
“I think the most important strength is you're trusted and respected by people, that you work your ass off, that you give a shit, that you know you don't know everything,” he said last year. “They have curiosity. They have grit. They have courage. Are you willing to change direction? You're willing to go in front of your shareholders and say, we screwed up, we made a mistake, we were wrong about that. Those are the things that I think are the most important things, not one particular thing.”
If the winner of the JPMorgan CEO race truly has these qualities, then the other contenders are more likely to hang around, too, to the bank’s benefit. Investors should hope for this rather than picking their own favorite or just begging Jamie to never leave.
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