Disclosing Illness in the C-Suite
When a chief executive announces he or she has been diagnosed with a serious illness, HR must play a central role in communicating the news and helping the organization prepare for the future.
By Julie Cook Ramirez
With the recent announcement of his lymphoma diagnosis, Goldman Sachs CEO and Chairman Lloyd Blankfein joined a growing list of top executives who've shared their personal health information with the world. JP Morgan Chase CEO Jamie Dimon, Berkshire Hathaway Chairman Warren Buffet, AIG President and CEO Robert Benmosche, Apple CEO Steve Jobs and a host of others have all divulged cancer diagnoses to employees, customers, shareholders and the public at large.
Securities and Exchange Commission reporting regulations mandate that publicly traded companies disclose any information that may impact an investor's decision to buy or sell stock. Increasingly, companies are interpreting that requirement to include any serious health condition confronted by members of their executive team.
But just how much information should a senior executive share -- and when? How much, if any, privacy should they expect to maintain? And what role does HR have to play in disseminating the news -- and planning for their eventual successor?
Handled properly, disclosure of a chief executive's illness can accomplish far more than ensure the company is in compliance with SEC requirements. It can reassure employees and investors, address key questions about the company's succession plans and halt the grind of the rumor mill.
Blankfein divulged his lymphoma diagnosis in a memo sent to employees and filed on the SEC's website just one day after receiving the news himself. That kind of prompt disclosure is becoming more the rule than the exception, as companies seek to get in front of an issue and handle the announcement in a manner that answers key constituents' questions, while being sensitive to the executive's wishes.
"If you or your organization doesn't make an announcement about something, it's probably going to get announced by somebody else and probably in a way that won't be so good for you," says David Lewin, Neil H. Jacoby Professor Emeritus of Management, Human Resources and Organizational Behavior, UCLA Anderson School of Management, and author of Human Resource Management: An Economic Approach. "The old idea that you could fly below the radar if you wanted has been pretty much supplanted."
When it comes to how not to handle the disclosure of a serious health issue, all fingers point to Jobs, who was widely criticized for sitting on his initial diagnosis for a full year before emailing employees from his hospital bed to tell them he had been diagnosed with a rare form of pancreatic cancer in 2004. Again, when the cancer returned, Jobs chose to keep the news private, blaming his gaunt appearance on a "common bug" at a product launch in 2008.
The subsequent "runaway speculation made matters worse," according to Lynne Curry, president of The Growth Company Inc., an Anchorage, Alaska-based management and HR consulting firm.
"When a company leaves employees in limbo," says Curry, "it drives employees into escalating, doomsday watercooler conversations, and they respond with deteriorating morale and productivity."
HR must "take the lead" in communicating news of the illness internally, says Curry, although the ultimate decision about how much detail will be shared must remain with the chief executive. Rather, HR's focus should be on keeping employees informed about how the illness is going to impact the company's day-to-day operations, who will be assuming the CEO's duties during his or her absence, and what plans the company has in place for a successor, should the executive be unable to return to work.
"Sudden news about significant health issues within the corporate leadership will be psychologically destabilizing," says Richard Birdsall, a senior consultant with The Growth Company Inc. and director of its HR On-Call division. "HR needs to communicate often and effectively to maintain positive momentum to prevent a downward spiral of insecurity, unrest, and an overall depressed affect."
Such communications serve to reassure employees, shareholders, and clients that the company will be in good hands regardless of the CEO's health struggles. HR has a significant role to play in the selection and preparation of a "CEO-in-Waiting," according to Yan "Anthea" Zhang, professor of strategic management and area coordinator for the strategy and environment group at Rice University's Jesse H. Jones Graduate School of Business in Houston. However, it's important to remember that the succession planning process must begin well in advance of a crisis.
"You cannot draft a succession plan after a diagnosis is announced," says Zhang. "When something sudden like this happens, you always have a back-up. Otherwise, the company will experience significant turbulence, which is never good."
Frequently, boards of directors prefer to rely on a consulting firm to advise them on succession planning, says Lewin, but it's incumbent upon HR to assume a central role.
"When it comes to succession planning, HR should be first in line," says Lewin. "HR should be strategically oriented and confident enough to keep succession planning in front of the Board as an ongoing issue."
While an ailing CEO is likely to garner the most attention because he or she is the public face of the company, news of a CFO or CIO facing a serious illness should be handled in much the same manner, according to Birdsall. In fact, he says, an illness that threatens to result in changes to the company's accounting structure, such as the CFO, may be even more problematic because of its potential impact on the manner in which its financial status is reported.
Regardless of which member of the executive team is impacted, it's important that HR remain focused on the fact that a key member of the corporate family is potentially facing a life or death situation which must be handled with respect and sensitivity.
"Providing sufficient disclosure about the health of a management team member, while at the same time respecting the leader's privacy considerations can be a difficult balance to strike," says Birdsall. "This is a serious responsibility not to be taken lightly."
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