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The company’s personal crisis

San antonio Express News (04/30/2002)
By San antonio Express News Reporter

Jan Reinas, chief executive of Norske Skog, the world’s second largest newsprint producer, was being treated for cancer when he negotiated Norway’s biggest inter-national acquisition two years ago.

In a strange way, he says, the anxieties he faced over the NKr21bn (£1.5bn) acquisition of Fletcher Challenge, the New Zealand pulp and paper company, helped to ease his personal predicament. “If I hadn’t had these daily challenges, I might have been in a situation where I had to live with fear every day and every minute. That would have been very negative.”

The deal was completed about nine months after Mr Reinas was diagnosed with testicular cancer. Despite the powerful side-effects of chemotherapy, including hair loss and a change in skin colour, he did not miss any of the meetings and remained prominent throughout, dealing swiftly with reports that internal rivalry was surfacing in his management team.

A serious illness or personal crisis that affects the chief executive can be deeply unsettling for the whole organisation. Will the boss cope with the job or decide to quit? If word gets out, what will happen to the share price and the company’s reputation? Will potential successors jockey for position and turn against each other? And how should those around the CEO handle their senior colleague’s troubles?

Several high-profile CEOs have stayed at the helm through serious illness. Michael Eisner, Walt Disney chairman, had a quadruple heart bypass operation in 1994. Former General Electric chairman Jack Welch, always one to outdo the rest, had a quintuple bypass the following year. Andy Grove, co-founder of Intel, underwent treatment for prostate cancer.

Others choose to step down, putting health or family first. Michael O’Neill resigned on his first day as chief executive of Barclays, the UK bank, in 1999 after learning he had an irregular heartbeat. Michael Kranda, US chief executive of Oxford GlycoSciences, the UK biotechnology company, recently decided to return home to Seattle because of his son’s serious illness.

Mr Reinas, now 57 and fully recovered, believed correctly that he could keep going. But he rejects any notion that he was a superhero. He says his colleagues readily shared his workload, one of them travelling on his behalf because the chemotherapy severely reduced his immune defences. He felt strengthened by knowing he had people in place to take over if necessary. Delegating more tasks also allowed him to focus on the Fletcher deal.

It was hardly an easy time, however. Mr Reinas was making big organisational changes to prepare for a doubling of the company’s customer base after the acquisition. A story appeared in the media describing infighting in the management team and linking it to his illness. He did not know whether the story had come from inside the company but he had to act.

“I made it clear to my management team, and also at board meetings, that I was the boss,” he says. “I had to use all my experience as a leader. I couldn’t live with a situation where there were uncertainties about someone trying to take this opportunity to gain personally. That would undermine my leadership. It could have been chaos.”

Each personal situation is unique. But there are two particularly problematic scenarios, says Andrew Ward, assistant professor of organisation and management at Emory University’s Goizueta Business School. If the boss is unlikely to resume his or her duties, the succession process requires careful control by the board. Otherwise things can turn ugly, especially if an incapacitated CEO exerts his or her will. “Perhaps the most prominent example was at Time Warner when Steve Ross was dying and Nick Nicholas, the co-CEO with Ross, was forced out in favour of Ross’s pick, Gerald Levin,” he says.

The other is if the CEO continues in office but is mentally disengaged, yet refuses to acknowledge that perform-ance is slipping. Again, the board needs to take control, taking up the issue with the CEO, providing temporary back-up if necessary or, in extreme cases, asking him or her to resign. “In any of these cases, the top management team needs to be visible and reassure the members of the organisation that things will not fall apart,” says Prof Ward.

Fellow managers will find it harder to help if the chief executive has a controlling or inaccessible style. But personal crises can also lead to un-typical behaviour, says Bob Arnold, director of strategy and organisational effectiveness at Chiumento, a UK human resources consultancy. People can go through denial, then anger, then fear. They may become short-tempered, which can confuse or upset outsiders such as clients or analysts who are unaware of the problem.

“The quicker you can encourage someone to be open about their emotions, the quicker you can build coping mechanisms, such as taking time off, reducing the workload, or talking to a counsellor,” he says.

However personal the problem, privacy is often impossible for public figures. Some go to great lengths to avoid leaks. In his autobiography, Work in Progress, Mr Eisner says he insisted on being checked into hospital for an angiogram in 1994 under a false name and co-ordinated stories with his secretary. When news of his operation was released, he insisted the statement include a quote from the surgeon. “I had seen too many companies release misleading information about the medical condition of their executives.”

Even the best news handling will not necessarily prevent media speculation. But releasing detailed and factual information is a good way of reducing rumour, says Jerome Supple, president of Southwest Texas State University, who discovered he had prostate cancer five years ago. He subsequently researched the experiences of other US university or college heads who had cancer.

Most found that going public provoked an outpouring of sympathy and support that they found moving and uplifting. One university president, however, encountered pity rather than sympathy. During a second bout of chemotherapy, he felt his colleagues were sceptical about his ability to carry on, and almost deferential. “I had a very hard time convincing them that I was not going to go away,” he says.

Mr Reinas was open with his management colleagues at Norske Skog from the day he learnt he had cancer. He says they got the balance right. “They were not continually in my office telling me I should go home and relax but they were watching my behaviour. They would say: ‘Leave this to me.’ They respected me as the boss - but they were around and ready to offload work.”

For all his determination, he says, he would have quit if it had been better for his health. “I had to be ahead of the speculation. I watched my ability to cope with the challenges all the time.”