How to maintain your CEO's privacy—but keep employees informed—if he or she falls ill

Steve Jobs’ illness (whatever it might be) should force all companies to ask themselves one question: Do we have a deep bench?

And it should force communicators at those companies to ask themselves the follow-up question: Are our bench players known and respected, both internally and externally?

“For Apple, it’s a little like prescribing gloves to a workman with splinters,” says Paul Dusseault, who leads the corporate practice group in Fleishman-Hillard’s Atlanta office. But the answer to the reputational challenge, he says, is to keep senior management in the public eye through blogs, tweets, op-eds, speaking engagements, media interviews, employee town halls and so on.

All companies should do this, he says—after all, the onset of a potentially fatal illness is just one of the reputational risks a company runs by making the CEO its only public “face.”

“Accidental death, scandal or even being tapped for a cabinet post in a presidential administration could all lead to the perception that the company is suddenly ‘leaderless’ and ‘adrift’,” Dusseault says. “Employees, partners, suppliers, customers and shareholders all could react rashly.”

Indeed, when the media released Jobs’ Jan. 14 memo to employees, Apple’s stock dropped to a one-year low in after-hours trading (rebounding a bit by the next morning, when it was down 4.1 percent). In the memo, Jobs announced that his medical condition was more serious than he had thought, and that he’d be taking a five-month leave of absence.

Because of the wording of the memo, and an earlier memo, investors began speculating that Jobs was gravely ill. In the earlier communication, Jobs responded to the reaction to his gaunt appearance and absence at MacWorld with assertions of an easily corrected “hormone imbalance.”

 And it wasn’t the first time something like that had happened: Apple has been historically secretive about Jobs’ health. In 2004, the company did not announce the CEO’s pancreatic cancer until the day after he had a surgery to remove a tumor.

In a cheerful e-mail to employees, Jobs explained that he had dealt with a life-threatening illness but was “cured”—and would be back in the office in a month. When trading resumed the next day, Apple shares dipped 2.4 percent.

How much should you tell?

More than Apple did, says Gary Tobin, a long-time communicator who handled the heart attack and subsequent heart transplant of Bill McGowan, founder and chairman of MCI. (It should be noted that, at McGowan’s insistence, his heart attack was kept secret for two weeks, a decision that Tobin says he now regrets).

The Jan. 14 memo to employees merely stated that Jobs’ health problem was more “complex” than he’d thought and that he would be focusing on his health until June, when he would return to the company. Until then, he said, Chief Operating Officer Tim Cook would be in charge, but Jobs would still be involved with major strategic decisions.

The subsequent outrage among analysts, investors and employees—who demanded more information—confirmed that Jobs and Apple are synonymous.

Podcasts: an absent CEO’s best tool?

Steve Jobs told employees that he intends to “remain involved in major strategic decisions.” One of the best ways to do that is through social media, says Dave Burckhard, vice president of operations at National Podcasting System. While a memo to employees might convey company confidence and strength, Steve Jobs’ best tool is something that Apple has ample experience: the podcast—and more specifically, the video podcast. “If Steve Jobs truly intends to fully take the reins of the company this June, he should regularly, at least monthly, post a video podcast to employees,” he says. Burckhard says that each absentee CEO podcast should include: an update on the status of projects at the company; a description of the state of leadership at the company; remarks on company performance; and a short status update on his health. “An ‘in-person’ statement would be ideal but the next best thing is a podcast program,” Burckhard says. “Of course, the last thing Jobs should do is drop off the map. He needs to keeps his face in front of employees and the rest of the world, if only virtually, to inspire continuity in company matters.”

“To claim that it is a private matter is the one laughable part of the argument,” says Tobin, now principal of Tobin & Associates in San Francisco. “It’s a public company; public companies have responsibilities that private companies do not have. If you build a company around a ‘personality,’ you ultimately give up the right to claim ‘private’ matters.

Tobin points out that Apple—under Jobs’ direction—has made him the singular face of the company and, therefore, has created the dilemma that it is now trying to avoid. “His illness is more than a private matter and there are no good excuses to the contrary,” he adds.

Not all communicators agree, however.

According to branding expert Rob Frankel, author of The Revenge of Brand X: How to Build a Big Time Brand on the Web or Anywhere Else, the memo to employees was what it should have been: short, sweet and to-the-point.

“Contrary to what most pundits are preaching, there is no ‘public right to know’ in private affairs,” he says. “A CEO’s responsibility is just that: responsibility. Jobs has acted in a responsible manner, so what’s the big deal? … Apple’s brand is stronger than one man—and the man who created it made sure of that.”

(In fact, Frankel discussed just that on Fox News last year.)

When it comes to both employees and external audiences, all you can do is provide the truth in broad strokes—and reassure them that you’ve taken the appropriate measures that are best for all concerned, Frankel says.

“[Give employees information] on a ‘need to know’ basis,” he says. [They need to know] you’re going to fix the problem.”

Give employees credit

The most important thing is to give stakeholders—especially employees—the credit they deserve for being able to see the forest through the trees, says Michael Shmarak, principal of Sidney Maxwell Public Relations in Chicago.

“That companies withhold information is a sign that they are not giving employees the credit they deserve as vital assets to the company,” he says.

The consequences of that can be severe—and technology makes it worse. Customers, analysts and employees are expressing their views anyway over the Internet, and their information may not be current or correct, Shmarak says.

“If I were at Apple, I would be concerned that other people who are not directly connected to the situation are controlling the flow of communications via blog posts and other forms of communication.”

It all comes down to timing, says Elizabeth Castro, an employee engagement expert, who’s provided internal communications support to major corporations such as Hanesbrands.

“The right time to communicate the illness of a leader is when that illness becomes apparent—you can see it—or when it hinders that person’s ability to continue their duties,” says Castro, vice president of O’Malley Hansen Communications in Oak Park, Ill. “Employees feel genuine concern for their leaders and there is an inherent nature in us all to be ‘in the know.’ But the last thing you want is speculation.” Speculation fuels misconceptions and rumors, and distracts employees from their daily duties, she adds.

The main messages in Jobs’ memo were right on, Castro says.

“The most important thing people want to know is: How does this impact our company? And peripherally, How could this impact my job?” she explains. “You want employees to know that the ship will continue sailing and that they are in good hands.”

Depending on the size of the organization, in-person discussions with direct managers are critical to sharing potentially difficult news, Castro says.

“I always recommend that small team meetings should be part of any big announcement. It allows employees to ask questions, share their concerns, and ultimately walk away with a stronger sense of comfort.”

Preparing for a successor

The trick is to have a strong succession plan, according to Frankel.

“All that a company need do is announce that there is a succession plan in place. They do not need to detail it to anyone,” he says.

But for a succession plan to be created, the chief must be convinced that shoring up the bench is a good idea.

“Ironically, the public perception of a ‘deep bench’ at a major company reflects even better on the reputation of the CEO than the perception that he or she is a solo act of genius,” Dusseault says.

Disclosure of Steve Jobs’ illness: What are the legal issues?

Legally, there is some gray area when it comes to disclosure of an executive illness. The Securities and Exchange Commission “should directly classify the health of a firm’s CEO as a material fact requiring disclosure,” says Alexa A. Perryman, assistant professor of management in the Neeley School of Business at Texas Christian University in Fort Worth, Texas. Perryman—lead author on a paper, “When the CEO is Ill: Keeping Quiet or Going Public?”, which will appear in an upcoming issue of the journal Business Horizons—says that because the SEC lacks specific guidelines regarding executive health disclosures, “this leaves companies to decide what does and does not constitute material information.” It’s obvious what Apple decided, but according to Bloomberg News (which cites an anonymous source), the SEC might disagree with the decision. The agency is reportedly investigating whether the company purposely misled shareholders, and should have disclosed Jobs' heath issues in a more timely manner. The SEC requires companies to disclose events and conditions with the potential to impact the firm’s future or its value in the market—and “there is research showing that the death of a CEO often leads to ‘negative market reactions’,” Perryman says. The SEC is allegedly investigating if the same can be said for serious illness. Thus far, “the evidence for the same phenomenon related to CEO illness, though, is largely anecdotal,” she continues. “News accounts have noted changes in stock prices due to rumors of CEO illness. An earlier incident involving Apple, for example, saw the firm’s value drop by $16 billion over rumors about Steve Jobs facing another battle with cancer.” In a newspaper search covering the years 2000 to 2008, Perryman and her co-authors found several instances when CEOs and companies chose the path of disclosure. However, they found that “CEO health typically is not disclosed until the condition has reached a critical stage.” The paper’s authors contend that CEOs’ medical rights to privacy must be balanced with a responsibility to investors and employees. They argue for public disclosure if and when: •    There is an illness or condition that immediately endangers the life of the CEO; •    An illness or condition requires a lengthy absence; •    A condition has the potential to shorten the lifespan of the CEO, or impacts the CEO’s ability to reliably perform his or her job