Introduction
Since Jamie Dimon took over as the CEO of JP Morgan in 2006, the company has experienced a surge in asset value by 110%. Earnings for the company have also increased almost threefold, and its market share in the investment banking industry has also remained strong over the years. Despite the financial crisis of 2008, the company continued to grow in value and expand its markets. According to Statistica (2018), JP Morgan has the leading market share in investment banking industry worldwide, with its revenue constituting 8.1% of the global investment banking earnings. Most financial analysis and authors agree that the success of the company is attributed to the company’s prowess in risk management. Thus, the leadership of the company is extremely effective because risk management is the function of top leaders at the company, and the leadership culture of the company is to manage risks.
Transformational Leadership
JP Morgan has adopted the transformational leadership style, which entails initiating change in individuals and systems. Transformational leaders inspire followers to achieve organizational objectives by motivating, respecting and trusting them to make decisions and create innovative ideas in the company (Sadler 24). They create positive change in junior staff and help them to develop their skills and achieve career growth. Transformational leaders also delegate duties, make effective decisions, and they are good in problem solving. They give employees the chance to participate in decision making, and motivate them to work towards the achievement of common organizational goals and objectives.
One of the qualities that make the company’s leadership transformational is the decision of Jamie Dimon in 2012 to change the senior management team. Due to the exit of Jay Mandelbaum, the manager of strategy and business development, Dimon decided to move Varry Zubrow from the risk management department despite leading the division through the financial crisis (Craig 2012). The bold decision showed that the CEO was not afraid of change. Furthermore, Zubrow would continue providing advices on risk issues, showing that the CEO allowed a cross-functional interaction and freedom that is common among transformational leaders.
Characteristics of Transformational Leaders
One of the key characteristics of the CEO of JP Morgan is the delegation of duties. According to Dimon, the work of the top executive is not to make decisions, but to facilitate the making of best decisions. The leader always sits in roundtable meetings with employees, departmental managers, and other leaders as they discuss issues of operations and strategy from time to time (Qu, 2018). He is committed to holding conversations and interacting with employees to understand their needs, support, and inspire them to achieve their team goals. The company has also inculcated the culture or responsibility and carefulness, which requires all staff members to be responsible for their actions, especially towards customers.
Risk Management Leadership
By focusing on risk management, JP Morgan ensures that it does not make decisions that will jeopardize the business. Although the company’s leaders take risks through investment banking, they are committed to the critical analysis and evaluation of data to establish risks before making decisions (Gandel 2017). While some companies such as AIG exhibited risky behaviors by offering unbacked loans that led to the financial crisis, JP Morgan’s leadership chose to focus on a less aggressive and evidence-based approach to risk management. Thus, the CEO and his junior managers are concerned with sustainable and stable business in a fast-changing environment.
Conclusion
Going forward, the company should maintain its strong position in the market through increased leadership training and development. The current top leaders are people who have worked in the company for long; hence there is need for the company to develop new leaders through incubation, training, and development.