What the JPMorgan Shakeup Reveals about Jamie Dimon

The message behind JPMorgan Chase’s headline-grabbing executive shakeup this week is that CEO Jamie Dimon is trying to de-mythologize himself. That’s good news for the investment bank, its employees, and its shareholders.

Over the past 18 months, JPMorgan Chase has made a habit of captivating the financial community. This time, though, it wasn’t a last minute acquisition of another investment bank like Bear Stearns. Nor was it the purchase of the assets of a bank like Washington Mutual out of receivership. It was merely a personnel change. But it was a big one.

Jes Staley, former head of the company’s asset management division, was named head of the company’s much larger investment bank.

Bill Winters, former co-head of the investment bank, announced his departure from the firm, having achieved a remarkable performance for JPMorgan at a time when even mediocre performances have been in short supply.

Steve Black, Winters’s co-head, was promoted to vice chairman of the investment bank, with an announced plan to step down at the end of 2010.

The move shows maturity on Dimon’s part. It’s a challenge for any CEO to keep his or her ego in check, but with the amount of media adulation Dimon has received, you’d think the man’s head would be in danger of exploding. Dimon surely has a high opinion of his own talents — and rightly so — but he is also well aware that the mythology of Jamie Dimon is fast approaching dangerous levels. What would happen to the stock if he suddenly retired or got hit by a bus?

The shakeup shows he will take action to make the world aware that JPMorgan Chase is not Jamie Dimon alone. This is helpful for both employees and investors. Staley was recently the subject of a cover story in Institutional Investor, a move that wouldn’t have happened without Dimon’s blessing.

As for Winters, the details of his departure will surely come out over time. But it’s a pretty good bet that Dimon didn’t push him out in some fit of pique; rather, he decided it was time to make some tough decisions, and he chose Staley. Winters was always a potential candidate as Dimon’s successor. With this week’s news, the odds fell precipitously. And so he left the firm. In making the call, Dimon showed that he had learned from his experiences working with Sandy Weill, whose inability to accept the realities of succession meant Citigroup would convulse every few years in a spasm of uncertainty. Dimon clearly intends to avoid making the same mistake.

Again, this is good for employee morale, especially at the highest levels.

What of Dimon’s own future? As he told me during the writing of my book, Last Man Standing, he doesn’t have any intention of stepping down any time soon. He wants to leave the bank in great shape, and he doesn’t think it’s there yet. My bet is that he’ll stick around for at least another three years, if not more. But if you’re betting on who’s next in line, Staley’s position is looking as good as it gets.

Duff McDonald is a contributing editor for New York magazine and the author of Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase, which comes out October 6 from Simon & Schuster.