Fundamentals of Management, 8th ed

Chapter 14: Basic Elements of Control

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of the executives they were waiting for. Then he called

up each one, asking, “Too good for the subway?” or

“Why don’t you try walking?” Dimon denies the story,

but limo service at J.P. Morgan Chase is way down.

• Dimon also takes a close look at compensation.

Regional bank managers at J.P. Morgan Chase once

earned $2 million a year, compared with Bank One’s

modest salary of $400,000. “I’d tell people they were

way overpaid,” says Dimon, and, as he suspected,

“they already knew it.” He cut pay for most staff by

20 to 50 percent, but most people elected to stay with

the company. Today, a strict pay-for-performance

formula keeps compensation in line.

• “In a big company,” Dimon advises, “it’s easy for

people to BS you. A lot of them have been practicing

for decades.” So he gathers outcome data from every

manager, various forms of information from low-

level staffers, and even candid performance critiques

from suppliers. “If you just want to run your busi-

ness on your own and report results,” warns Steve

Black, co-head of investment banking, “you won’t

like working for Jamie.”

• Finally, Dimon is convinced that IT is critical to the

bank’s long-term strategy and once cancelled a long-

running information-services contract with IBM.

“When you’re outsourcing,” he explained, “… people

don’t care” about your performance. At J.P. Morgan

Chase, “we want patriots, not mercenaries.” Between

2007 and 2008, he invested $2 billion in technology

developed in-house and considers it money well spent.

Dimon, however, doesn’t like being thought of as a

control freak. “It’s offensive … to be called a cost cutter,”

he complains, and besides, his long-run goal isn’t merely

control—it’s growth. “It’s thousand-mile march,” observes

one J.P. Morgan analyst, “and not everyone will survive.”