- Should we get rid of a CEO when they make a big mistake or is this a key learning point that they can use?
- Do we treat male and female CEOs the same when there is a major issue?
- Is this a technology rather than a governance issue - or are they intertwined?
- Reputational damage - Claire discusses how Christine Holgate turned her crisis into an opportunity and went to receive a great job offer after the Australia Post debacle.
James Vyer: Kelly Bayer Rosmarin resigned yesterday following her appearance at the Senate inquiry into the outage on Friday. So do customers actually care about who the CEO is until things go wrong? Shareholders perhaps. Let’s dig into this a bit with Claire Braund, Executive Director of Women on Boards. Notwithstanding the two quite big clangers that the now outgoing CEO of Optus has overseen, is it fair that the buck stops at the highest point in the chart?
Claire Braund: Well, technically the highest point in the chart, of course, is the board. And I think it's interesting when you said, do people know who the CEO is? I think once something happens or something goes wrong, everybody knows who the CEO is and people like somebody to actually blame.
Think about how big Optus is, think about how confident, think about the fact that they've got a parent company, which of course is Singtel. So there's a lot more moving parts. So, in many ways, it's unfortunate to put so much pressure on the person who, having possibly failed, could then learn from this and go on to be an extraordinary.
I also thought about Christine Holgate and also the gender issues around the comparison with the way she was treated with the way that Scott Morrison was then treated when he was on holiday for the bushfire season. And yet what happened to her? So I do think that there's less of a tolerance for failure for women at the top than there is for men.
James: Playing devil's advocate though with the ‘clangers’ - a massive data breach and then a big outage they're not great for telecoms companies. Would you expect that a man who might hold that role and similar things happen would end up with the same fate?
Claire: Well, I suppose the biggest recent case study we have is Qantas. And when you look at some of the ‘clangers’ that happened there and yet until public pressure was really brought strongly to bear, Alan Joyce was going to leave on his own terms. So yes, I do think there is a difference.
I also think that in this country, our culture is very quick to rush, to blame somebody and then to get rid of them, when in fact, if wise heads prevail, you might look at it and say, OK, this is a huge issue, it costs businesses tens of thousands of dollars. What do we learn from this? How can we fix it? Who's going to want to step up to be the CEO of Optus now? I don't know.
I think that sometimes so much pressure is brought to bear on a single individual at the top of a company and everybody walks away from them that really they have no option. And so I think that's a very difficult position to be in.
I do think the media treats men and women at the top differently. However, I also think that when you look at who's ultimately responsible for something like a major cyber breach, for something like a huge hack, something like for a huge customer outage, technically the buck actually stops with the board and so what's the culpability there?
So there's going to be lots of boards - and there are already lots of boards - getting lots of really in-depth case study analysis on the Optus scenario, because what happens when people start suing when these things happen? There are all sorts of ramifications. I think it's a general wake up call. There are two sides to it in a way - the business governance, leadership side and then the technology side, and I think it's probably the latter that makes us all a bit twitchy.
James: Do you think that there is a longer piece of rope given to those companies that we have a bit of a soft spot for when it comes to being a consumer?
Claire: I think that's absolutely fair. I think people's perceptions overrule what is quite often rational thinking and irrational behavior and it happens to me too. Why do we give Qantas a longer leash than we give Optus? Why do we give organisations that are at the heart of who we are? Why do we care so much that Akubra has been bought by an Australian philanthropist? Why do we care about those sorts of things so much more?
I also think that though the Optus issue is a classic case study in crisis management or perhaps lack of crisis management, or perhaps ‘we need much better crisis management’ because in the end it's not just down to the CEO. The CEO has to step up, has to be the person who is speaking, has to be the person who's actually leading. But that takes a whole pile of people in the room behind them to actually help them put that together. I'm assuming that they would have done all of that scenario planning and yet somehow it all just seemed to fall over at a really critical time.
And of the now ex-CEO Kelly Bayer Rosemarin, she told the truth when she didn't have answers. She said that she didn't have answers and yet somehow we judge that more harshly than had they glibly said something that was perhaps not the truth. So I think it's interesting in how we think on these things, but I do think that there will be a more vicious attack about her.
And now people are camping outside her house and making comparisons about how much the house is worth. All stuff that actually isn't relevant to her being CEO.
James: The cynic in me wonders if you're an experienced CEO when you draft your contract, If you're smart you put in an exit strategy? Obviously we don't know the details for this particular scenario, but typically if you know what you're doing, how do you construct your contract so that if this kind of thing happens, you can walk away with the so-called golden handshake, golden parachute, whatever you want to call it.
Claire: Look, I'm no legal expert and many of them would, as I said, have all sorts of clauses about that when they exercise share options and all of those sorts of things.
But I think the bigger issue here is around reputational damage, because the reputational damage to her is actually quite huge, as it was to Christine Holgate, who, to her credit, actually went hard on the attack. And another company that saw what she'd done at Australia Post went, oh, my gosh we're actually going to pick her up now.
James: Never let a good crisis go to waste. I forget whose quote that was.
Claire: Yes, but it is really difficult because it's not just from the point of view of your financial security, which is important to everybody, but it's your reputational damage. And that actually is priceless. It's not something you can buy, it's not something you can put any kind of value on. And so when people are attacking CEOs, when people are going out like this and, as I said, camping outside a house and doing all these sorts of things, she's a person. And in the end, she's got to walk down the street and buy groceries and take her kids to school and do all of those sorts of things. So it's the reputational damage that I think is the really hard thing. And I don't think any number of millions compensates for that.
James: Well, I suppose if you do have the millions, you can go off to Tahiti or Tuscany or something and hide.
Claire: In the end, you've still got the online social trolling going on, you've got all that vicious stuff happening and you can't really ever get away from it. And so I think that's fairly tough.
James: Thank you Claire for your perspective on this. Most fascinating.
Listen to the this interview HERE