What the Optus CEO resignation says about leadership

Making waves in the news is the sudden resignation of Optus chief executive Kelly Bayer Rosmarin following criticism caused by the company’s recent outages. Was Ms Bayer Rosmarin a scapegoat, or should chief executives be held accountable for organisational troubles?

Chief executives are the highest form of management within an organisation. With this hefty title comes the responsibility to ensure things are running to plan.

The Optus drama

While the 8 November telco outage was reportedly caused by “bad route data”, the 14-hour ordeal required some form of explanation as customers were left stranded.

Ms Bayer Rosmarin faced a Senate inquiry on 17 November, where she discussed Optus’s unpreparedness.

“My focus is on the team, the customers, and the community. My focus is not on myself. I haven’t seen any reports today. I’ve been preparing for being here,” she told the inquiry.

“The reality is that our network should have coped with this change, but on this occasion, it did not.”

Commenting on the issue, leadership communication adviser, speaker, and author Larry Robertson said two key issues were at play.

“One was a lack of planning by the executives. There had been no planning for an outage of this magnitude. It’s a bit unusual not to have scenario planning for that type of crisis. [They should have worried about] what could go wrong? What could disrupt our activities? Or worse, affect our reputation,” Mr Robertson said.

“Two, there was reluctance to come out and communicate with the public in a meaningful way. There were some comments, but nothing meaningful. Certainly, no apology or real understanding of disruptions caused. There was an apology days later, but trust had already been eroded.”

The resignation (and what it means for businesses)

Off the back of this inquiry, Ms Bayer Rosmarin announced her resignation. A move that she said came after “some personal reflection”.

“On Friday, I had the opportunity to appear before the Senate to expand on the cause of the network outage and how Optus recovered and responded,” said Ms Bayer Rosmarin in a statement.

“I was also able to communicate Optus’s commitment to restore trust and continue to serve customers. Having now had time for some personal reflection, I have come to the decision that my resignation is in the best interest of Optus moving forward.”

While blame must be placed on the company for the issue, is the chief executive the one who must take the fall? A debatable question, certainly. According to Mr Robertson, however, leaders have a responsibility.

“It comes down to leadership at the end of the day. Sadly, the CEO has done the right thing here by resigning. This is the second major outage that Optus has experienced in two years,” he commented.

“CEOs should get on the front foot and communicate. Acknowledge what has happened and give people a sense of comfort.”

Communication is crucial to maintaining trust, said Mr Robertson. This is where Optus may have failed: “Institutions of every type have lost trust with customers by dropping the communication ball.”

Similar issues of brand reputations collapsing were witnessed with Qantas, which, much the same as Optus, saw the chief executive step down.

Alan Joyce said in a statement at the time: “In the last few weeks, the focus on Qantas and events of the past make it clear to me that the company needs to move ahead with its renewal as a priority.

“The best thing I can do under these circumstances is to bring forward my retirement and hand over to Vanessa and the new management team now, knowing they will do an excellent job.”

Others are in agreement with Mr Robertson, as Dr Nathan Eva, associate professor in leadership at Monash Business School, explained: “Resigning was the right thing to do and probably good timing. I assume that she has been able to get the internals right over the past week, deal with the Senate hearing, deal with the parent company Singtel, set up an interim, make sure her team is OK, and then step away.

“It appears as a fairly selfless thing to do, and she has put her team first. And from what I’ve read about what she has done over the past year, it does seem like Optus comes first, the public comes second.”

However, others are more sceptical. Dr Mariano Heyden, professor of strategy and international business at Monash Business School, believes the resignation does not address the real issue.

“The old adage rings true for the resignation of Bayer Rosmarin: heads must roll. The symbolic scapegoating of a company’s figurehead is the reaction to pressures from the general public and policymakers. It helps deflect blame and gives the story a human point of reference by providing a ‘villain’ scapegoat to carve out a culprit from the overall brand,” said Dr Heyden.

“While resignations are common, it is largely a short-term reaction to stop the bleeding without directly addressing root causes. CEO turnover is an opportunity for the organisation’s board to take accountability for misfortunes and create a context for thinking about authentic change. Repairing public trust in Optus cannot solely be achieved by simply changing the CEO; rather, it also needs to be a by-product of authentic change in the way they conduct business.”

CEOs fed up

The immense pressure these leaders face and the responsibility to uphold company values could be part of the reason why so many chief executives are leaving their positions.

The CEO Turnover Report by Challenger, Gray and Christmas found that over 1,400 chief executives have left their positions so far this year through September. This is a 50 per cent increase from the same period in 2022 and the highest since tracking began in 2022.

It’s no secret that chief executives are under pressure to perform. While some may debate whether or not they should take the fall for missteps, somebody needs to be responsible for upholding company responsibilities. That being said, organisations should not view the dropping of a chief executive as the end of the story. Ongoing adjustment and addressing of issues should be top of mind in the wake of a misstep.