Dear reader,
Welcome to the May issue of The Director's Dilemma newsletter.
Every month this newsletter looks at a real-life board scenario and considers a range of responses. This month we consider the plight of a director who suddenly finds himself at odds with a stance endorsed by the company.
To read this email in a web browser, go to www.mclellan.com.au/newsletter.html and click on 'read the latest issue'.
I hope you will enjoy the latest dilemma:
The Dilemma
Xan is a 1st generation Australian and loves his adopted country. He still has relatives in his birth country, which is riven by conflicts.
As a highly qualified commercial lawyer, Xan, whilst unable to practise law without requalifying, has developed a satisfying career as an in-house commercial and contract manager for a large company. His boss encouraged him to study governance and, once qualified, join a relevant board to increase his network, enhance his business skills, and give him an opportunity to give back to society.
Xan found a local NFP that helps children of recent immigrants to become involved in sports and arts. He volunteered for a while then stood for election to the board and was delighted to get elected first time. He has now been on the board for two years.
Last week the NFP published an endorsement of one of the parties engaged in conflict in his birth country. It’s on an opposing side to the one most associated with his family and region. Xan is hurt that he was not even consulted and a bit concerned that the conflict, and the parties to it, are not relevant to the activities of the NFP.
Naturally an introvert, Xan is considering resigning from the board rather than raise the issue with his colleagues or the ED. However, he still volunteers and loves the impact that the NFP has for children who need a boost to become engaged in their new community.
What should Xan do?
Ian’s Answer

Xan's initial response could be to have a private chat with his Chairperson stating that he feels uncomfortable with the organisation endorsing any political agenda, let alone one that leads to a personal conflict of interest. He could articulate his view that the organisation taking a political stance could well be counterproductive to the aims of the NGO and undermine its future effectiveness overall.
He could request that the Chairperson table the matter at the next board meeting for discussion and ask that a vote be taken.
If this was refused, he could raise the matter at the next board meeting himself, explaining his position and seeking assurances on the NGO’s future political neutrality and requesting a retraction of the endorsement.
In the event that Xan was unable to prevail he may consider his position untenable and resign stating the reasons for his decision and requesting they be recorded.
Ian Leach is the founding Vice President of Rise Coffs Harbour and the Owner of SalesDimension. He is based in Coffs Harbour, NSW, Australia.
Julie's Answer

That Xan has found out about this endorsement, with no prior communication or request for his input, after publication speaks volumes about the respect between the organisation’s executive leadership team and its board. Only an ED who believes the board to be distant and unengaged would take such a step without first raising the possibility in a conversation with the directors.
Xan should raise this issue during the board’s in camera session after first notifying the Chair that he intends to do so. This public endorsement is a major political risk that was not aligned to the strategic plan and seems to have been taken without board authority. Hopefully the other directors will agree that it is a regrettable lapse of judgement and the chair, with the board’s authority, can raise this with the ED.
If it is the first time the ED has stepped over the bounds of reasonable use of his position, then I would suggest the chair discuss it in a one on one meeting with the ED after the board meeting concludes. If it is something that continues or escalates a trend, then the conversation should take place with the whole board but no other executives present. The ED needs to know that the board are united and resolute that the strategy should not be placed at risk by virtue (or vice) signalling that does not align with a strategic and authorised plan of action.
If the board are not willing to give the ED clear boundaries around what can, and what cannot, be done using delegated powers, then Xan should start searching for another board that governs more effectively.
Julie Garland McLellan is one of Australia’s most internationally acclaimed company directors and board advisors. She is renowned for her practical experience as well as deep governance expertise and qualifications. She is based in Sydney, Australia.
Richard's Answer

Wow! I understand Xan’s hurt.
Having grown up, living and working in multicultural Australia, I’ve witnessed similar situations many times.
Many first-generation migrants draw strength and identity from living in close-knit cultural communities that provide social support and cultural continuity. Even as they embrace their new country, deep ties to their homeland endure.
In this context, the NFP’s endorsement may be causing Xan to feel shame or face backlash from his community with potential consequences such as marginalisation or demonisation. For his relatives in his birth country the repercussions could be severe.
From a governance perspective, the NFP’s public endorsement of one side in a foreign conflict, without full board consultation, is highly questionable and potentially damaging.
As a board member, Xan should have been included in a decision of such significance. The failure to do so raises serious concerns around governance processes as well as the board’s respect for Xan’s role and contributions.
Beyond Xan’s personal dilemma, the NFP must confront and justify how their making of such an endorsement aligns with their mission. Taking a partisan stance can erode community trust, damage reputation and jeopardise funding.
Xan must raise this for board discussion. By framing the issue around the NFP’s mission, community cohesion and reputational risk, he may help refocus the NFP on its core purpose.
However, if the board remains unwilling to course-correct or if Xan faces conflict with his community or fears for his relatives’ safety, then, despite his love of the NFP’s work with children, resigning from the board and stepping back as a volunteer may be the best course of action.
Richard Sterling is Managing Partner of AltoPartners Australia and specialises in For Purpose and Social Impact organisations. He is also a member of the World Commerce and Contracting Association and the AESC. He is based in Sydney, NSW, Australia.
Chat GPT’s answer

Xan is in a challenging situation and should approach it thoughtfully. First, he should reflect on his values and goals for being on the board and the impact he wishes to create. Understanding the NFP's perspective is crucial, so he may consider seeking clarification on why the endorsement was made and how it aligns with the organization’s mission.
Open communication is essential. Xan can initiate a private conversation with the executive director (ED) or fellow board members to express his concerns about the endorsement and the lack of consultation. Framing his concerns in terms of organizational alignment may foster a constructive dialogue.
If he feels comfortable, Xan could suggest a board meeting or forum to discuss governance matters, including the endorsement process, allowing for a broader conversation on the NFP’s political stance. Engaging with other board members who might share similar values can provide the support he needs.
Xan should also evaluate whether resigning from the board would limit his ability to contribute positively. If he chooses to stay, he can remain engaged through volunteer activities while advocating for more inclusive decision-making processes.
Ultimately, he must balance his dedication to the organization with his personal values. Whether he stays or steps down, Xan's focus should be on continuing to make a positive impact in the community, particularly in supporting children in their integration and development.
Chat GPT is an artificial intelligence (or a pattern recognition, data analysis, and prediction engine). It resides in Cyberspace.
Book review - The Future Boardroom; how to transform in turbulent times by Helle Bank Jorgensen

Boards are facing an increasingly turbulent future. Trends have halted, reversed or accelerated. Geopolitical alliances that seemed set for many years have subtly shifted. Technology is powering different ways of working. And, beneath all the froth and bubble, we still still need to build profitable enterprises that provide meaningful jobs and living wages without destroying our environment.
So how can we, as directors, dare to look beyond the short term and craft bold strategies for the future? Or how can we not?
This book may not have all the answers; it will have enough ideas for you to ask the relevant questions and for your board to benefit from having taken a proactive approach.
Available from Amazon.com
Board reviews – Every board – just like every other team – needs to measure its performance if it hopes to improve. When your board next needs to conduct a performance evaluation or a governance review, please remember that I would be delighted to help. You can contact me at julie@mclellan.com.au
Inspirational quote for May

As directors, it is our job to ask questions. But that is meaningless if we don’t listen to the questions our colleagues ask, share in building the best possible answers, and respect the wisdom that emerges from our discussions. Sometimes, just listening completely is all that is required to gain a better understanding.
This newsletter - If you have any ideas for improving the newsletter please let me know. If you are reading a forwarded copy please visit my website and sign up for your own subscription.
Suggestions for dilemmas - Thank you to all the readers who have suggested dilemmas. They are greatly appreciated. I will answer them all eventually. I could not write this newsletter without your help and without the generous help of all the experts who respond each month to the case studies.
Be a contributor - If you would like to attempt a response to the dilemmas for publication you will be most welcome. Simply reply to this email and let me know. I am always on the lookout for new talent from around the world so please reach out if that sounds like something you could do. I am also always grateful for the generous sharing of the current and past contributors. I couldn't create such an engaging newsletter without their help.
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Farewell until the next issue due 1 June 2025. I look forward to greeting you again then.
Enjoy governing your companies, it is a privilege!
Best regards,
Julie
