How to undo the damage a board has done? – a dilemma

Peter has asked for your advice. He is a director of a not-for-profit company in the arts sector. A few months ago his organisation’s funding was increased by 40%. The board and management were ecstatic.

Shortly after the funding was announced the Chairman informed the board that he had authorised a staff member to change working arrangements and move to a part time role in other premises and reporting directly to the board. The CEO had been informed of this decision verbally immediately before the meeting and was clearly not happy. The grant funding application had stated that this role was full time and in head office very close to the government department to allow frequent liaison.

At the end of that meeting the Chairman solicited dates for an ‘in camera’ (NED only) board meeting which Peter attended a week or so later. At that meeting the Chairman discussed ‘general staff discontent’ and a need to restructure. Peter and a few colleagues asked why the CEO was not involved in this discussion and were told that he was too busy with day to day issues to think strategically. This seemed strange as the organisation was running well and Peter felt the CEO was capable of making a great strategic contribution. At the meeting the NEDs resolved to restructure and split the organisation into two parts; one would be headed by the part time staff member and one by the CEO. Peter asked that the CEO and staff member both present to the board before this decision was finalised but was overruled by the majority who wanted fast progress.

Now the CEO has resigned and is taking leave. Worse, the organisation is rudderless with junior staff unable to operate either of the two new structures without the CEO’s leadership. The Department is asking for explanations and threatening to cancel the funding.

What should Peter do?

Many readers of this blog will be familiar with my newsletter The Director’s Dilemma. This newsletter features a real life case study with expert responses containing advice for the protagonist. Many readers of this blog are practicing experts and have valuable advice to offer so, again, we are posting an unpublished case study and inviting YOU to respond.

If you would like to publish your advice on this topic in a global company directors’ newsletter please respond to the dilemma above with approximately 250 words of advice for Peter. Back issues of the newsletter are available at http://www.mclellan.com.au/newsletter.html where you can check out the format and quality. The newsletters will be compiled into a book. If your advice relates to a legal jurisdiction, the readers will be sophisticated enough to extract the underlying principles and seek detailed legal advice in their own jurisdiction.

The first volume of newsletters is published and available at http://www.amazon.com/Dilemmas-Practical-Studies-Company-Directors/dp/1449921965/ref=sr_1_1?ie=UTF8&qid=1321912637&sr=8-1

Julie Garland-McLellan has been internationally acclaimed as a leading expert on board governance. See her website at www.mclellan.com.au or visit her author page

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