Dear reader,
Welcome to the April 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 how to drive a change that will not be popular.
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
Winnie is the chair of the board of an employee-owned firm that evolved from a partnership. All of the directors are called ‘Partners’ and each runs a silo practice in his or her specialty within the company. She is really an ‘executive chair’ although her title is ‘Managing Partner’ and is finding it hard to run her own practice, administer the business, and also lead the board which is fettered by conflicts of interest and personal rivalries. The directors don’t act like directors; they act like chiefs of their own individual enterprises and compete for resources instead of collaborating to grow the firm.
Winnie doesn’t have the time or the expertise to develop and implement strategy over all of the different service lines. The company is large enough that it could benefit from a full time CEO, but the board members don’t want an outsider to tell them what to do. Younger partners who are not on the board are expressing frustration that growth has stagnated; they want more opportunities. Winnie is worried that they will leave to join other, higher growth, firms.
Decisive change is needed, and Winnie is keen to make it happen. She needs to build support at board level for this.
How should she proceed?
Kate’s Answer

This scenario is common in firms evolved from a small partnership. The leadership resists fully transitioning to a board-led model, struggling with the mindset shift required of directors.
For Winnie's firm, growth (perhaps survival) depends on operating as a unified legal entity, coordinating activities, and deploying resources strategically. Winnie holds the reins to drive this change, but doing so effectively may mean stepping back from her own practice. If she wishes to maintain her practice, she must persuade her fellow directors to appoint a CEO. If she believes she can take on the role herself, she needs their support in carving out the necessary time and authority to do it properly.
Winnie should challenge the directors to embrace an effective board model. They must decide whether they are willing to take responsibility for the firm's governance and strategy. It will mean stepping beyond their individual fiefdoms, to lead on risk management, financial stewardship, and business development for the whole firm. If they lack the necessary skills, time or willingness, they must collectively consider what that means for their future.
To build support, Winnie should identify directors who already understand boards - these will likely be her allies in shifting toward more strategic leadership. She may need to encourage governance training, or hire management consultants or independent directors, to pull in external expertise.
A company is more than a group of individuals. Its success comes from a shared vision, strategic decision-making, and effective resource allocation. The strongest firms do more than just house successful individuals; they unite them in a common purpose, ensuring that talent, capital, and technology are deployed for collective success.
Kate Waterford is Managing Partner of Maliganis Edwards Johnson, a Canberra-based law firm. She currently serves on the AICD's Law Committee and ACT Divisional Council, and in committee roles for the Fred Hollows Foundation and Amnesty International Ltd. Kate has held chair and vice-chair positions on several Australian NFP boards, working on human rights, education, professional regulation, and healthcare. She edits a legal textbook on the topics of health law and civil and political rights.
Julie's Answer

Partners are very different from directors and, while the firm has transitioned to a corporate model, the people have retained the behaviours that made them successful rather than adopt change and behaviours that will keep them successful into the future. Winnie must act before she burns out.
The first step is to realign her board and other senior leaders around a shared strategy that is enticing enough to encourage change. This should include a clear focus on areas that are expected to grow and a careful identification of those that will either be maintained or allowed to atrophy.
Her next step is to develop a logical framework for rewarding the senior leaders for the success of the organisation, rather than the success of their own particular part of it. This structure must be compelling and needs to be supported by all concerned. It should include an 'escape mechanism' for those who are not able or willing to change. If Winnie can't get this right everything else will fail.
The final step is to enrol the next generation of leaders in understanding, supporting, and helping to drive the change. She must not start this until she has a body of support from steps one and two.
At each step, Winnie will need specialist help in designing strategic frameworks that support the desired change and also 'political' support from the respected 'elders' within her company. If she can't get that support, Winnie should leave. This company needs to change, and if you can't change the people, you can't change the company.
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.
Thomas’ Answer

Given the current legal setting and the attitude displayed by the owners of the firm, it feels like being on board the Titanic shortly before the disaster: The company is facing serious challenges and risks, however the people in charge are not aware of it, or - even worse - ignore it.
We have the freedom to decide how we want to deal with things we don't like. There are three proven options that Winnie can play through to move forward.
Love It
Accept the situation, stop fighting, and start improving your golf handicap
Leave It
Sell your equity and leave the company together with the best young talent, maybe setting up a new firm using the experience you gained
Change It
First Step: The Wake-Up Phase. Work with the Board, question the status quo, rock the boat, challenge the comfort zone. The first-class passengers on the Titanic continued to wine, dine and dance as the ship crashed into the iceberg. Involving the younger partners is key. Not everybody will like it, so what. No need to be everybody's darling. Find allies and confidants, build coalitions. Be persistent, this is a long-distance marathon, not a sprint. You might consider hiring a personal coach with whom you can prepare your actions, test your arguments and who will act as a sounding board as well as a trusted advisor for you.
Second Step: The Planning Phase. Prepare the strategic direction by asking fundamental questions to guide your planning. Where do we - as a firm - want to go? What is our company's positioning within a given time frame? What "is in it" for the key stakeholders? What is our plan concerning succession? How can partners who are retiring say goodbye in style and in good standing?
Third Step: Implementing the plan by taking small steps, utilising agile project management techniques, measuring milestones, celebrating successes and engaging in constant communication. Assess feedback and adapt the plan to ensure sustainability.
My personal advice for Winnie: If you don't achieve the first step despite all your efforts, have a plan B for yourself. If you achieve the second step, make sure that you get proper compensation in case you will lead the third step.
Thomas Heyn is a member of the German bar and holds a PhD in Labour Law. In 2002, he co-founded the Executive Search firm Jack Russell Consulting, the German branch of AltoPartners, based in Munich. Previously Thomas held Senior European Management positions with Hewlett Packard, Tektronix, and Oracle.
Chat GPT’s answer

Winnie is in a challenging but pivotal leadership position. As chair, she must ensure the board operates in accordance with its legal duties, including acting with care and diligence in the company's best interests, not just individual silos. Here's how she should proceed:
- Clarify Governance Roles: Winnie should remind directors that they have collective fiduciary duties. Holding a workshop or bringing in an external governance expert could help reinforce the distinction between board and executive responsibilities.
- Reframe the CEO Discussion: Instead of framing the CEO role as an outsider taking control, Winnie could position it as essential for unlocking firm-wide growth. She might propose an internal leadership review to identify inefficiencies and highlight how a CEO could provide strategic cohesion without threatening autonomy.
- Engage Younger Partners: These individuals represent the firm's future. Winnie should establish a forum or advisory group where they can voice concerns and propose growth initiatives. This could create momentum for change and build internal pressure on the board to act.
- Address Conflicts and Collaboration: A strategic retreat focused on firm-wide goals rather than individual practices could help align directors. Winnie should champion a performance-based incentive system that rewards collaboration over competition.
- Build a Coalition for Change: Winnie should identify influential directors who see the need for reform and enlist their support before presenting any major proposals.
By taking these steps, she can shift the board's mindset, gain buy-in for structural improvements, and position the firm for long-term success.
Chat GPT is an artificial intelligence (or a pattern recognition, data analysis, and prediction engine). It resides in Cyberspace.
Book review - Not-For-Profit Board Dilemmas by Julie Garland McLellan

All Directors are leaders, whether in the private, public or not-for-profit space. All organisations look to their boards for direction, mentoring, support and advice - adding tremendous value to the professionalism of organisations. NFP directors are in a unique position. They are advocates of their cause and many also contribute to their organisations on a volunteer basis outside their role as a board member. What is vital though, is that these directors understand their legal obligations as custodians of their organisation. I congratulate Julie Garland McLellan on successfully highlighting the importance for directors, specifically NFP directors, to practice good governance across all aspects of their organisation in her series of relatable and honest case studies.
Reviewed by:
John Brogden, Former MD & CEO of the Australian Institute of Company Directors
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 April

Some decisions are harder than others. Some decisions need a lot of work to build support for implementation. Some are wildly unpopular.
As directors, it is our job to carefully and boldly make the decisions and then diligently implement them.
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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Let's connect - I use LinkedIn to share information about boards and directorship with my friends and acquaintances. If you use LinkedIn and we are not yet connected I will welcome a connection from you. You can find me at linkedin.com/in/juliegarlandmclellan.
Farewell until the next issue due 1 May 2025. I look forward to greeting you again then.
Enjoy governing your companies, it is a privilege!
Best regards,
Julie
