The boardroom’s hardest conversation: How to manage a graceful director exit

Boards are built on the premise that the people around the table can work together in the best interests of the organisation. But what happens when one of them is no longer pulling their weight, disrupting the dynamic or simply proving to be the wrong fit?  

It’s the conversation no chair wants to have – you’ve reached the point where a fellow director is no longer fit for the board and someone has to tell them. 

The problem is more common than many boards would like to admit. A September 2026 PwC survey found 55 per cent of US board members thought at least one of their fellow directors should be replaced, while personal relationships and social awkwardness were among the biggest barriers to taking action.

For Australian public companies, there is an additional layer of complexity. The board cannot technically remove a fellow director. While members can remove a director by resolution, a chair seeking a voluntary resignation is ultimately left with the delicate task of persuasion. 

If you’re not careful, even when you successfully procure a resignation, a director’s departure can turn an internal disagreement into a public argument about the board itself. 

Who can forget the WiseTech saga and the extremely messy fallout from Christine Holman FAICD’s resignation in 2024? That is the wider challenge for a chair – getting someone to leave does not necessarily mean the dispute leaves with them.

That’s one reason why establishing norms and ground rules about what is expected and how a board communicates is so important, says Dr Matthew Turnour, chair at Neumann & Turnour Lawyers. “You’ve got to have the difficult conversations early,” he explains. “I would’ve been having conversations about the issues we’re running up against over several months by the time we get to a conversation about removal.”

Genevieve Hawkins GAICD, founder of Mentally at Work, agrees. She says chairs need to understand each director’s motivations and establish how the board will deal with conflict before a problem ever arises.

“If the board has a clear framework for how problems and conflict are dealt with right from the start, then when someone goes out of line, it’s far easier to pull them up and hold them to account to this framework. It’s easier to say, ‘We’re going to pause here so we can get back on track with our agreed process for working through conflict.’”

That also helps you to distinguish between honest and productive disagreement – which can be the lifeblood of a strategic, well-functioning board – and a truly unfixable impasse. As Turnour puts it, “You lose arguments. Sometimes you get rolled. You don’t always get your own way. But disagreement doesn’t always mean poor performance.”

However, he adds, pretty early on it becomes evident if someone is not a team player or is just “being really difficult”. “From a chair perspective, the earlier you jump on that kind of thing, the better.”

And when the writing is on the wall, explains University of Queensland Business School Associate Professor Chad Chiu, peer evaluations and collective pressure can play an important role in getting the job done. But it’s a delicate dance.

While it’s fair to acknowledge that the situation has been discussed with fellow board members, Chiu advises the chair to shoulder the heat for the ultimate decision.

“If I was the decision maker, I’d want to take full responsibility,” he says. “I’d rather this conversation happen between me and that person directly. I can mention I consulted with different people, but in the end, this is my choice. You don’t really want to defer accountability to others.”

Being asked to step down is always going to feel at least a little personal, Chiu acknowledges, so his advice – and what he teaches his MBA students – is to always centre these kinds of conversations around the business outcomes you’re trying to achieve, rather than resorting to personal grievances.

“For example, you might say something like, ‘We’ve considered plans B and C, but they all have considerable consequences. So in the end, we end up with option A, which is removing you from the board’. Providing that kind of information – the decision-making process of how we landed in this situation – is very important.”

Hawkins advises asking for the director’s perspective first, so they feel heard before you explain your own standpoint. “When you’re feeling defensive you can’t hear what the other person is really saying until you feel heard yourself.” 

She suggests opening with, “Here’s the awkward situation, can you help me understand your perspective?”

Turnour agrees with Chiu, advising chairs to keep the focus firmly on how the director is adding value to the organisation – leading to the blunt question, “It’s just not working, is it?”

The aim is to frame the conversation so the director feels he or she is choosing to leave, rather than being rejected or turfed out. “Your ideal outcome is that the person decides that’s what they’re going to do, and they create a narrative that can work for them to save face and exit,” says Hawkins.

The resignation letter then serves to put the director’s own reasons for departure on the record in terms they are comfortable sharing with others, which hopefully puts a lid on any nasty fallout for everyone involved.

Unfortunately, it’s always possible the person will still refuse to bow out. If that’s the case, Chiu says it’s valid to simply ask the question, “Why?”

“What is the reason you’re reluctant to step down?” he asks. “Typically, it’s about personal reputation, a lack of influence in the company or because being on the board is part of your identity.”

Once you’ve worked out why they feel so determined to stay, it’s possible to negotiate around those reasons. Perhaps keeping them involved in social events with the company is enough to preserve their sense of value, he suggests. 

“Whatever it is, we can talk about how to address those concerns. Knowing why you’re reluctant to leave is very important.”