Diplomacy is often associated with foreign affairs: governments negotiating, managing relationships and resolving disputes without unnecessary conflict. In business, the stakes are usually different, but the human dynamics can be surprisingly similar. Organisations do not usually face war, but they do face disagreement, tension, personality clashes, competing interests, information asymmetry, mistrust and pressure.

For boards, executives and company secretaries, diplomacy is therefore not a soft optional skill. It is a practical governance capability.

In governance, diplomacy is the ability to manage sensitive issues with judgement, tact and integrity so boards and executives can make sound decisions using the right information at the right time.

For company secretaries, this can be especially important. The CoSec often sits at the junction between the board, the chair, the CEO, senior management, shareholders, regulators and advisers. That position creates influence, but also risk. The CoSec may be trusted by all sides, but owned by none.

The CoSec as governance diplomat

The modern company secretary is far more than a minute-taker or administrator. In contemporary governance practice, the role commonly includes advising the board and its committees on governance matters, supporting board effectiveness, monitoring governance processes and helping the board receive the information it needs to discharge its duties.

That makes the CoSec a form of governance diplomat: not in the sense of being political or evasive, but in the sense of being a trusted channel between parties who may not always see the same issue in the same way.

The CoSec may need to help directors understand management’s perspective, help management understand the board’s expectations, help the chair frame a difficult discussion, help executives improve board papers, or help the organisation respond to regulators, shareholders or external advisers.

This requires more than technical knowledge. It requires emotional intelligence, timing, judgement and the ability to say difficult things without making the situation worse.

Why conflict arises

Conflict in governance can arise for many reasons, including:

• unclear roles between the board and management;
• tension between oversight and execution;
• disagreement about strategy, risk appetite, performance or culture;
• pressure from regulators, investors, customers, employees or the media;
• poor-quality board papers or late information;
• dominant personalities or unresolved interpersonal issues;
• different professional backgrounds and decision-making styles;
• actual, potential or perceived conflicts of interest;
• competing loyalties in group structures or founder-led businesses;
• uncertainty about who has authority to make a decision; and
• attempts to manage, soften or suppress information that should properly go to the board.

Some conflict is healthy. Boards should not avoid robust debate. Good governance requires challenge, testing and constructive disagreement. The problem is not conflict itself. The problem is unmanaged conflict, hidden conflict, personalised conflict or conflict that prevents the organisation from making sound decisions.

Where diplomacy is most often needed

Company secretaries may need to exercise diplomacy in many practical situations, including:

• agreeing the board or committee agenda where the chair, CEO and executives have different priorities;
• encouraging management to improve board papers without humiliating or frustrating the author;
• chasing late papers when executives are under pressure;
• helping the chair manage a difficult director or an over-dominant executive;
• dealing with a director who repeatedly asks for excessive operational detail;
• clarifying whether a matter is for decision, discussion, noting or escalation;
• helping management understand why the board needs fuller, clearer or more balanced information;
• responding when management asks that sensitive information be withheld from directors;
• dealing with proposed amendments to minutes that do not reflect what occurred;
• managing a disputed action item after a meeting;
• coordinating urgent responses to ASX, ASIC, APRA, ACNC or another regulator;
• supporting the board during a crisis, investigation or whistleblower matter;
• managing conflicts of interest or related party issues;
• handling tension between the chair and CEO;
• supporting induction or feedback for a director whose conduct is causing concern; and
• maintaining trust when the CoSec must deliver an unwelcome message.

In each case, the CoSec’s task is not simply to “smooth things over”. It is to help the governance system work.

The skills of governance diplomacy

Effective diplomacy in governance requires:

• understanding the issue, the people and the power dynamics;
• separating facts from assumptions, emotion and advocacy;
• knowing the legal, regulatory and governance framework;
• maintaining independence and objectivity;
• using respectful, precise and non-inflammatory language;
• listening carefully before proposing a solution;
• identifying the interests behind each person’s position;
• helping parties save face where possible;
• avoiding surprises, except where confidentiality or urgency requires otherwise;
• knowing when to speak privately and when a matter must be formally escalated;
• keeping accurate records;
• being patient, but not passive;
• being firm, but not combative; and
• understanding that trust is built over time and can be lost quickly.

The most effective CoSecs often influence quietly. They do not need to win every argument in the room. Their value lies in helping the board and management get to a better outcome.

Practical techniques CoSecs can use

Several well-established diplomatic and negotiation techniques are directly relevant to company secretaries.

1. Separate the people from the problem

A difficult issue should not become a personal contest. The CoSec can help reframe the discussion away from blame and towards the governance question: What decision is required? Who must make it? What information is needed? What are the risks?

2. Focus on interests, not positions

A director may say, “This paper is useless.” Management may say, “The board is interfering.” Those are positions. The underlying interests may be better risk visibility, clearer accountability, more time, or concern about reputational exposure.

A diplomatic CoSec helps translate the complaint into a solvable issue.

3. Use private channels before formal escalation

Many problems can be resolved through a timely conversation with the chair, CEO, committee chair, paper author or relevant executive. Quiet pre-briefing can prevent avoidable embarrassment and reduce defensiveness.

However, private channels must not be used to suppress matters that should be formally recorded or escalated.

4. Preserve optionality

In government diplomacy, parties often keep communication channels open even when positions are firm. CoSecs can do the same by avoiding unnecessarily absolute language too early. For example: “There may be a way to address the concern while still ensuring the board receives the information it needs.”

5. Use “shuttle diplomacy”

Where direct confrontation would be unhelpful, the CoSec may speak separately with the chair, CEO, committee chair or executive to clarify concerns, test options and identify a workable path. This can be particularly useful where personalities are strong or trust is low.

6. Create an agreed record

Minutes, action lists, decision papers and board protocols are diplomatic tools as well as governance tools. A clear record can reduce later disagreement about what was decided, who was accountable and what happens next.

7. Know the escalation point

Diplomacy does not remove the need for escalation. Where there is a suspected breach of law, misleading disclosure, withholding of material information, improper pressure to alter minutes, unmanaged conflict of interest or risk to the company, the CoSec may need to escalate to the chair, committee chair, board, general counsel, external counsel, auditor or regulator, depending on the circumstances.

This is where diplomacy and courage meet.

When diplomacy is not enough

The hardest moments for a CoSec arise when diplomacy points one way and duty points another.

For example:

• management asks the CoSec not to include a material issue in a board paper;
• a director asks for minutes to be changed in a way that distorts the record;
• an executive seeks to delay disclosure to avoid embarrassment;
• a chair wants to avoid discussing a conflict of interest; or
• the board is not being given information needed to discharge its duties.

In these situations, diplomacy remains useful in how the issue is handled. But it cannot determine whether the issue is handled.

The CoSec should be tactful, respectful and careful — but also clear. The obligation is not to protect comfort. It is to protect the integrity of the governance process.

Examples from US business (although there are many Australian equivalents)

Corporate history provides many reminders that poor internal diplomacy, poor escalation and weak governance culture can be costly.

The Wells Fargo sales practices scandal showed how aggressive targets, pressure, poor escalation and cultural failure can allow misconduct to persist. The independent board investigation identified sales culture, performance management and pressure on employees as central causes.

Boeing’s 737 MAX and subsequent safety issues show the danger of weak safety culture, inadequate escalation and insufficient challenge of management narratives. Recent regulatory and safety commentary has continued to focus on oversight, production pressure and safety systems.

By contrast, Johnson & Johnson’s response to the 1982 Tylenol crisis is often cited as an example of decisive stakeholder communication, prioritising public safety and working constructively with regulators, law enforcement, healthcare professionals and the media.

Microsoft’s cultural reset under Satya Nadella is another useful example. Its shift from a more combative internal culture towards a “learn-it-all” mindset illustrates the power of reframing, listening, collaboration and cultural diplomacy in a large organisation.

These examples are not all company secretary case studies. But they demonstrate the same governance lesson: organisations perform better when difficult information can move through the system, tensions are surfaced early, and leaders create conditions for constructive challenge.

A practical checklist for CoSecs

Before entering a difficult governance conversation, a CoSec should ask:

• What is the real issue?
• Who needs to know?
• Who has authority to decide?
• What duties, laws, policies or standards are engaged?
• What facts are known, and what remains uncertain?
• What is the least inflammatory way to raise the issue?
• Is a private conversation appropriate, or is formal escalation required?
• What record should be kept?
• Could my actions be seen as taking sides?
• Am I protecting the governance process, or merely preserving harmony?

Conclusion

Diplomacy in governance is not about avoidance, compromise at any cost or keeping powerful people comfortable.

It is about helping boards and management deal with difficult issues constructively, lawfully and ethically. It requires judgement, tact, independence and courage.

For company secretaries, diplomacy is one of the most important skills in the role. Used well, it can prevent misunderstandings, reduce conflict, improve board effectiveness and protect the integrity of decision-making.

But diplomacy has limits. When the issue is one of legality, disclosure, ethics, conflicts, director duties or the accuracy of the governance record, the CoSec must be prepared to act firmly.

The best company secretaries are therefore not merely administrators or observers. They are trusted governance advisers: calm under pressure, clear about principle, careful with language, and courageous when it matters.

Governance in Action Pty Ltd assists boards, company secretaries and executives to strengthen governance frameworks, improve board processes and navigate sensitive governance issues with clarity, judgement and care.

IMPORTANT: This article / blog has been prepared with the aid of AI (including refining structure, wording and readability).Final judgement, editing and accountability remain with the author.