Seeking advice on how to handle a difficult stakeholder ( a more senior female leader ). I work in product and have 1 direct report who is a very strong designer. Her team has two designers, but rather than give them feedback; this leader keeps pinging my designer to fix their work or work on her projects. This puts my designer in a very awkward position, and this work is not our responsibility. She knows she should not do this, but it continues. How can I stop it without creating conflict?

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I would just politely indicate her request is out of scope for the SOW and if this is something she wants your designer to support you’ll need to setup an additional to call to discuss and issue a change order.

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No drama required. Simply send her an email requesting the project or client codes so the designer's time is charged appropriately . Copy accounting and her boss.
Also note in the email that while you appreciate the trust she's placed in your subordinate this has unfortunately now impacted your timelines /deliverables. Further while you're happy to have your team collaborate with hers going forward you can provide her with a cost or expense estimate for your resources time, since budget overruns is not in anyone's best interest. .. you get the drift.

She will get the message in spades and you won't get into a battle.

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