Our expert says:
If there is an HR person or dept, take this up wih them, and also politely ask your boss why he has not taken up with TM the fact that she is undermining your authority and encouraging other staff to disobey you. And ask how he wants you to deal with this situation. Ask whether you are to treat her as de facto head of the dept and ask her to issue all insructions to staff >
Apparently, if I understand you, she used to hold your post or something equivlent to it, and was demoted because she did it badly and with a lousy attitude --- they were very foolish not to have sacked her at that stage, but now she is strongly motivated to prove that nobody else will succeed in the post she failed at. One wonders why, if she also badmouths the CEO and other directors, people seem so scared to discipline her appropriately. And they're lawyers, who should know exactly how to do this ! The directors seem to be failing in their legal obligations to you as well as to themselves.
Meantime, ignoring her and trying not to give her the satisfaction of seeing how much she upsets you will at least frustrate her attempts to more obviously hurt you
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