The council is looking for a new CEO following the resignation of Carey McIntyre in February this year.

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Mr McIntyre has since taken on the role of Shoalhaven City Council's City Futures director.

Ms Watson said former Wollondilly Shire Council general manager Les McMahon was helping the Shellharbour council recruitment panel find a suitable replacement.

Mr McMahon last year served as interim CEO with Wingecarribee Shire Council and is now filling a similar role with Cootamundra-Gundagai Regional Council.

"I don't know what the reason was but he walked out of the whole process [at Shellharbour council] which rung alarm bells in my head," Ms Watson said.

"Les McMahon is a highly respected member of the local government community for over 47 years. He's been a relieving general manager all over the state. For him to walk out and not participate anymore in a process, I had concerns over that."

The United Services Union, which represents Shellharbour council workers, has also weighed into the issue.

"We have an interest in terms of who's being appointed because the appointment of that general manager will determine the relationship that our members have with the council and the harmony in the workplace," USU acting manager Rudi Oppitz said.

He added that, if Mr McMahon had walked away, then the NSW Minister for Local Government needed to investigate.

"A council of that size with a bright future and a very large financial budget needs to have a very good, experienced general manager running it," he said.

"If there are issues which allegedly caused Mr McMahon to walk away then I think it needs to be looked into quickly."

A Shellharbour council spokesperson did not directly respond to questions relating to Mr McMahon's alleged decision to cease assisting the council.

The council later released the following statement from Mayor Chris Homer.

"The recruitment process for the CEO has not yet been finalised and still underway," Cr Homer said.

"Council is not in a position to give any comments in relation to this process given that it is still current.

"This recruitment process is highly confidential and covered by the Council's code of conduct and individual confidentiality agreements."

Mr McMahon was also contacted for comment.

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