Barnsley director Don Rowing has admitted that Sean O'Driscoll's decision to turn down the manager's position at the club is "a body blow".
O'Driscoll, who was sacked as boss of Nottingham Forest on Boxing Day, revealed on Sunday that he had "declined the opportunity" to take over at the South Yorkshire club.
Rowing told BBC Radio Sheffield: "It is a body blow for us.
"I think he liked what he saw but it was just the wrong time."
O'Driscoll confirmed on Sunday that he had met the Barnsley board to "ascertain exactly what the short and long term strategies and ambitions of the club are" but had "respectfully declined" the club's offer.
Rowing said the club understood O'Driscoll's reasons but were "very disappointed".
He added: "He has undoubted coaching ability and has great experience in this division but we pick ourselves up and we will look elsewhere."
Barnsley relieved former boss Keith Hill of his duties at Oakwell after a 3-1 home defeat by Blackburn on 29 December.
Hill's assistant David Flitcroft has been in charge of the team on a temporary basis since then and despite being keen to have a new man in place in time for Saturday's home match with Leeds, Rowing conceded the appointment may take more time.
"We have to be very careful in terms of what we do and give it some thought," he added.
"We don't want to make a rash or rushed appointment; we have to get someone who is right for the football club.
"If we have to go without a manager for the league game, then that is just something we'll have to do."
Barnsley are currently bottom of the Championship with 21 points from 25 games but won through to round four of the FA Cup on Saturday with a 1-0 win over Burnley.