Permanent Secretary and Chief Executive Insight Days

SUMMARY REPORT

Learning at the highest level

“It’s great to spend time with someone in a completely different business but who still has the same problems as you do. It gives you a sense that this is a shared endeavour. We are quite different but there is a huge amount that is shared.

You have to go abroad sometimes to appreciate your own country; it reminds you about what matters.”

Dame , , Ministry of Justice

The Whitehall & Industry Group

Permanent Secretary and Chief Executive Insight Days

Learning at the highest level

INTRODUCTION

The purpose of the independent charity, The Whitehall & Industry Group (WIG), is to build learning between the public, private and not-for-profit sectors for the public good. It does this through a wide range of briefings and workshops, cross-sector placements and leadership development programmes. This year WIG celebrates its 30th anniversary and to mark the occasion it developed a new programme of mutual learning between top leaders in the public and private sectors.

The Insight Days programme consisted of thirteen pairings between Chief Executives and Permanent Secretaries, each spending a day in each other’s organisation. All participants volunteered to take part and the pairings were selected by WIG to avoid conflicts of interest. A full list of participants can be found at the back of this report. Through a combination of questionnaires and telephone interviews, participants provided feedback on the experience and the learning achieved.

OVERVIEW

Overall, this learning programme has shown that:

1. There is much in common in the challenge of leading large, complex organisations, irrespective of the sector.

As Dame Ursula Brennan, Permanent Secretary, Ministry of Justice (MoJ), said: We are grappling with similar problems but in a different context.

Michel Van der Bel, Managing Director, Microsoft UK, put it in a similar way: The language used and the subjects under discussion were all very similar – how to change behaviour for culture change; how to do more with less; getting people behind why we do the things we do; managing the pressures.

Richard Heaton, Permanent Secretary and First Parliamentary Counsel, Office, observed: There was a large amount of read-across, an opportunity to compare and contrast the types and levels of complexity of working in government or industry. The importance of people performance and how we do it, in particular.

2. The similarities outweigh the differences.

As Mark Price, Managing Director, Waitrose, put it: I was struck by the number of similar themes including cost efficiency, embracing technology, managing risk and I think as a consequence there’s scope for shared learning. Change management, project management, managing the workforce, managing big IT projects. There is lots and lots in common.

Or as Chris Wormald, Permanent Secretary, (DfE) said: The Insight Day broke down a lot of myths about the differences between the sectors. There is a great deal in common for leaders of large organisations, whatever the sector. The main similarity is keeping control of a large, complex organisation.

3. The mutual learning was valuable and a worthwhile use of top management time.

At this level, the ultimate test of the value of any learning programme was whether or not the participants felt it had been a worthwhile use of their time. All agreed that their Insight Day provided them with valuable learning and, when scored on an index of 1 to 10, the value was assessed on average as 8 out of 10. The learning was assessed as valuable both to them as individuals and to their organisations, and the shadowing format over the two separate days served the purpose well. Many participants were, in fact, surprised by how much they learnt and all would recommend a similar programme of cross-sector learning to others.

The whole experience was valuable in helping me to understand just how much pressure the retail industry is currently under and what impact government policy can have; but also, I think, in helping to showcase for Justin, a leading private sector CEO, how interesting, varied and important the work of the Civil Service is. Sir , and Head of the Civil Service

KEY AREAS OF LEARNING

The key areas of learning from the programme fell into seven broad headings as below. These are detailed in the report under Main Findings.

1. Learning and personal development for top leaders; 2. Value of understanding the other sector better; 3. Change, innovation and the role of technology; 4. People and talent development; 5. Engagement with stakeholders; 6. Strategy and prioritisation; 7. Structure, governance and risk.

MAIN FINDINGS

1. Learning and personal development for top leaders

The following comments by Chief Executives and Permanent Secretaries illustrate how they found their Insight Days to be a valuable learning opportunity:

From a personal development point of view it was very rewarding. In particular it was fascinating to see another leader facing similar challenges whilst operating in a different plane. There are uncanny similarities. Nigel Stein, Chief Executive, GKN

It was really useful. And very unusual. To spend time with someone else running a big organisation; to share thoughts on organisational design; business delivery and much more. For me to spend a day with a permanent secretary learning how government works; how the department works; how they deal with issues. It was a fantastic insight that you’re not going to get very often; learning is difficult to achieve in any other way. Mark Price, Managing Director, Waitrose

It was very good to see someone else doing what you do but in a different context, providing a different and useful perspective. It makes you feel less alone. It was also good to be able to talk to him as a peer objectively without the complexities of a similar conversation with another civil servant. I’m sure this was mutual. Martin Donnelly, Permanent Secretary, Department for Business, Innovation and Skills (BIS)

Experiencing first-hand another leader’s environment in another sector really helped their understanding:

It was a great opportunity, very open and engaging, and it has given me a wider understanding of government. The cross-sector learning in particular was so useful. We work a lot with government and it really helps to understand the pressures they are under. Also, you must fight insularity! Ian King, Chief Executive, BAE Systems

It gave them an opportunity to learn from another leader as well as make organisational comparisons:

We, as the tax administrator, can get stuck into thinking we’re unique. We do some benchmarking with other countries and organisations but the Insight Day has widened my view about where useful comparisons can be made. If I’m honest I thought my visit would give me the opportunity to see another leader at work and I did learn from Steve as an individual because he is a powerful leader. But I also learnt that our two businesses have enough in common to provide many areas of learning, it really widened my view. , Chief Executive and Permanent Secretary, HM Revenue & Customs (HMRC)

The learning was valuable despite the relatively brief timescale:

The relatively short exposure works well and is of value at this level. It would not have been so useful earlier in my career when you need to go for a longer period, a set piece secondment. But at Permanent Secretary/CEO level this shorter, focused exposure is very valuable. Chris Wormald, Permanent Secretary, Department for Education (DfE)

A number of participants mentioned how singular leadership roles are; how it can be lonely at the top:

I was reminded of the isolated nature of the leader, how important it is to find personal support and resilience. , Permanent Secretary and First Parliamentary Counsel,

2. Value of understanding the other sector better

There was universal agreement amongst the Chief Executives and Permanent Secretaries interviewed that there was enormous value in getting to know and understand the other sector better; it was viewed that the two-way aspect of the Insight Days was also important:

Cross sector exchange can only be positive; understanding how Whitehall works is really valuable. Justin King, (formerly) Chief Executive, Sainsbury’s

It is always really useful to have a day stepping back and seeing how others go about life. Observing another organisation makes you see your own in a different light at any age or stage of your career. I think it’s a really good idea and I don’t think we do enough of this kind of thing. It leads to a better understanding between the corporate world and government and that has to be a good thing. I think it’s also really important to do it two-way as both sides learn on both occasions. Mark Lowcock, Permanent Secretary, Department for International Development (DFID)

For many, the Insight Days provided an honest and in-depth exposure to their counterpart’s world:

Absolutely the Insight Day was valuable learning. It was of immense benefit. I liked the authenticity of it. I’m glad it was not structured or prescribed to me. I saw it in the raw, that’s much more me. It was a great privilege and opened my eyes to a lot. It’s always good to learn. Yes, you still learn when you are a CEO but you may not always admit it! Well done for putting the programme together. Ian King, Chief Executive, BAE Systems

Much debunking of myths and stereotypes was reported:

Like any institution you have a preconceived view and it’s very interesting to counter that with a real overview and insight into the mechanics of government, how it actually works. I was impressed by the quality of the people, the professionalism, the level of care and also interested to see their management approach. Spending that much uninterrupted time with somebody in a similar leadership role but of a very different organisation is unusual and incredibly useful. Richard Flint, Chief Executive, Yorkshire Water

As an opinion former the experience has influenced me favourably. I was very impressed, more impressed than I expected, by the quality of the people and the scale of the challenges they face. There was no evidence at all of the stereotypical relaxed pushing around of papers. Nigel Stein, Chief Executive, GKN

A number of the private sector participants agreed that gaining a better understanding of how government works helped their own company’s performance:

It is very useful indeed for organisations that want to support government departments and government departments who want to embrace the private sector for example through outsourcing. It really helps with understanding agendas, priorities, the pressures. It builds an empathetic relationship. Graham Inglis, Chief Development Officer, DHL Supply Chain

If you work in a business involved with government it is so worthwhile. It helps you to understand how people operate. The frustrations. The lack of clarity. The challenges of working within the system. Steve Holliday, Chief Executive, National Grid

Yes, it will be of practical benefit to our organisation. A better understanding of what the challenges are within the public sector. Also the civil service reform agenda and what it takes to change culture within a rapidly changing public sector. Michel Van der Bel, Managing Director, Microsoft UK

Cross-sector learning is of value to the individuals and organisations involved but also more widely benefits the sectors and, ultimately, the UK:

Cross sector learning is important, openness to the views of others is fundamental. It’s only worthwhile when it results in stronger alignment between public and private sector practice, and is part of an individual’s development plan. David Nish, Chief Executive, Standard Life

WIG explained that the purpose of the Insight Days was to increase understanding between business and government leaders, with the thought that the better we know and understand one another, the better we will work together. From my perspective, this objective was well achieved. Working together is in everyone’s best interest and for the nation as a whole. Having neither grown up in the UK nor in the public sector, this first-hand learning was highly valuable for me. Paul Keel, Managing Director, 3M UK & Ireland

3. Change, innovation and the role of technology

Change, innovation and the role of technology were key themes mentioned by participants:

The standout similarity for me is that we're all struggling to innovate so as to reduce costs/raise revenue in the short term, while keeping focused on the strategy. Dame Ursula Brennan, Permanent Secretary, MoJ

In particular, learning in organisational change areas was useful:

In terms of follow-up and extension we talked about getting a couple of teams from our respective businesses together from change areas because we think it would be very useful. Lin Homer, Chief Executive and Permanent Secretary, HMRC

Mark Price has the ability to use the branch network to test ideas – analysis takes you so far, but Waitrose can move from analysis to quick practical trials, which is an advantage. They, like us, wrestle with how to build business cases for innovation. Innovation is needed but success is unpredictable and wrong assumptions introduce risk. It may be over or under ambitious. I was really struck by how much easier it is for Waitrose to try something out, pick one of 300 stores and give something a go. If it works, great, it can be rolled out across stores. If it doesn’t, the risk is contained. Dame Ursula Brennan, Permanent Secretary, MoJ

Specifically, evidence of the transformative role of technology in business, how it enables personalisation and reduced costs. It was a big theme of my Insight Day and it was very interesting. Philip Rutnam, Permanent Secretary, (DfT)

The use of analytical data was another area of common interest:

Another big theme was the reassurance of how similar both our businesses’ challenges are and how we take them forward. For example both of us are using technology to address significant issues. Steve is using analytical data tracking on physical sites whilst we use analytical data tracking on transactions. It was very interesting and reassuring. We are both looking to up our dependency on technology and how to do that safely and in a controlled way. We are also both increasingly dependent on innovation. And the increasing use of technology to do routine systems means we both have to upskill our people for other tasks. Lin Homer, Chief Executive and Permanent Secretary, HMRC

I was very interested to see how my counterpart was able to use financial metrics to drive performance. We’ve been trying to improve the management of information across government and have made some progress but it was very interesting to see how information can be used when there’s a bottom line only driver. For us there are multiple objectives all at the same time. Mark Lowcock, Permanent Secretary, DFID

There was a really interesting conversation about modelling and data collection. We have a strong shared interest in really good modellers and also cost drivers. They need to get underneath their data to really understand the inputs and how they affect the outputs. We do, too. I have just spent the morning looking at the drivers of the prison population; we need to understand this to get the right response. Dame Ursula Brennan, Permanent Secretary, MoJ

4. People and talent development

Participants in the Insight Days programme run some of the UK’s largest organisations, with the public and private sector management challenges both being huge. For illustration, the Department for Business, Innovation and Skills spends about £27 billion and has 24,000 employees; GKN’s turnover is £15 billion and the company employs 50,000 people.

Management challenges and particularly talent development were recurring themes throughout the Insight Days. Again, the Chief Executives and Permanent Secretaries speak for themselves:

The difficult challenge of getting things done in large complex organisations is the same. How to get different people with different perspectives and agendas pointing in one direction when they are all coming from different places. Philip Rutnam, Permanent Secretary, DfT

We both have the same focus on developing talent; people, diversity. Graham Inglis, Chief Development Officer, DHL Supply Chain

I was very interested in the human talent discussion I sat in on. Partly because 3M works much more off metrics and also a one-pager, whilst ours would be many more. I have asked our team to see if they can replicate this use of data and brevity for us. Martin Donnelly, Permanent Secretary, BIS

The special skills required by Permanent Secretaries were noted:

It’s about the delicacy and diplomacy required to fulfil senior public sector roles. And the level of public scrutiny. And how to manage an impartial workforce to implement a ministerial agenda. The agility needed is unique to the role. Mark Price, Managing Director, Waitrose

Private sector participants also commented on the more collaborative and consensual nature of working within government:

For example I see management as being all about functions. Person A is responsible for function A and will report to me on progress or otherwise. During my day in government I saw that they approached management very differently with senior people given a broad range of responsibilities, working in a collaborative way. I thought this was a very interesting and mature response to managing complexity, and very probably using fewer resources. Richard Flint, Chief Executive, Yorkshire Water

The thought, time and care that Ursula and the team put into their decision-making and the consensual nature of it, as opposed to the more frantic pace of change at Waitrose, was a contrast. Mark Price, Managing Director, Waitrose

5. Engagement with stakeholders

Both Permanent Secretaries and Chief Executives noted that, because more of the work of government takes place in the public domain, there is scrutiny from a wide range of stakeholders, all of whom are free to comment. The following quotations are illustrative:

In the private sector there are four primary stakeholders: customers, shareholders, employees and communities. Our responsibilities to each are pretty clear. In the public sector I saw in just one day how many parties they are accountable to. It was difficult for me to observe rules or framework as to what is or isn’t in bounds. Paul Keel, Managing Director, 3M UK & Ireland

The main similarity is we are both leading a complex organisation from the front. A key difference is that I have more stakeholders to manage. Paul picked up very quickly how we have to face in so many different directions at the same time – ministers, Cabinet Office, stakeholders – which creates more ambiguity. The core narrative he uses to his team is much more simple e.g. “Are we going to reach our sales targets? If so, there will be a bonus.” I was also struck by how much influence BIS has on his company in various ways. Also how maintaining trust – him with customers and me with stakeholders – is a priority for both of us. Martin Donnelly, Permanent Secretary, BIS

It’s a spectrum and we are on the far right hand side of it in terms of thousands of people interfering. My counterpart was really struck by how many people have a say; the scale of it. Dame Ursula Brennan, Permanent Secretary, MoJ

Many, many similarities. We all deploy resources to achieve the best result in a changing environment. However, mine is a less political environment and I have much more control over what I do. The Permanent Secretaries have more issues to balance, greater diversity of issues and stakeholders. The other big difference is the direct exposure to politics, the relationship between politicians and the civil servants. Richard Flint, Chief Executive, Yorkshire Water

The influence of politics and the media on the role of Permanent Secretaries was also noted:

An appreciation of how it is to be on the front line and on the front page which was very enlightening. Seeing the effect of the pressure of the media. The need for transparency and compliance. It all helped to reinforce a view of how government departments work. Mark was involved in two or three things during our day which were in the news. It was quite an eye opener and gives a very useful appreciation of how departments work when we engage with them. We all deal with multiple agendas where it’s critical to focus on the right things. In the private sector this is easier than in the public sector, thank God! Graham Inglis, Chief Development Officer, DHL Supply Chain

We both manage large, complex bureaucracies – the information, the challenges and the activities are exactly the same. 50 percent is identical; 50 percent completely different. On their side the minute by minute movements of money being central to the conversation; on our side the role of politics, the media, political debate and parliamentary scrutiny. Chris Wormald, Permanent Secretary, DfE

6. Strategy and prioritisation

Chief Executives and Permanent Secretaries alike face the challenge of deciding on priorities and maintaining focus on what matters. This is not easy in fast moving, highly stressful environments where schedules are tight and the pressure of time is a constant.

The following quotations illustrate both the similarities and the differences in the challenges faced by the participants:

It made me realise that the ‘what’ of public and private companies is very different but the ‘how’ is remarkably similar. The rapidly changing environment and how to lead an organisation within this context. The objectives are different – the provision of public services versus grow revenue/innovate – but the demands are the same. This led to great learning on both sides, sharing notes on what works and what doesn’t in our respective roles. Michel Van der Bel, Managing Director, Microsoft UK

We both have to manage complex challenges against punishing timescales; turning complexity into simple milestones. The drivers are very different. It was fantastically interesting to see first-hand the political versus the business driver. Ian King, Chief Executive, BAE Systems

The main difference between my role and that of my counterpart is the different drivers created by a focus on the bottom line versus politics and the media. Mark Lowcock, Permanent Secretary, DFID

I observed more similarities than differences between my role and Martin’s. So many foundational elements of leadership are common – ethics, teamwork, communication, results orientation, caring about people. Martin is every bit as focused on these as I am. That said, the biggest difference is in the charter of our two organisations. The primary objective of for-profit private sector enterprises is shareholder value creation. While not easy to achieve, this objective is relatively clear and stable in comparison to the shifting winds by which the ministries must navigate. Paul Keel, Managing Director, 3M UK & Ireland

There was sympathy expressed by some Chief Executives for the environment in which Permanent Secretaries operated:

It provided a really good perspective on operating in a public sector environment – the challenges, the opportunities. It was a great and unusual opportunity to see a leader in action, witnessing the day-to-day issues faced, throughout the day. This gave a great sense of what the public sector is dealing with, managing the operational and the political simultaneously. It’s very complex to navigate through this without losing focus on what must be done. Unplanned actions interfere all the time. Michel Van der Bel, Managing Director, Microsoft UK

Because the public sector has more stakeholders than the private sector, it naturally has more voices influencing the agenda. This is natural and appropriate in a democracy. But as a consequence, the agenda changes more frequently than in ‘my world’. Maintaining focus on a stable set of priorities must be harder. Paul Keel, Managing Director, 3M UK & Ireland

Maintaining focus on priorities also provided a rich seam for learning and observation amongst participants:

If I had to pick one thing it was probably the insight about the importance of sharing business performance data with staff; the energy put in to making sure the strategy – long and short term - is known and understood. It was very impressive, as was the frequency with which they update and engage the top 100 leaders from all over the country on this subject, so people understand where the business is going, what their part will be. It creates a sense of expectation that all will be actively engaged. Dame Ursula Brennan, Permanent Secretary, MoJ

7. Structure, governance and risk

Management structure and approach was a key theme in participant feedback. There was much comparison and mutual learning between the Chief Executives and Permanent Secretaries:

What struck me as being one of the main differences between the way my organisation works and the way a government department functions was the nature of discussion around the executive committee table. Mine meets weekly and is a mixture of debate and reporting; his meets monthly – the ‘transactional’ decisions are taken in other forums. The executive committee is reserved more for debating key policy issues. There is less reporting. This mostly reflects the different nature of our organisations. António Horta-Osório, Chief Executive, Lloyds Banking Group

It was very interesting to reflect on how we approach things as managers. To see the way a bank runs itself, how it’s very much about scrutiny. His management committee is all about scrutinising people. How I run mine is much more about consensual problem solving. His is weekly, mine is monthly. His therefore is much more prominent. We are doing the same thing but very differently. I found that really interesting. It did make me want to reflect and ask why do we do things the way we do them? Is it because it was inherited? Out of habit? Because that’s the way we do things around here? It is very useful to just question why we do what we do as we do. To see if there is scope for improvement. Chris Wormald, Permanent Secretary, DfE

I was also struck by the management approach and enormous professionalism of the civil servants and the attention, well to be honest, the real care with which they considered the impact of their work on the people they serve. There is a very real sense that it is a service, the civil service. Of course we all serve someone e.g. customers but it was an eye opener to see that the electorate really does have a man or woman answerable to them. I have to answer to my board, the regulator, my customers but it is not such a direct line. Richard Flint, Chief Executive, Yorkshire Water

The role of the leader in setting a vision and delivering through people is very similar. What’s different is that I operate in a structure where leadership is shared in various ways with Ministers and where there is dual accountability. Philip Rutnam, Permanent Secretary, DfT

The clarity about who is in charge of something, who has ownership and can really get their arms round it, is generally clearer in the private than the public sector. Trying to drive accountability is harder. Dame Ursula Brennan, Permanent Secretary, MoJ

There were some interesting comments from participants on relationships within organisations:

In business the levers of power are connected in a visible and direct way; this is not, on the whole, the case in Whitehall. Justin King, (formerly) Chief Executive, Sainsbury’s

We have twice monthly performance progress checks, one business as usual and one for major change programmes and investments. My counterpart visited us on one of these days and he was very interested to see that our top team looks at a portfolio whilst his top team looks at each individual business. He is much more hands on in the running of his business whereas we look at a number of businesses and trends across them at a more strategic level of management. In some Departments such as HMRC or DWP, the Permanent Secretaries are quite hands on in their management but others are a complicated mix of part hands on management and part the more strategic level, it does make things different. My role is more comparable to their Chairman, who looks across the whole organisation, across all of the businesses. Dame Ursula Brennan, Permanent Secretary, MoJ

He works in a wonderfully rich complex environment interwoven with a variety of challenges. The big difference is he reports to a board and a Chairman. He operates in a much more closed world but that doesn’t make his decision-making any simpler. Sir Peter Housden, Permanent Secretary,

Finally, there was specific value, as reflected in earlier comments, in seeing how risk was managed:

The day will be of practical benefit to our organisation and the single point of learning that was most useful was how the risk framework was used to manage the Department. Mark Price, Managing Director, Waitrose

Project assurance was the most interesting area for me. We both observed how judgement plays a really important part in it. Richard Heaton, Permanent Secretary and First Parliamentary Counsel, Cabinet Office

CONCLUSION

The Whitehall & Industry Group was established as an independent charity 30 years ago with the sole purpose of developing learning opportunities between the sectors, for the benefit of individuals, organisations and ultimately the nation. Its inaugural Insight Days programme has proved a fitting celebration of the rich learning opportunity that cross-sector exchange provides, at any and all levels.

Although developed initially as a one-off, due to the highly positive response of participants, there are now plans to repeat the Insight Days programme for Permanent Secretaries and Chief Executives, recognising not only the learning value but the interdependence of their respective sectors.

Opportunities to learn for leaders at the highest level may be somewhat restricted by the high pressured environments in which they operate but they are all the more valued when achieved. A short but intense exposure to another leader at a similar level, in another sector, is a rich and effective learning environment.

Of course, it needs willing participants who are prepared to give up their time and are open to sharing their day and their experiences. The time given to this by the participants has been greatly appreciated and, clearly, valued by the individuals as well.

The Whitehall & Industry Group October 2014

Insight Days: Participants

(Pairings as below)

Permanent Secretaries Chief Executives

Dame Ursula Brennan Mark Price Ministry of Justice Waitrose

Martin Donnelly Paul Keel Department for Business, Innovation and 3M UK & Ireland Skills

Richard Heaton Ian King Cabinet Office BAE Systems

Sir Jeremy Heywood Justin King Cabinet Office (formerly) Sainsbury’s

Lin Homer Steve Mogford HM Revenue & Customs United Utilities

Sir Peter Housden Richard Flint Scottish Government Yorkshire Water

Sir Michel Van der Bel Department for Communities and Local Microsoft UK Government

Stephen Lovegrove David Nish Department of Energy & Climate Change Standard Life

Mark Lowcock Nigel Stein Department for International Development GKN

Philip Rutnam Ana Botín Department for Transport Santander

Mark Sedwill Graham Inglis DHL Supply Chain

Professor Sir Mark Walport Steve Holliday Government Chief Scientific Adviser National Grid

Chris Wormald António Horta-Osório Department for Education Lloyds Banking Group

The Whitehall & Industry Group (WIG) 80 Petty France, London, SW1H 9EX T: 020 7222 1166 E: [email protected] F: 020 7222 1167 www.wig.co.uk

Charitable Company Limited by Guarantee Registered No. 3340252 Charity No. 1061584