The leadership lessons of Lord Paul Myners

Lord Paul Myners on leadership

A former City minister and chair of household names including M&S and NatWest, Paul Myners played an integral role in the government’s response to the 2008 banking crisis. The vastly experienced director shares his wisdom on effective governance, gained across the public, private and third sectors

Curiosity is the most important quality of a good non-executive director. It’s not much fun if you’re just going to turn up and nod in agreement with the executive team. Your objective should be to help management make decisions, so you need to do independent research, because your alternative is to be wholly reliant on information from the business. When I join the board of a company in an industry I haven’t worked in before, I obtain specialist publications and conference material to understand the big issues.

An independent director should focus on the most crucial factors – the half-dozen or so issues that will have a material bearing on the success of the company over the next 10 to 15 years. I’m on the board of a business with a designated number of must-win battles: about eight. There are other battles – other markets, challenges and products – but these are the eight we have to win. It sounds blindingly simple, but this is one of the more significant lessons from my experience.

I’ve found that it’s acceptable to ask two questions in board discussions. Ask a third and eyebrows are raised. But often it’s the third one that really gets you into the issue. The first question is scoping (“Have I understood?”); the second is clarifying (“Is this why this is?”); and the third demands action (“If I understand this correctly, the consequences will be the following. How do we manage that?”) If you have a culture where that third question is discouraged, your board will be less effective than it could be.

Serving as a non-executive director at public companies has become rather unattractive to me because of the excessive attention they place on process. I want to feel the energy of success, which I can in a private company, but not in a public company when I’m sitting on its audit committee, remuneration committee, governance committee and nominations committee. By the time I get to the main board meeting, it’s easy to forget what the purpose of the corporation is. Most of my businesses these days are private.

An independent director must be willing to make life uncomfortable for others around the boardroom table if necessary. For instance, at Marks & Spencer we were growing sales, but also having to fund costly working capital, so the cash figure was not good. In the monthly report to the board there seemed to be a disconnect between the words at the front and numbers at the back, so I pressed quite hard about that.

I start by assessing how empty the glass is. That is to say I am more inclined to identify the downsides of a proposal, whereas others are perhaps quicker to see the opportunities. I have quite a high awareness of risk, which I think has stood me in good stead. I’ve made a couple of significant boo-boos in my career, so my risk awareness isn’t perfect, but there have probably been fewer incidents than average where I’ve failed to spot significant risks.

Very few people in government have serious private-sector experience. Lobbying ministers is mostly a waste of effort – I would go to their special advisers. A lot of lobbying is required in the case of Brexit. Businesses need to highlight the practical issues in their supply chains. They have to work hard to convince the government that this is not bleating and not Project Fear. There are very real issues here, with profound consequences.

Trust your intuition when recruiting. This notion is often dismissed as being incorrect or incomplete. But you do know when someone has potential – you see the shine in their eye, their enthusiasm. I don’t use psychometric testing or ask candidates silly unexpected questions. There is one permanent secretary in government who has a reputation for asking: “Truth or loyalty – which is most important?” I think it’s daft. I was asked that question and I replied that I didn’t think playing linguistic games was a requirement of the job.

If you have a problem, it’s your problem until you tell me. Then it’s our problem. If you’re at the top of your business, it’s very important to have someone to talk to who’ll offer untainted advice – someone who knows you and understands your issues. Say you need to choose one course of action from three options: simply describing each of them to that person will help you to eliminate at least one.

The power of the UK’s financial sector infuriates me. It puts pressure on firms to be short-termist. Its dominance has sucked the oxygen out of other aspects of business and contributed to imbalances in our economy and the supremacy of London. Despite that, I’m inspired by the quality of ventures that young people are launching today. In my position I get to see some truly great ideas.

In the mid-noughties the Bank of England was quite pleased with what it had achieved. The governor called it the “Nice economy”: non-inflationary, consistently expanding. Despite continuous growth and close to two per cent inflation, I felt there was an element of delusion about the role monetary policy was playing in that. The primary driver was globalisation. I was on the court of the bank and I worried that it hadn’t paid enough attention to financial stability. In 2007 I went to see Gordon Brown and told him I was uncomfortable. A year later I was asked to become City minister as a peer.

There were probably 500 people more qualified than I was to be City minister. I think Gordon Brown remembered me from our meeting and thought I fitted his brief: someone who could speak to the bankers in their own language and not be overwhelmed by them. I didn’t foresee the banking crisis, but I did see that the banks were increasingly mispricing and mismanaging risk. I saw large loans without proper lender protection – including one we had agreed at Guardian Media Group when we’d purchased Auto Trader.

The enormity of the task was stressful, but working out what needed to be done was not. Once it became clear that the banking system couldn’t be allowed to collapse, it wasn’t hard to understand what support it needed. We based very big, hairy decisions on limited information. I would like to tell you that we came to the £50 billion bail-out figure scientifically. In fact, the science told us £30 billion. But we knew that wouldn’t be enough to convince the public that their money was safe, so we parked the science and decided that £50 billion would do it ­– and it did.

The best chairs are able to lay out the issues plainly. I was on the board of a bio-pharma company in the 1990s that was well ahead of its time. Its chair, John Jackson, was extraordinarily good at leading board discussions. We once had a very tricky issue to decide and I didn’t know how we would work things out. He made an opening statement showing how it could be broken down into its constituent elements. I thought this was nothing short of masterful.

M&S was slow to acknowledge changes in society and in retail. The business is steeped in history. It worked well for much of the previous century, with customers ranging from children to senior citizens, but the market is fragmented now. Children don’t want to shop where their mothers shop – and certainly not where their grandmothers shop. It was slow to see the threat and potential of online shopping.

The most significant decision we made at Gartmore was to stop pursuing growth in funds under management as a key objective of the business. We were adding funds faster than we were coming up with good new investment ideas. The piece of toast was getting bigger, but the portion of butter was the same – and it was getting thinner on the bread. We took the radical step of switching our focus to managing margin rather than volume.

My role at Guardian Media Group was to develop its non-newspaper portfolio. There is an investment portfolio worth £1 billion, which gives the newspaper a huge opportunity to move from print to digital. There is no paywall, which attracts journalists and is consistent with the Guardian’s wish to be a profoundly well-informed, thoughtful and beautifully written voice of liberalism.

I am an avid reader of newspapers. I read the FT, the Guardian and the Daily Mail every day – the Daily Mail because I realised that every politician reads it. Awful paper. I read quality magazines and books too. Most recently I read The Bank that Lived a Little, by Philip Augar.

The best business books I’ve read are Security Analysis, by Benjamin Graham and David Dodd, and Winning The Loser’s Game, by Charles Ellis. I should add that when I was younger you could learn a lot about business ­– or how to not do business –­ by reading reports into failed companies written by the government-appointed inspectors and published by the then Department of Trade and Industry. The Insolvency Service no longer publishes detailed reports.

About author

Dan Matthews

Dan Matthews

Dan Matthews is a freelance journalist and author working for titles including the Telegraph, Forbes and the Guardian. He is the founding editor of the business thought leadership website His interview credits range from William Hague to Joanna Lumley via Will Gompertz.

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