Open Secret

POSTSCRIPT

Sixty is the magic age for retirement in the public service, but as I had been given a four-year appointment as Director-General, I was nearly sixty-one when I left MI5. I have met many people whose retirement is all planned out well in advance – they have their house, their garden, their building project or their DIY tasks all lined up and their dream cruise ready booked. My retirement did not begin well. When I came home on my final day, with a box full of junk from my office and a bunch of flowers from my colleagues, I was taken aback when Harriet said, ‘Well is that it then?’ and burst into tears. I was surprised she was so upset, but it was because her whole life for many years had been so affected by my job – where and how we lived, her relationships with her friends, her own sense of danger and insecurity – that she could not believe that it could all end in what seemed to her such an anticlimax. If anyone deserved a medal from a grateful State, she did.

But of course it hadn’t ended. Because my flooded house was still in ruins and my successor needed to move into the official premises, Harriet, the dog and I moved into a sort of holding bay, a small flat beneath one of the Service’s operational properties. There we lived for nearly a year, surrounded by most of our possessions in large cardboard boxes and tea chests. Unfortunately for me, the operational task they were performing in the upstairs flat was being done twenty-four hours a day, directly above my bedroom, and it seemed to involve constant walking about on very creaky floors. What’s more, they changed shifts at 6 a.m. I learned something I had not until then appreciated, that MI5 officers are particularly cheerful in the early morning. The shift changes were accompanied by loud greetings and the sound of the kettle being put on. The dog, who had never learned great discretion, in spite of his time as an assistant to the security officers, used to bark very loudly to accompany the shift change, so my early months of retirement were not nearly so restful as I had hoped.

As my retirement date had drawn near, I had begun to wonder how I was going to keep myself amused. I did not see myself being comfortable sitting knitting in a rocking chair after all I had seen and done. My first idea was that I might take a leaf out of the book of the Foreign Office who seemed particularly good at getting their ex-Ambassadors berths as Masters of Oxford and Cambridge colleges and try for such a post. While I was thinking about it, a small advertisement appeared in a Sunday newspaper, seeking applications for the Mastership of Emmanuel College, Cambridge, to succeed Lord St John of Fawsley. I put in an application though I am sure now that the advertisement was not expected to produce serious applicants. Indeed, the selection process had hardly begun before it became clear that a majority of the Fellows had already decided to elect one of their own number. They wanted a counterbalance to what they saw as the flamboyant style of Lord St John’s Mastership, which, as they described it to me, had been characterised by Royal visits and a building and restoration programme of Renaissance proportions, though accompanied, as they admitted, by formidable fund-raising.

Nonetheless, I decided, partly for interest’s sake, to go through the selection process.

The whole procedure had a rather mediaeval touch, consisting as it did of a series of ‘trials’.

First there was trial by dinner. After dinner at High Table, one was required to converse in the Common Room with Fellows, moving from group to group so they could sum you up. It was quite a bizarre occasion. The Fellows, a few in suits or sports jackets but most in something very much scruffier – jeans and pullovers or similar – all covered by the ritual black gown, looked out of place and uneasy as they sat with their port in an 18th-century panelled room, which had been painted in bright, flat designer colours chosen by the outgoing Master. He had had most of the public rooms of the College and the Master’s Lodge decorated in the same style. Indeed, the Master’s Lodge had had the unusual honour for a college building of being featured in Homes and Gardens.

‘Do you like it?’ I asked innocently looking round the room. ‘No,’ they said firmly, and went on to complain that they had been unable to do anything in the face of Lord St John’s determination to smarten them up. It was a complaint which sat oddly with what I had been told of the governance structure of the College, namely that no decisions at all could be taken except by agreement of all the seventy or so Fellows. Lord St John had clearly found ways of getting round that.

Then there was trial by presentation. The idea of this was that candidates, having met the Fellows at dinner and, having been indoctrinated into the financial accounts, would make a speech to the assembled company, setting out what they would do if they became Master.

Although, as I now know, this sort of event is normal in the selection process for the Heads of Colleges, it seemed very odd to me to be required to present one’s plans before one had even arrived. True to form, I told them I thought they were old-fashioned and needed a bit of modern management, which was clearly not what they wanted to hear. The internal candidate was duly elected, as had, of course, always been intended.

The whole process was interspersed, in the case of my candidacy, by leaks to the press about my progress through the trials, and comments, made no doubt by supporters of other candidates, about the immense levels of security it was assumed my presence would require.

Security, it was said, would be of so intrusive a nature that academic life would become impossible. When, at an advanced stage of the selection process, the Provisional IRA let off a huge lorry bomb in Docklands, marking the end of the particular ceasefire they were engaged on at the time, those against my candidacy claimed justification. Not for the first time the Provisional had intervened in my affairs and I was never to find out what made the academic world tick.

Having failed in that enterprise, I began to receive enquiries about joining the Boards of some companies as a Non-Executive Director, as well as many enquiries from charitable organisations. I eventually took up some of these and thus began my third career, as a portfolio person.

In many ways this was to be the most surprising part of my life. Having spent the last few years of my career in the Security Service pursuing an ‘openness programme’, attempting to explain who we were and what we did, and above all what we did not do, I was surprised at how few of those people I now encountered had absorbed any of the messages I thought we had been giving out loud and clear. Most were confused about the difference between MI5 and MI6, which I suppose was not all that surprising. But I was amazed by how many regarded me with caution and concern on the assumption that I must know everything about everybody’s private life.

This attitude was typified for me by an episode which occurred just after I retired, and which I mentioned in an article I wrote shortly afterwards in The Times. I went to a dinner given by the De La Rue Company for the London diplomatic corps. Much of the business community was there. I was at the same table as the Ambassador of a country formerly part of the Soviet bloc. He had been observing me with some interest during the first course, and just as the main course arrived, he suddenly announced to the table at large, ‘She knows the names of all my mistresses.’ A frisson went round the table and I could see all my fellow guests thinking to themselves, ‘Perhaps she knows the names of all my mistresses too. And what else does she know?’

Many people I now met assumed that my main contribution to the corporate world would be in providing information about security risks and how to manage them. It did not seem to occur to them that having managed a major programme of change in one of the most secret parts of the state, I might have some skills that would be relevant to managing companies. Though I found that surprising at first, I think now, three or four years on, that I understand better why this was. It is just one example of the profoundly imperfect relationship and the lack of understanding which exists between the corporate world and the public service.

In my last few years in the public service we were continually being told that compared with business we were inefficient, slow, risk-averse, wasteful and a number of other uncomplimentary things. Successive Prime Ministers have brought in senior business figures in an almost tutorial role, to demonstrate and explain to the public service how to improve the way it does things – how to manage itself and its business better. Many of these relationships have eventually ended in disillusion or misunderstanding. Various ideas have been adopted, some suitable, some not. Where they have not been suitable, it has often been because businessmen and consultants quickly become baffled, and sometimes irritated, by the sheer complexity of public issues and by the requirements of accountability, which are key to the way the public service conducts itself. Public administration is not free to move, as may seem at first sight best, to solve single issues. The single issues have always to be seen as parts of other bigger issues. And the public service cannot be casual or slaphappy about establishing precedents – you are dealing with people’s rights and people’s expectations.

In MI5, being somewhat to the side of the mainstream, we were freer to pick and choose from the management models which we observed succeeding or failing in other areas.

Though many outside commentators had views on precisely how we should be made accountable, for the most part businessmen were less eager to enter our business to tell us how to conduct it than they were in other parts of the public service. With us they knew they didn’t know what it was all about, with other areas they thought they did.

But, after having been told so firmly and for so long that the corporate world was the model we should all be adopting, I was both surprised and sometimes disappointed by what I found when I joined it and met a cross section of people at the top of British business.

My observations relate to no one company in particular nor to every company I have come across. I don’t think I was particularly surprised to find that levels of personal ability and skill are still no higher even in the best companies than they are at equivalent levels in the public service. But how long can that last, given the huge and increasing difference in remuneration levels between the two sectors? Clearly companies must offer levels of reward which will attract and retain people capable of running them, and that means rewards on an international scale. I have no problem with that, provided that the rewards are related to performance. But, given the extent to which, in business, it is remuneration which is the prime motivator, and the prime way of establishing a person’s status, it does seem to me very unhealthy that such a huge difference exists between the public and private sector. How can company bosses take seriously, for example, Permanent Secretaries who are content to work for remuneration similar to that received by comparatively low level staff in their companies?

The truth is that in many cases they don’t. One Chairman of a company said to me, ‘We don’t want an ex-Permanent Secretary on our Board. After all, all they do is what they are told’ – a breathtakingly inaccurate version of the job of the head of a government department. Nor do many senior people in business understand the motivation of those whose satisfaction comes, as it still overwhelmingly does in the public service, from a sense of personal achievement or of service to the public. I am sure many cynics will sneer at that characterisation of the senior civil service, but it is still largely true.

I was surprised to find a very inadequate understanding in business of the value which is available, free, from the government machine. I am not talking only about the deep understanding which exists in the Foreign Office about foreign governments, about key personalities and the issues which are likely to affect events in different parts of the world.

There is also the information and assessments of the Home Office and the police, to say nothing of the Security Service about domestic issues, tensions, and pressures, all of which are very relevant to long term business planning and can be accessed. But there are other things too. Various parts of the public service know a great deal about balancing complex pressures, managing risks, assessing information and how an organisation can know what it knows by the effective storage and accessing of information. All these skills are vital to businesses, some of which, in my observation, are not particularly good at them. But, as far as I have seen, many business leaders have little understanding of what is available, or any real understanding about how to access it. If any attempt is made to do so, it is either delegated to a fairly low level in the company or done at second hand, through consultants.

As a result, it is not used to the best advantage in the formulation of business strategies, to the disadvantage of UK plc.

Of course, I was not surprised by the dominance of men in British boardrooms. It is a well-known fact and it is changing; though it is changing very slowly. But, given the journey through life I had already made, I was surprised by the extent to which in 1996, there was still an issue about women on Boards. It was quite a few years since I had been aware of being regarded as an oddity, as a female in the public service. Even my European colleagues, the Heads of the European Security Services, had come to accept me as one of them. And although there were not large numbers of women at the top of the civil service, those that were there were certainly not there for politically correct reasons. They were neither patronised nor discriminated against, but treated just like the men. So I was frankly amazed to be told by the Chairmen of several companies, ‘We need a woman on the Board.’ It was clear that those Chairmen did not much care what woman, nor did they perceive that ‘a woman’ might have just as much to contribute as ‘a man’, and that she would certainly be just as different from another woman as two men would be from each other. And I was astounded when the Chairman of one British plc said to me, ‘I think we need a woman on the Board, but I am afraid I would not be able to persuade my fellow Directors of that.’ It was an unexpected, and unwelcome flashback to find myself addressed as ‘dear’ by the distinguished Chairman of another. Needless to say those were not companies I wished to have anything to do with.

I was also very surprised, perhaps I shouldn’t have been, by the style of some of the men who run British business today. In the early part of the century great businesses were built by giants of men. Such men had imagination, drive and conviction and could inspire the thousands who worked for them, all of whom knew exactly who was the boss and would follow him. Their style was autocratic, and based on a conviction of their own rightness. And those who were right built very successful businesses indeed. But that style will no longer cut the mustard in the much more complicated and fast-moving circumstances of the new century. Yet a significant part of the British corporate world seems to me still to be hankering after such men. A new model has not yet emerged. So there are still too many around who appear to believe that in order to lead, it is necessary to know the answers to all questions immediately; that listening is a sign of weakness. Such people have little idea how to lead by delegation, how to place power and responsibility at the appropriate level or how to use the skills of the frequently very talented and enthusiastic teams they have assembled around them. As a result, those talented people, if they stay, gradually lose their ability to take decisions appropriate to their level of pay and responsibility, and look upwards instead for someone to tell them what to do. I was struck too by the focus on day-to-day management of crises, the absence of long-term strategic planning or the ability to recognise or manage complex issues in some of the companies I came across.

This probably struck me all the more forcibly because it is quite a different pattern from what I had been used to. The public service has not bred ‘great men’ in the same mould.

Instead it has organised itself to try to make the best use of all its talents and to manage complicated public business through distributed power centres. The potential weakness of that system is delay, turf battles, passing the buck. One of its strengths is the ability intelligently to apply the corporate memory to new situations. Of course, business and the public service have quite different jobs to do and it will be a disaster if either slavishly apes the other. But it is a big mistake to think that business has a monopoly of wisdom.

And what of the role, which I currently play, Non-Executive Director? It’s a role about which there is almost as much confusion as there is about my former career. There have been Non-Executive or independent Directors on the Boards of companies for years but it was only with the Report of the Cadbury Committee in 1992, following some spectacular corporate failures and frauds in the late 1980s, that their role became clearly associated with ensuring proper control of the way companies are run, ‘corporate governance’ to use the jargon.

Since then, other Committees have sat and made other recommendations about the running of companies, many of which have given further specific responsibilities to the Non-Executive Directors – for setting appropriate remuneration for the executive Directors, for monitoring the audit arrangements of the company and for making recommendations on appointments to the Board, to say nothing of monitoring the strategic direction of the company, ensuring there are effective policies in place and that resources are properly allocated. All this to be done in a volatile and uncertain environment where change is continuous and in an increasingly transparent environment, where the names of Non-Executive Directors appear regularly in the newspapers, accompanied by accusations of incompetence, fat-cattery and of acting as though their position carries only benefits and not responsibilities, particularly when anything seems to be going wrong in a company.

Non-Executive Directors, the informed outsiders, have become the linchpins of the system as the private sector moves from the days of the great autocrats, when it was run without any effective accountability, and tries to develop some appropriate system of oversight. Indeed, so much responsibility has now been piled on Non-Executive Directors that not surprisingly, there seems to be little agreement about anything to do with them.

Armies of consultants hold innumerable conferences, breakfasts, dinners, to discuss the role of the Non-Executive Director, the qualifications and skills required, where they should be found, how they should be appointed, how much they should be paid. It is a burgeoning industry.

The job has certainly moved on a lot from the early days of Non-Executive Directors, when anecdotal information relates that they were appointed by the Chairman largely as people he could rely on to support him. I suspect that in those days the job in many companies consisted largely of glancing through a few papers, going to a meeting, saying ‘Jolly good show, Chairman,’ and going off for a good lunch. But it has now swung so far the other way that it is beginning to look unrealistic to place all those different responsibilities on a small group of people, particularly as many of them sit on or chair the Boards of three, four or as many as eight different companies. It may just be possible to do that when everything is going well, but when things get complicated it clearly is not. But it is not easy to find people with the necessary skills who will take on these roles as the responsibilities increase.

So is it possible to be an effective Non-Executive Director or are you just there to blame when things go wrong? Not so much fat cat as fall guy. I learned a lot from observing how the eminent judges who were the first outside scrutineers of MI5 went about it. They arrived knowing nothing about the intelligence world or the people who worked in it, with the responsibility of investigating complaints. They started by asking for all the files relevant to every complaint they had to investigate. And all the files were given to them. In some cases that might mean thirty volumes stuffed with papers. It was clearly impossible, in the time they had available, to read everything in the thirty volumes, so eventually they settled for summaries of information. In other cases there might be no papers at all to see, if, as happened not infrequently, the complaint was from somebody who had never been investigated and was not known to the Service.

How were they to know if the summary was accurate, or, if no papers were produced, that there genuinely were none? Knowing they could not know everything, they had to work out some way of judging whether what they were being told was likely to be true. They did that by going round meeting people at all levels in the organisation on all sorts of occasions both formal and informal. They questioned and listened far more than they talked. They looked at the processes and the way things were done. They used their judgement and experience to weigh up what they heard, not only what was said, but also who was saying it and what that revealed about the ethos and state of the organisation. They managed with no difficulty to do that without in any sense compromising their independence of judgement. And that is what I have tried to do as a Non-Executive Director.

So I have attended recruitment days, talked to focus groups on this and that, flown to oil and gas platforms and visited many different parts of the companies I am now working with, and the companies who work with us. And, to my great surprise, I spent my sixty-fourth birthday abseiling off a ski lift in Norway, on a Change Management Course, and later in the same week playing Claudius in a production of Tom Stoppard’s Fifteen-Minute Hamlet in a barge theatre in Copenhagen. Many more traditional Non-Executive Directors would be surprised and shocked at that level of involvement, and it is far more than was envisaged when the system was first introduced but I don’t know how the job as it now is could be done effectively without it.

I spent many years working in an organisation which when I joined it had hardly any external regulation at all, except for Home Secretaries who, in those days, seem rarely if ever to have sought to find out what was happening. By the time I left, it was, in common with other parts of the public service, highly regulated, with a complex pattern of accountabilities and oversights – ministerial, judicial, administrative and parliamentary – as well as that of the media, with its long ears and very long purse. I contributed to the development of that regulation and worked under the system which resulted. I believe it was effective, though no system of regulation is perfect and like all healthy systems it will develop and change as time goes on. It is arguable, though it will never be a popular line of argument, that the public service as a whole is now over-accountable. It does seem to me to be a characteristic of contemporary thinking that when something goes wrong, rather than addressing ourselves to the reason for failure, we instinctively rush to add another layer of regulation and oversight.

Over-regulation can be the enemy of imagination and inspiration. And perhaps even worse, by enforcing conformity to more and more rules, we give the impression that no more is required, and thus risk ultimately eroding honesty.