Paul Walsh is Chairman of Compass Group and Avanti Communications, and a Non Executive Director of FedEx. Prior to this, Paul was Chief Executive of Diageo for 12 years, a Non Executive Director at Centrica and Unilever, a member of the Prime Minister's Business Advisory Group and the Council of the Scotch Whisky Association.
What is the secret to a successful board?
A successful board requires a group of engaged and independent thinkers who are willing to invest a decent amount of time in understanding the business. I happen to think that boards can be heavily involved and remain independent.
An effective board will support and challenge management. It will also help management to identify the priorities and trends that really matter and this should drive the board agenda. At Diageo we used our annual Board Strategy Day to select the four evergreen priorities that we would revisit at each board meeting.
How important is information in the boardroom?
When I was at Diageo I took the view that (unlike our products) bad news does not improve with age. The one thing boards hate is surprises. It’s management’s duty to provide a candid account of affairs to the board and to be upfront about the bad news.
When tricky issues emerge, my advice to management is first to speak to your board about it, follow up with a written report and then schedule a full and thorough discussion. These three steps give everyone the chance to ask their questions and mull over the facts, rather than feeling pressured into a rushed decision. Reports should then be ‘taken as read’ instead of being presented at the meeting, which chews up valuable time and dis-incentivises proper preparation.
How could, or should, the role of the Company Secretary develop to better support the board?
Clearly good governance practices are essential, which is the Company Secretary’s domain. But good governance around a bad business model is a recipe for disaster. A good Company Secretary will help their directors to discharge their legal duties, whilst also carving out ample time for the board to discuss how to build the business.
What does the outlook for the UK look like, ten years from now?
I’d expect steady growth but it’s not a given. A big factor will be the government’s ability to create productive employment opportunities – and productive is the key word here. There’s no value in creating jobs for the sake of it. But if we can create jobs in IT and manufacturing, then I think our prospects could be good. I also think it’s the government’s job to create an environment where business can prosper and stability is at the heart of that. As a business leader, you can’t plan, invest or recruit without it. So I’m all for the Tories’ pledge to hold taxes steady. Uncertainty doesn’t help anyone.
What’s your take on the in/out Europe debate?
We should try to have our cake and eat it. We should maintain the economic trade agreements but keep our own currency and push back on over-burdensome European regulations. I don’t think we should be afraid of being outside the EU. But I think we’re better off being inside it.
What sectors would you back for the next decade?
I would back the technology sector. It’s transforming the way we live, both in our personal and corporate lives. And it’s disrupting traditional value chains, mostly for the better. Take the taxi app, Uber: it connects you directly with your driver, allowing you to get a better service and removing the cost of the middle man.
On the flip side, we should all be paranoid about where the next competitive attack will come from. Technology presents huge opportunities. But it’s also a huge threat to those that don’t keep up.
What book is on your bedside table?
At the moment I’m reading Hemingway’s Green Hills of Africa and The Old Man and the Sea.
What is your golden rule?
I have two. Hire great people. And take time to work out your priorities. If you have a list of priorities as long as your arm, you need to go back and work out what really matters.
Our chairman interviews are published each month. If you would like to stay informed about future interviews, weekly governance news and our quarterly research findings join our newsletter by submitting your email in the email textbox towards the bottom of the page.