Issue 38 Spring/Summer 2015

The business of sustainable development

The Environment Agency, a non-departmental publicly funded body with an annual budget in 2014/15 of £1.3 billion and a head count of 10,500 people based in area offices throughout England and its national office in Bristol, is both a service delivery organisation and a regulator. While managing flood risk is its most visible responsibility, the agency’s diverse remit includes pollution prevention, improving water quality, water resource management, waste regulation, monitoring, inland fisheries and water-related conservation. The agency is sponsored by the Department for Environment, Food and Rural Affairs (DEFRA). The Secretary of State appoints the chairman and members of the agency’s board. The chief executive is appointed by the chairman. Appointed CEO in 2008, Paul with the board launched an ambitious five-year business plan to slim the organisation and make it better equipped to meet its public obligations. The plan has seen the Environment Agency become more accountable and pass on more money directly to projects which will have the most impact. These include river management schemes, better drainage, and flood storage areas. For the first time the agency has been awarded a six-year £2.3bn capital settlement for its flood risk management work from 2015/16 to 2020/21. It also receives around £345m of revenue funding on a cost recovery basis from those it regulates and around £108m for other environmental protection work. Value for money is gained by the use of private contractors and organisational efficiency. Despite a falling revenue budget, Paul has increased investment and improved effectiveness by adopting a risk management approach. “Over the last five years we have reduced our corporate support service costs such as HR, IT, finance and procurement by 34%. And we have moved from a national, regional and area structure to a national and area-based organisation,” he says. Paul benchmarks the Environment Agency with other national public and private sector organisations. “We look at Network Rail, the Highways Agency, and big supermarkets to see what they do. Like them, we have devolved management and deliver

a consistent and efficient service with a large dispersed workforce. Part of our success is due to achieving brand recognition whether you are operating in Cornwall or Cumbria,” he asserts. Good communication is a vital ingredient in managing a devolved organisation. Paul believes the CEO should be highly visible and his working week includes meetings with people who are not his direct reports, visits to hear about work on the ground and web-based Q&A sessions with people at all levels in the agency known as a “chat with the chief” every four to six weeks. Communicating effectively is a key to business efficiency. “I meet regularly with my seven direct reports and their direct reports and I always encourage people to know and talk to people two levels down. The secret of management is to have a good team,” he explains. Paul gained an Executive MBA from Cranfield in 1990. At the time he was managing director of an environmental consultancy. This included research on sick building syndrome for the Building Research Establishment (BRE) and advising chemical and process companies how to comply with the COSHH regulations – (Control of Substances Hazardous to Health). His chairman and business partner, Cranfield alumna Nancy Thomson, who herself had established the company out of a business start-up at Cranfield University, suggested he take an MBA. “As a scientist and technologist I wanted to understand business more and my dissertation was a strategic business plan for the consultancy,” he says. Studying for the MBA is of unquestionable relevance to today’s CEO.

Paul adds that studying for the MBA is of unquestionable relevance to today’s CEO. “Business and innovation has to be part of the solution. The MBA has helped me ask the right questions.” After a period in SmithKline Beecham he then joined the Environment Agency in 1998 as a director of environment protection and then after six years in this role he was appointed as director of operations. Paul’s strategic focus was essential. Having gained considerable experience of working in both the private and the public sector, he sees the challenges as no different from those facing any large organisation. “Within a company you are focused on improving shareholder value and being profitable. The only difference here is that the government is the major shareholder and our value derives from protecting people and wildlife. We use a slightly modified balanced scorecard to measure our results which are reported quarterly at our board meeting and are available on our website for all to see.” With plans to retire in September, Paul regards his contribution to running the Environment Agency as work in progress – good successes but more to do. With a change of government, and with flood risk management still on the agenda and continuing interest in high-profile issues such as fracking for shale gas, it is time to recruit his successor and give the new CEO the chance to influence and shape the next five-year plan. And just in case you feel that Paul has been a bit hard- headed in his drive to balance the books, his satisfaction at leaving an organisation in good health takes second place to his overwhelming love of the environment as a place for people and a habitat for wildlife. He returns to the agency’s core mission. “At the end of my time here, the quality of the air and rivers in England in terms of the issues we have responsibility for has measurably improved. Fish are back in rivers they have been absent from since the industrial revolution and otters and water voles are now present in all English counties.” Now that is an achievement to be proud of. MF

32 Management Focus

Management Focus 33