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Building on Leadership

Monday, November 1, 2010 - 08:47

Construction giant John Holland uses skills diversity as a business strategy. For Glenn Palin, Group Managing Director, it is a leadership and management environment of quite amazing scope. By Jason Day.

If leaders can be said to be shaped by the environments in which they work, then the diversity inherent in leading a large construction company must make for one dexterous chief.

Think about it. Construction companies must constantly identify moving targets for new work, specialise in tendering to win it, and be adept in forming the right teams quickly. They must account accurately for costings, be expert in project management, and deal with the communities in which they operate.

Further, by the very nature of their industry they must have worker safety as a priority, along with environmental and sustainable business considerations, which are now increasingly crucial. At the mercy of public infrastructure investment from jumpy governments, they must also account for myriad other considerations such as funding, industrial relations, training and development, community relations, and crisis management.

And all this in a landscape where temporary alliances between traditional competitors to deliver projects is now common. Moreover, while they are one company, they are made up of diverse operations that are themselves responsible for their own markets, be it in tunnelling, water, rail, public or private construction and much more.

To keep on top of all that while leading a company forward requires a clear head and the ability to let good people do their work.

John Holland is a company within the Leighton Group. It is headed by Glenn Palin, Group Managing Director. Not an engineer, which he admits is quite an interesting situation, Palin's background is in building, although 35 years in the industry (17 at John Holland) has provided a grounding in business, finance and investment, as well as project estimation, management and operations.

"I was probably the odd one out among my peers," he says. "In saying that, I think it's not a bad thing. I've held every role from a junior to managing director, and been lucky enough to work in a number of different states."

John Holland was started in 1949 by engineer Sir John Holland, who passed away only last year. A far cry from today's 6000, the company began with just seven people in Melbourne. The first job was the construction of a woolshed at the property of the future Prime Minister, Malcolm Fraser.

Riding the coat-tails of a period of great development following World War II, the company sustained growth over a long period, opening offices in every major city. Iconic projects from John Holland include the Sidney Myer Music Bowl, Westgate Bridge, new Parliament House, MCG Great Southern Stand, Sydney Showground at Olympic Park, the Darwin to Alice Springs railway, Eastlink Motorway in Melbourne and the Sydney Desalination Plant.

With over 100 projects underway, the company now turns over about $4 billion a year.

The move to collaboration

An interesting development in the construction industry over the past 15 years or so has been the move to projects done through collaborations and alliances [for more, see page 13].

These alliances are many and varied, and may be between, for example, John Holland's 12 businesses themselves, or with sister companies within the Leighton Group, or even with direct competitors.

Palin confirms the reasons for this: "A couple of things happened. One is that when the billion dollar mega projects started to come along it was very difficult for one company to both have all the skills and be able to afford to play.

"A project such as Eastlink is very expensive and demands large resources. So one way of dealing with that is to form joint ventures where you can complement each other to deliver the project.

"Alliancing became a way of going to the market early and capturing a team of people with the skills and behaviours you wanted," confirms Palin.

"At one stage, John Holland was doing more than 50 per cent of its business through alliancing. The people with the skills to work naturally with people - collaborating, value adding and problem solving - come out in that sort of alliancing environment. John Holland has been very successful in that area."

Culture

Chasing growth, John Holland has acquired a number of specialist businesses. Transfield Constructions was one example in 2003. Valuable lessons were learned on integration of cultures.

"We had some acquisitions where we had integrated them too much," says Palin. "Do that and you start to lose the value of the integration. With Transfield, we went the other way.

"Naturally, people are proud of what they've achieved, so the last thing you want to do is take that away from them and say 'No, you've got to do it our way.' We spent a lot of time making sure that the uniqueness that they brought was valued and not lost.

"Today we find ourselves with all those specialist areas, many leaders in the industry, being a major part of what John Holland is because we didn't allow them to be lost in that transition."

Strategically, it's been very important, confirms Palin. He describes John Holland as two businesses: the traditional one that does building and civil engineering, and the one that deals in specialist areas such as tunnelling, power and aircraft maintenance.

John Holland has 12 business units in all. The company's management strategy is to keep a broad-based management team, while Palin tries to empower those people to do their jobs.

Balancing a respect for uniqueness while being able to sell themselves as one John Holland is a challenge.

"Yes, you want tunnellers to be tunnellers, but you also want them to be John Holland people and do things in the John Holland way," says Palin.

"We have 12 general managers, each astute in their own right. But we can't afford for them to operate independently, they've got to be part of the team.

"So we bring them together under a number of executive general managers to group them into traditional businesses, specialist businesses and other national businesses.

"Our aim is to maintain their uniqueness at a business-unit level but then gradually build them into broader teams, culminating in the one John Holland team that I lead."

4Ps

The 'John Holland way' is an internal colloquialism that may be best explained as a term describing the company's culture. It is understood to be about working to the values that the company holds.

The company is guided by four key operating principles, commonly known as the '4Ps': people, performance, partnerships and profit.

Crafted in the early 2000s, these are central to everything, be it worker safety or finding new markets. Palin says it was an evolutionary step for John Holland.

"At the time the whole industry was a little protectionist and defensive," he says. "But there was change in the community, things like younger people changing their values and the environment becoming a much more crucial issue.

"It was quite innovative for us to start asking ourselves what we were going to do to match community expectations.

"Where did we want to be in 10 years' time? What were we going to look like? How were we going to inspire people to work for us? How were we going to react to what the marketplace needs? The '4Ps' came from that discussion.

"We have one central P and that is profit; but that's an outcome. How you get there is another matter. We believe the other three Ps are the secret to sustainable profitability.

"We came to realise that you can either make a profit one year and be a star, or you can have a sustainably growing profitable business; and that's what legends are made of."

Communication

With such diversity in offerings, clients and operations, the challenge of adequate and consistent communication on strategy direction is huge.

Palin's answer to how communication is actually assisted by the way in which John Holland works is an intriguing insight into what makes this company tick.

"Communication is challenging," Palin says. "There's a number of forums that help to make sure we understand what each of our businesses are required to do, and to ensure a consistent approach.

"In my view, the glue that binds us together is not what we do, it is how we do things. We've put in place structural efficiencies that force collaboration and, therefore, communication."

Palin gives the example of the centralisation of services for many of the businesses, such as HR, quality, environment, IR and safety. "Making them collaborate and work together is a way to make the integration and communications happen," he says.

Satisfaction on the job

Asked what aspect of the business satisfies him the most and Palin gives a revealing answer.

"A lot of people say they can't wait to see a project completed. And yes, when you see something finished, it's fantastic. But the very nature of what we do means that a lot of the hard work and intricate construction is covered up by a facade," he says.

"I get pleasure from seeing the satisfaction that our people get out of completing their individual tasks.

"The other area to bring me joy is in seeing our businesses be successful, because it means that we've had a good strategy, have implemented it, [and] in doing so [have gotten] over the usual difficulties that threaten to derail us, and made it work.

"For businesses to be able to overcome, replan, modify and change their direction and still achieve goals is exceptional. That's where I get my buzz."