Fletcher Building chief executive Mark Adamson's five-year transformation plan for New Zealand's biggest listed company is running faster than initially planned.
"I'm probably further ahead now than I would have anticipated," said the boss who last year announced a multi-pronged approach to centralisation, technological innovation, creating more unity among the businesses, cost savings and better procurement methods for the company with a market capitalisation of $5.8 billion.
The transformation project has an official name: FBUnite. "The transformation is about more centralisation. Previously, Fletcher was a decentralised business but when it comes to procurement, do we need to negotiate with Telecom 50 times, or once?" he asked, giving that example of way separate divisions and business units could use the corporate's size to drive better deals and increase profitability.
"The reputation of Fletcher is of a big, ominous, all-seeing monster, manipulating everything but the reality was we didn't utilise that at all!"
Adamson admitted to initial qualms about the level of change he had planned, which he said was aimed at the culture, not the headcount. He was unsure if he could transfer the skills he learnt in the more aggressive private equity sector across to the huge corporate.
"My concern was the ability to bring that to Fletcher which is a big, traditional conservative organisation and I've been greeted with open arms. Very few people have had to leave the business".
More rigorous management performance standards have been introduced but they come with incentivised rewards to provide a balance. "It's just turning up the dial on management. I expected cultural resistance and that I would have to fire quite a few more but none of that has transpired."
Before becoming Fletcher CEO, Adamson said he was dismayed when one of his children explained what his father did - "Dad fires people". That was true, in previous roles, Adamson admits, but not the approach he is taking at Fletcher. "I spent 20 years in private equity and there are a lot of people who left the business as a result of changes but I didn't wear that as a badge of honour."
The biggest changes in Fletcher lately had been at senior management level, with the appointment of new executives to run divisions, including Graham Darlow in construction, Mark Malpass running infrastructure, Tim Richards in charge of building products, Paul Zuckerman changing from steel to laminates and panels and Nick Olson as chief financial officer.
"We have four Kiwis, three Brits, two Americans and two Aussies in senior management so there's a breadth of international experience not many other companies would have. We probably argue as much as the United Nations but we're more effective."
One of Fletcher's biggest focus areas in New Zealand is Christchurch, where Fletcher EQR has managed repairs to about 40,000 damaged houses but another 40,000 repairs are needed, he said. Calls for more speed on the Christchurch rebuild did not take account of the fact that houses that could be fixed easiest and fastest were those generally fixed first. "We tended to do the easier jobs first. But we're now into 12-week jobs. The next 40,000 are the bigger jobs."
Fletcher EQR was set up after the September 2010 earthquake to fix damage of $10,000 to $100,000. Acting under contract to the Earthquake Commission, the company provides project management and services from scoping the damage and finalising the repair strategy through to managing contractors and handling building code compliance issues.
CBD commercial work had not really begun, mainly because the area had to be cleared first. "That's about done but the Government will have to step forward to give confidence," Adamson said of plans to accelerate reconstruction work. "As the residential work winds down, we hope that the CBD work picks up the slack."
Fletcher had 700 staff in Christchurch pre-September 2010 but now has 1600 staff and is managing about 15,000 contractors.
Priorities in next 12 months
Mark Adamson's focus is on:
Christchurch post-earthquakes rebuild: "In my view, based on similar disasters around the world, the manner in which the recovery is being progressed is incredibly impressive. We're roughly half-way through," he said of the estimated 80,000 total house repair programme.
Fletcher Building transformation: "Improving profitability, the speed of innovation and new technology."
Profitability: "The acid test of any CEO is being able to deliver a decent return to the shareholders, driving up the bottom line."