Tenacity in Trying Times
Cautious optimism steers Australand CEO, Mr Bob Johnston through stormy waters
Issue: Jan 2010
Mr Bob Johnston, CEO of Australand, with over 20 years of experience in the real estate business
When Mr Bob Johnston took over the helm of property giant Australand (a subsidiary of CapitaLand) as its Managing Director and Chief Executive Officer, the property market could not have been rosier. It was August of 2007 and the property developer had just announced first-half gains and was forecasting improved results in full-year growth. Australand was enjoying profit jumps of 55 per cent in its commercial and industrial arm, and 36 per cent in its investment property arm respectively. The Australian property scene was robust, to say the least.
Fast forward two years and the scene is drastically changed due, in no small part, to the financial crisis and subsequent global economic downturn set off by the collapse of financial institutions beginning with Lehman Brothers in the last quarter of 2008. By July 2009, Australand was reporting a quarter of a billion dollar first-half losses.
Grace Under Fire
Says the man at the centre, “The last two and a half years have been challenging ones given the economic climate we have all had to endure. Clearly, it is much tougher to lead a business through a difficult period.”
But, perhaps there is no better measure of a man than how he reacts in times of trial. And for Mr Johnston, he has certainly come out shinning because by the end of 2009, he and his team have managed to steer one of Australia’s most diversified property group towards the horizon of better times.
Australand curtailed its development activities, executed selective asset sales of over $143 million, embarked on a $475 million equity raising to strengthen its balance sheet and downgraded its guidance for its 2009 full-year operating profit.
And by July 2009, Mr Johnston said, “Despite the difficult market conditions experienced during the period, all divisions contributed to an operating profit after tax of $60 million, before unrealized property revaluation losses and development inventory impairments.”
He added, “There are signs of stabilisation emerging in each of our major markets which should see conditions improve in 2010.”
Mind of An Engineer, Heart of A Man
An engineer with a first class honours electrical engineering degree from James Cook University, his analytical mind has, no doubt, played a major role in helping him keep his cool in times of extreme difficulty.
His style of dealing with challenges is clearly reflective of his training. Said Mr Johnston, “I am personally cautious by nature and like to consider things very carefully before making decisions.”
But Mr Johnston is also one man who puts a lot of heart into his decisions.
“Once made though, I am optimistic about the outcomes and remain focused on making the most of situations. I am optimistic about the future and where I see the opportunities for Australand, but take a cautious approach to ensuring the paths we travel down are ones that I feel will generate success.”
His persistence in looking for the lining in even the darkest cloud and hanging on tenaciously has contributed to the way he has successfully managed Australand.
Engaging people to make them feel part of the solution in tough times helped Mr Johnston manage Australand through the crisis
“When the going gets tough, you need to stay focused on the strengths of your business, to be open and transparent with your people and to conduct all that you do with the highest level of ethics and integrity. You can achieve an extraordinary amount through the tougher times by engaging your people and making them feel part of the solution and not the problem,” said Mr Johnston.
And this focus on people is not merely a business strategy but his guiding philosophy in life. His aim, he shares, is to “treat people with integrity and respect because you can sleep better at night”.
Australand had to cut its staff numbers by 20% in the second half of 2008 and had to embark on further reductions the next year. But in the style of a true optimist, Mr Johnston said, “Fortunately we are seeing conditions improve and we have started the rebuilding phase.”
Which is why when asked what his most challenging task since becoming the man on top in Autraland was, he said, “The most difficult challenge was to downsize our business. This unfortunately meant that we reduced our staffing levels by approximately 30%. No leader likes to shrink their business or to lose good people but we felt that we needed to “cut our cloth” to suit the environment. The only way to deal with this was to treat people fairly and with respect in the process.”
People - Company’s Best Asset
Mr Johnston (second from left) celebrating with colleagues at the 2009 office Christmas party
Mr Johnston is someone who values human resource, perhaps above all. He attributes much of his good work to a “terrific team” at Australand.
His leadership style is also indicative of his focus on people. “I try to employ a leadership style that is open and transparent whilst being inclusive. I would also like to think that our staff would also view me as firm but fair and prepared to make the hard decisions. This is often a difficult balance as you want to encourage initiatives and enthusiasm to bring out the best in people but you also need to be clear about what is important to the business and ultimately the investors.”
To that end, Mr Johnston strives to create a company culture that is entrepreneurial but disciplined. “A culture that is adaptive to and embraces change, a culture that respects people and provides opportunity for growth.”
Family Behind Success
But perhaps the people who are most precious to him is his family who has stood firmly behind him through it all and given him the latitude to do all and be all that he can be.
Admits Mr Johnston, “My wife is very supportive and probably too accommodating.” The self-confessed workaholic who works “longish” hours on weekdays makes it a point, though, to try and keep most weekends for his wife and 3 teenage kids.
“It is a ritual in our house to have a family dinner together on Sunday nights. The children know that this is something that we do together and we try and make sure this happens when possible.”
Outlook for 2010
Looking forward, Mr Johnston is characteristically optimistic.
“Now that balance sheet has been repaired investors are looking for where the growth will come from and I expect that there will be some consolidation in the sector as growth becomes a driver for investors. Those companies with a clear strategy to deliver on this will be rewarded.”
His prognosis of the Australian property market is equally positive.
“We expect that the demand for housing will only continue to strengthen and the key for many property groups including Australand is to continue to look for ways to address affordability, particularly as interest rates edge upwards.”
Of his journey with Australand so far, Mr Johnston said, “You learn an incredible amount through a period like we have all just come through and now that the worst is behind us; I am enthusiastic about the future. We are all very focused now on growing the business and re-establishing Australand as a leading property company in Australia.”
But what has the man who has over 20 years of experience in the property industry have to say to those who want to get their feet wet in real estate?
“Don’t be too caught up in trying to fast-track your career but spend as much time as you can learning from seasoned people around you. When opportunities are thrown at you make the most of these and do the best job that you can. The toughest jobs are where you learn the most and equip you best for the future.“
Wise words from someone who got into the business because “I like that the fact that what we create is real and if you are good at it, there is serious money to be made!”