REmatrix Interview with Forbes J. Rutherford, President of Rutherford International Executive Search Group Inc.
November 19, 2008 – Toronto, Canada
Topic: Recessionary Jitters – A Commentary
REmatrix.com www.rematrix.com
You wrote last January that an unstable sub-prime and derivative market would precipitate a market correction of major proportions. What would you advise your clients, now that the correction has arrived?
Forbes Rutherford
What we’re experiencing is a de-leveraging of a financial industry that was built on fatuous property values, easy credit, gravy train group think and financial architecture that leveraged gullibility with guile. If consumer confidence and the real economy can be insulated from the fallout then this de-leveraging will simply purge the system of phantom wealth – think of it as a financial colonic reboot. Survival of the real economy will depend on the banks not tightening their sphincters when it comes to maintaining the flow of short-term credit to industry.
There are always opportunities for those that have the creativity to see it – we have entered a chaotic phase in the business cycle, however in “chaotic systems” one can find, albeit ever so briefly substantive patterns – in real estate as in any business, there are opportunities to be found within chaotic economies.
Getting back to your question, my advice to clients would be to not overreact. If continuous cost management was not part of their corporate culture during the good times then now is a good time to embrace it but not in a wholesale fashion that undermines the company’s ability to have momentum when the market rebounds. “Layoffs in force” without determination of who to shed based on performance criteria has been proven to retard a company’s ability to take advantage of the eventual recovery relative to your competition. In fact, nimble companies should use this time to improve the quality of their management teams. It’s easy for mediocrity to lay hidden when all the boats are lifting with the tide – not so when market position and margins are eroding.
REmatrix.com www.rematrix.com
What would you advise job seeking clients?
Forbes Rutherford
It’s probably best that we clarify who my client is. The simple description of a client is “one, who pays my fee,” which in all search assignments is the hiring company. I do provide career counseling and some degree of executive coaching, however the majority of my practice is “creating wealth for clients by matching talent and ideas with capital.” Over the next eighteen to twenty-four months a portion of my practice mantra will be, “we help clients preserve capital by matching them with adaptive and agile talent.”
As for individuals, it’s likely the standard response to the greeting, “How are you?” will be a credulous – “I have a job, how about you?” All kidding aside, regardless of economic condition, quality employees will leave for greener more challenging pastures. The mediocre will leave in good times if they think they’ve played out their hand and the jig is up; whereas in tough times, they’ll generally sit tight, keep their head down and not entertain any form of change. The mediocre employee rarely makes an effort to manage their career – for them change is merely the outcome of happenstance.
My counsel to those concerned about their job security is to first understand that this correction is a metaphorical fiscal neutron bomb. The explosion has wiped away real and perceived investment values but left the physical assets standing. Ownership positions meltdown but assets remain and require management; tenants’ contract and shift to lower cost facilities but need modern amenities; vacancy needs to be filled – asset value erosion mitigated. You can choose to become collateral damage or be part of a creative response.
If like me, you see opportunity in unsettled times – you need to elevate your game, stay informed, widen your network; and most importantly, you learn to recognize business opportunities
Continuation of article may be found on the REmatrix.com web site at: http://www.rematrix.com/careers/careers_08sum-let-4.html
About the Author
Forbes Rutherford provides specialized human capital consulting and executive search services to both national and international property and investment firms. He has practiced his profession for twenty-two years; and has sat on the Board of a number of professional real estate associations based in Canada. Having dealt with a broad cross section of the industry’s senior executives and rising stars, Mr. Rutherford is in a unique position to observe the changing macro trends and oncoming challenges facing the Canadian and International real estate community. Additional information on Mr. Rutherford’s background may be viewed at the following web links: www.rutherfordinternational.com or http://www.linkedin.com/in/rutherfordintl
Thursday, November 20, 2008
Thursday, November 13, 2008
“Double, double toil and trouble; fire burn, and 'the financial market' cauldron bubble”
Executive and Board Performance – Disavowing Financial Gravity
By Forbes J. Rutherford, President, Rutherford International Executive Search Group Inc.
www.rutherfordinternational.com – www.rematrix.com
May 2008
“Double, double toil and trouble; fire burn, and cauldron bubble”
Macbeth Witches, Scene 1
Little has changed – the pursuit to disavow the existence of financial gravity inflated the Dot Com bubble, continued into a home equity bubble and will likely feed the commodity bubble. We’ve learned little - the manipulators of corporate stock values slipped from the constraints of Sarbanes Oxley and moved downstream to apply their talents at excavating middleclass wealth by pump/priming home values and debt. This time, instead of engaging stock brokers to sell the phantom values, they used real estate agents and mortgage brokers to sell the American consumerist dream which eschews sacrifice and toil. Dupes or “useful idiots,” the retail financial services sector sold debt and empty dreams utilizing fraudulent financial mechanisms that were created by “financial grifters” on Wall Street.
The sub-prime melt down, the predictable collapse of a 140 year old investment bank, the approaching derivative tsunami that is expected to sweep away more historical investment banks is simply a consequence of monetization of ethics and delusional deception of financial principles – all with the assistance of the Federal Reserve, a fawning supplicant which colluded by selling cheap money by accepting junk bond quality mortgage backed securities as collateral. The system is cracking under the weight of this inflationary madness.
August 2002
This following commentary on creating shareholder value by linking staff bonuses, business unit managers and first tier executive compensation through the establishment of a hierarchy of performance measurements was written in 2002. It has even more relevancy today.
My horoscope suggested today was a good day to sit down and read books on mysticism, metaphysics and ancient religions. It went so far as recommending the “Tibetan Book of the Dead” as a suitable summer read. I’m not in the habit of stocking the corporate library with such titles, although I do have a few executive resumes that might qualify. However, the daily reports on Enron, Worldcom and various “mini-ron’s and com’s” in the financial press of late, should suffice as a comparative alternative. Certainly, there will be no lack of reading material over the ensuing months, as further accounting distortions are reported by financial forensic investigators.
How has the executive suite and investment community of corporate America reached such an all-time low in the eyes of stakeholders with respect to ‘trust’, that a politician feels obliged to lecture Wall Street on ethics! A politician lecturing on ethics is akin to the philanderer expecting their spouse to be virtuous. The political response will result in increased regulation, and conveniently eschews a loosely held belief in the principle of ‘market forces'. The solution to regaining the retail investors trust in our financial markets is not by increasing the regulation of business, nor is it a vacuous promise to take a few unscrupulous executives out to the symbolic woodshed.
Complete Text - Link to REmatrix.com Career Section
By Forbes J. Rutherford, President, Rutherford International Executive Search Group Inc.
www.rutherfordinternational.com – www.rematrix.com
May 2008
“Double, double toil and trouble; fire burn, and cauldron bubble”
Macbeth Witches, Scene 1
Little has changed – the pursuit to disavow the existence of financial gravity inflated the Dot Com bubble, continued into a home equity bubble and will likely feed the commodity bubble. We’ve learned little - the manipulators of corporate stock values slipped from the constraints of Sarbanes Oxley and moved downstream to apply their talents at excavating middleclass wealth by pump/priming home values and debt. This time, instead of engaging stock brokers to sell the phantom values, they used real estate agents and mortgage brokers to sell the American consumerist dream which eschews sacrifice and toil. Dupes or “useful idiots,” the retail financial services sector sold debt and empty dreams utilizing fraudulent financial mechanisms that were created by “financial grifters” on Wall Street.
The sub-prime melt down, the predictable collapse of a 140 year old investment bank, the approaching derivative tsunami that is expected to sweep away more historical investment banks is simply a consequence of monetization of ethics and delusional deception of financial principles – all with the assistance of the Federal Reserve, a fawning supplicant which colluded by selling cheap money by accepting junk bond quality mortgage backed securities as collateral. The system is cracking under the weight of this inflationary madness.
August 2002
This following commentary on creating shareholder value by linking staff bonuses, business unit managers and first tier executive compensation through the establishment of a hierarchy of performance measurements was written in 2002. It has even more relevancy today.
My horoscope suggested today was a good day to sit down and read books on mysticism, metaphysics and ancient religions. It went so far as recommending the “Tibetan Book of the Dead” as a suitable summer read. I’m not in the habit of stocking the corporate library with such titles, although I do have a few executive resumes that might qualify. However, the daily reports on Enron, Worldcom and various “mini-ron’s and com’s” in the financial press of late, should suffice as a comparative alternative. Certainly, there will be no lack of reading material over the ensuing months, as further accounting distortions are reported by financial forensic investigators.
How has the executive suite and investment community of corporate America reached such an all-time low in the eyes of stakeholders with respect to ‘trust’, that a politician feels obliged to lecture Wall Street on ethics! A politician lecturing on ethics is akin to the philanderer expecting their spouse to be virtuous. The political response will result in increased regulation, and conveniently eschews a loosely held belief in the principle of ‘market forces'. The solution to regaining the retail investors trust in our financial markets is not by increasing the regulation of business, nor is it a vacuous promise to take a few unscrupulous executives out to the symbolic woodshed.
Complete Text - Link to REmatrix.com Career Section
Thursday, June 5, 2008
Globalization of the Real Estate Professional
REmatrix Interview with Forbes J. Rutherford, President of Rutherford International Executive Search Group Inc.
June – Toronto, Canada
An Overview of Global Real Estate Markets & Potential for Career Opportunities
Forbes Rutherford has provided specialized HR consulting and Executive Search services to both national and international property and investment firms for the past twenty-one years. Having dealt with a broad cross section of the industry’s senior executives and rising stars, Mr. Rutherford is in a unique position to observe the changing macro trends and oncoming challenges facing the Canadian and International real estate community. Additional information on Mr. Rutherford’s background may be viewed at the following web links: http://www.rutherfordinternational.com or http://www.linkedin.com/in/rutherfordintl
REmatrix.com
What would you consider a fundamental consideration for choosing a career in commercial real estate?
Forbes Rutherford
I’ve been involved in real estate executive search since 1986 and prior to this profession, I worked in real estate development in Canada and property investment overseas. I’ve experienced all the market cycles and am intimately aware of the economic machinations associated with oil price shocks, double digit interest rates, “loan to own” commercial lending, tax driven squeezing and pumping of industry sectors, economic recessions and industry specific depressions. Real estate is the first industry sector to be cooled by a country’s monetary policy; and the last to be warmed up by it.
A fundamental consideration for choosing a career in real estate is to understand its structure and economic role in our lives. In business theoretical terms, commercial real estate is a “complex adaptive system;” meaning it can move to the brink of chaos before new patterns emerge and new forms of organizations take place.
For more than ten years, we have witnessed the rise of domestic oligarchic ownership through the acquisition of institutional investment grade trophy portfolios and assets however new transnational capital pools and service companies are emerging – they’re nimble, unwedded to the asset and focused on their particular niche within the risk/reward investment spectrum.
REmatrix.com
What advice do you give to young real estate professionals starting out?
Forbes Rutherford
Stay current, plan for rainy days and be as adaptive as the system you’re entering. Real estate is cyclical and dynamic; and one should be comfortable with the concept of living with uncertainty. A large percentage of our real estate professionals haven’t experienced a full market cycle – but in time they will, as financial gravity does exist. It's part of the natural order of a market economy. The framework for doing business today may not exist tomorrow. To understand this assertion, one only needs to review business history and list the iconic names that no longer exist but for a shell company on a receiver’s shelf.
REmatrix.com
What trends have you observed in the globalization of real estate and what will the impact of globalization have on careers?
Forbes Rutherford
It’s not globalization of real estate per se, as all real estate is local; it’s really the globalization of real estate investment, portfolio management, infrastructure investment in emerging markets and the rapid consolidation of global service companies to support these transnational property owners.
It’s not a comprehensive list of observed trends, but some that come to mind are:
Go to http://www.rematrix.com/careers/careers_07sum-let-3.html
June – Toronto, Canada
An Overview of Global Real Estate Markets & Potential for Career Opportunities
Forbes Rutherford has provided specialized HR consulting and Executive Search services to both national and international property and investment firms for the past twenty-one years. Having dealt with a broad cross section of the industry’s senior executives and rising stars, Mr. Rutherford is in a unique position to observe the changing macro trends and oncoming challenges facing the Canadian and International real estate community. Additional information on Mr. Rutherford’s background may be viewed at the following web links: http://www.rutherfordinternational.com or http://www.linkedin.com/in/rutherfordintl
REmatrix.com
What would you consider a fundamental consideration for choosing a career in commercial real estate?
Forbes Rutherford
I’ve been involved in real estate executive search since 1986 and prior to this profession, I worked in real estate development in Canada and property investment overseas. I’ve experienced all the market cycles and am intimately aware of the economic machinations associated with oil price shocks, double digit interest rates, “loan to own” commercial lending, tax driven squeezing and pumping of industry sectors, economic recessions and industry specific depressions. Real estate is the first industry sector to be cooled by a country’s monetary policy; and the last to be warmed up by it.
A fundamental consideration for choosing a career in real estate is to understand its structure and economic role in our lives. In business theoretical terms, commercial real estate is a “complex adaptive system;” meaning it can move to the brink of chaos before new patterns emerge and new forms of organizations take place.
For more than ten years, we have witnessed the rise of domestic oligarchic ownership through the acquisition of institutional investment grade trophy portfolios and assets however new transnational capital pools and service companies are emerging – they’re nimble, unwedded to the asset and focused on their particular niche within the risk/reward investment spectrum.
REmatrix.com
What advice do you give to young real estate professionals starting out?
Forbes Rutherford
Stay current, plan for rainy days and be as adaptive as the system you’re entering. Real estate is cyclical and dynamic; and one should be comfortable with the concept of living with uncertainty. A large percentage of our real estate professionals haven’t experienced a full market cycle – but in time they will, as financial gravity does exist. It's part of the natural order of a market economy. The framework for doing business today may not exist tomorrow. To understand this assertion, one only needs to review business history and list the iconic names that no longer exist but for a shell company on a receiver’s shelf.
REmatrix.com
What trends have you observed in the globalization of real estate and what will the impact of globalization have on careers?
Forbes Rutherford
It’s not globalization of real estate per se, as all real estate is local; it’s really the globalization of real estate investment, portfolio management, infrastructure investment in emerging markets and the rapid consolidation of global service companies to support these transnational property owners.
It’s not a comprehensive list of observed trends, but some that come to mind are:
Go to http://www.rematrix.com/careers/careers_07sum-let-3.html
Friday, May 2, 2008
Adjusting Your Career Within a Teetering Economy
January 25, 2008 – Toronto, Canada
Forbes Rutherford has provided specialized HR consulting and Executive Search services to both national and international property and investment firms for the past twenty-five years. Having dealt with a broad cross section of the industry’s senior executives and rising stars, Mr. Rutherford is in a unique position to observe the changing macro trends and oncoming challenges facing the Canadian and International real estate community. Additional information on Mr. Rutherford’s background may be viewed at the following web links: www.rutherfordinternational.com or http://www.linkedin.com/in/rutherfordintl or https://www.xing.com/profile/Forbes_Rutherford
Topic: Adjusting Your Career Within A Teetering Economy
We’ve been a keen observer of the real estate industry for twenty-five years and have experienced more than one industry cycle. The bursting of the United State’s housing credit bubble, is the result of pumping an industry with super-easy financing and profligate lending, which is reminiscent of the commercial real estate meltdown in the early 90’s. Clearly we are entering a chaotic economic period, with the reverberations seemingly chasing the time zones.
American mortgage lenders have exercised the same undisciplined penchant for writing ‘no’ or ‘little’ documentation mortgage loans in the residential industry as they did in previous decades with commercial lending. We believed then that an underlying driver was “personal performance compensation” run amok; and we believe a contributing driver for the sub-prime debacle today is rapacious personal enrichment without appropriate safe guards. Poor short-term compensation architecture that rewards fatuous results serves neither customer nor shareholder in a meaningful way but allows management to calculate bonuses against phantom value creation.
The spillover effect on other sectors of the economy including the commercial real estate industry is likely to be dictated by the degree of optimism the American consumer has in his or her future. Clearly the Federal Reserves aggressive rate cut and an effective fiscal stimulus during the election year run up may give stocks and optimism a shot in the arm however it needs to be implemented quickly as housing is a $23 trillion asset class that is in an aggressive deflationary mode. The supply of intended homes for owners has reached a level of vacancy which surpasses all records since 1956. Business Week reports that the supply of unsold homes will carve an average of 10 percent out of home values over the balance of this year. Match this reduction in consumer asset wealth against current household financial obligations relative to their disposable income, which is just shy of 20 percent and one would conclude that the American consumer is walking a high wire.
What is one to do with respect to managing their career in an economy that is teetering weighted by a general morass of insecurity?
Check this article periodically for revisions, as my thoughts will unfold once we’re able to gauge the market’s direction. In short however – if you tend to be conservative and adverse to risk - it makes sense to me that you consider companies with a strong balance sheets and a tenant mix within its portfolio that is relatively insulated from the angst of the American and Canadian consumer. Ownership positions meltdown but assets remain and require management; tenants’ contract and shift to lower cost facilities but need modern amenities; vacancy needs to be filled – asset value erosion mitigated. Seek property owners and managers with portfolios that are well located and occupied by commercial and retail tenants that have solid, ongoing businesses and are well situated within commercial, retail and transportation nodes. In a global economy, real estate is local however the investment in commercial and infrastructure assets is international – employers with good diversification offer greater peace of mind.
If like me, you see opportunity in unsettled times – you elevate your game, stay informed, widen your network; and most importantly, you learn to recognize business opportunities, which always albeit briefly reveal themselves within the cracks of chaotic systems.
Forbes J. Rutherford, PresidentRutherford International, January 25, 2008
Forbes Rutherford has provided specialized HR consulting and Executive Search services to both national and international property and investment firms for the past twenty-five years. Having dealt with a broad cross section of the industry’s senior executives and rising stars, Mr. Rutherford is in a unique position to observe the changing macro trends and oncoming challenges facing the Canadian and International real estate community. Additional information on Mr. Rutherford’s background may be viewed at the following web links: www.rutherfordinternational.com or http://www.linkedin.com/in/rutherfordintl or https://www.xing.com/profile/Forbes_Rutherford
Topic: Adjusting Your Career Within A Teetering Economy
We’ve been a keen observer of the real estate industry for twenty-five years and have experienced more than one industry cycle. The bursting of the United State’s housing credit bubble, is the result of pumping an industry with super-easy financing and profligate lending, which is reminiscent of the commercial real estate meltdown in the early 90’s. Clearly we are entering a chaotic economic period, with the reverberations seemingly chasing the time zones.
American mortgage lenders have exercised the same undisciplined penchant for writing ‘no’ or ‘little’ documentation mortgage loans in the residential industry as they did in previous decades with commercial lending. We believed then that an underlying driver was “personal performance compensation” run amok; and we believe a contributing driver for the sub-prime debacle today is rapacious personal enrichment without appropriate safe guards. Poor short-term compensation architecture that rewards fatuous results serves neither customer nor shareholder in a meaningful way but allows management to calculate bonuses against phantom value creation.
The spillover effect on other sectors of the economy including the commercial real estate industry is likely to be dictated by the degree of optimism the American consumer has in his or her future. Clearly the Federal Reserves aggressive rate cut and an effective fiscal stimulus during the election year run up may give stocks and optimism a shot in the arm however it needs to be implemented quickly as housing is a $23 trillion asset class that is in an aggressive deflationary mode. The supply of intended homes for owners has reached a level of vacancy which surpasses all records since 1956. Business Week reports that the supply of unsold homes will carve an average of 10 percent out of home values over the balance of this year. Match this reduction in consumer asset wealth against current household financial obligations relative to their disposable income, which is just shy of 20 percent and one would conclude that the American consumer is walking a high wire.
What is one to do with respect to managing their career in an economy that is teetering weighted by a general morass of insecurity?
Check this article periodically for revisions, as my thoughts will unfold once we’re able to gauge the market’s direction. In short however – if you tend to be conservative and adverse to risk - it makes sense to me that you consider companies with a strong balance sheets and a tenant mix within its portfolio that is relatively insulated from the angst of the American and Canadian consumer. Ownership positions meltdown but assets remain and require management; tenants’ contract and shift to lower cost facilities but need modern amenities; vacancy needs to be filled – asset value erosion mitigated. Seek property owners and managers with portfolios that are well located and occupied by commercial and retail tenants that have solid, ongoing businesses and are well situated within commercial, retail and transportation nodes. In a global economy, real estate is local however the investment in commercial and infrastructure assets is international – employers with good diversification offer greater peace of mind.
If like me, you see opportunity in unsettled times – you elevate your game, stay informed, widen your network; and most importantly, you learn to recognize business opportunities, which always albeit briefly reveal themselves within the cracks of chaotic systems.
Forbes J. Rutherford, PresidentRutherford International, January 25, 2008
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