Recessionary Jitters - Phantom Wealth and Financial Colonics

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