Saturday, February 28, 2009

What's Happening To My Little World?

Call from a friend:
We just had another client cancel one of their contracts for this year and my lay-off list is growing... What's happening to my little world??

I should've heeded your "doom 'n gloom" and taken off my rose-coloured glasses much sooner.

Forbes J. Rutherford:
Just a minute, I'm becoming optimistic that we'll see light by the end of third quarter in Canada - unemployment is 5 percentage points below the double digits of last recession and only 2 points above structural unemployment. The consumer hasn't completely stopped buying and might be experiencing some level of Obama led euphoria. It could be a "dead cat bounce" and everything will tip over the edge, but Receivers in perpetual recession prone Atlantic Canada aren't busy....YET......

You may be experiencing an "over reaction" by client's canceling projects, their Board is expecting cost reductions and can't reconcile cost/benefit of the output. It's an easy target...to not invest in one's corporate brand...and a silly response to a recession...as now is the time to increase brand visibility in preparation for the eventual recovery. However, in times such as these most executive teams become reactive, and the mantra is often "cut it and if we made a mistake, we'll cross that bridge when the realization of the mistake comes."

Every major recession has changed the economic culture and forced (to use an overworked phrase) a paradigm shift in the make-up of business organizations. For example, the 1983 recession eradicated any remaining vestige of the "company man" and the workers commitment to a single company for their working life.

The early 90's recession embraced youth at the expense of age and the importance of archived knowledge walking around the office.

This recession, regardless of Canada's financial services industry strength will generate (if it exceeds 18 months) a realization that the revered importance of the "financial sector" with its delusional cadre of Financial MBA's is made up of men and women with feet of clay; and that they actually have no idea how to create real value.

America's Joe Citizen's backlash, especially if Obama piles on with tax increases will rightly view these grasping architects of financial mismanagement as being for all their education nothing better than that of a used care salesman or a municipal politician. This recession has the potential of making it clear to all, that the levers of power are pulled by charlatans and that they can trust no one but their immediate friends and family.

A backlash would be a good thing, as clearly the people would realize that government is the responsibility of the people and not of the elites. But this is not likely to happen - the only paradigm shift out of this economic morass will be the disassembling of international corporations; and geographical regions of the world shifting into bastions of bilateral trading blocks. National and regional interests will be driven by access to energy, and in some cases...water.

A Fortress Asia and Fortress North America is likely to be the long-term outcome of the economic recovery; however China is a mercantialist free-booter - their economy is based on selling its production capacity externally. They don't have a domestic market and their burgeoning middle-class is dependent on foreign sales. They are sitting on a sea of foreign commercial paper, which may temper their actions - but expect China's Politbureau to externalize blame for their predicament if the recovery takes too long to arrive.

We'll have Fortress Europe but we're seeing signs of it turning on itself - there are two competing social cultures - Old Europe and its sense of entitlement, and the new democracies formed from the former Soviet Republics that don't take freedom for granted and were cashing in on easy credit to build their economies and become a bulwark for New Europe's northern borders. This is likely to implode, and we may well witness a reconfiguration back to the Old Europe, once they cast the New European democracies back into the demilitarized zone between Russia and NATO. This will be achieved by grinding their economies with Brussels sponsored regulatory friction. As Canada and the United States has learned in the Balkans and Afghanistan, Old Europe's commitment to alliances is as weak and as self-serving as their duplicity is strong.

Russia might want to get used to the idea of adopting Canada's industrial policy and become experts at being hewers of wood and drawers of water as commodities will be the only game the Oligarchs can play for the next ten years.

India has a domestic market large enough to sustain itself; however it will continue to commoditize knowledge management as it's prime export.

At the corporate level, I believe that knowledge based and service driven companies such as yours will likely restructure into fractured business units and individual skills, that orbit collaboratively around projects . Supported by the Internet, these business units will be held together by Account Executives and plug and play CRM technology platforms - only to spin off in different trajectories when the job is done. Business organizations have been moving in this direction since 2000 - this recession simply advances the "paradigm shift" more rapidly than most workers are able to fathom.

Change sucks! Rules of Engagement will shift. Perhaps a more flexible resource management strategy where twenty or thirty percent of a company's staff operate as "contractors" on specific projects that plug in and un-plug will be the way "creative and knowledge" based companies will be able to manage their overheads. The ability to marshal talent and proven skill will be critical.

Going forward, I suspect HR department's will be mandated to establish a "clearinghouse" of itinerant project specific contracted workers that can ramp up and ramp out under a very flexible arrangements.

Your little world my friend is simply a reflection of what's going on in the big world. Don't think in terms of hiring back staff if canceled projects are revived or new business landed - think in terms of creating a flexible supply of contracted staff - permanent employment going forward is measured in months.

Hard to fathom any optimism in these statements considering my Doomster views 18 months ago, but frankly.....

....in these times, the ability to adjust to change underpins one's sense of the future.

Wednesday, February 11, 2009

Right Sizing in Recessionary Times

REmatrix.com
A Portal To International Commercial Real Estate & Careers

REmatrix Interview Series with Forbes J. Rutherford, President of Rutherford International Executive Search Group Inc. on Right Sizing and Cost Management in Recessionary Times

REmatrix.com offers real estate professionals the means to communicate, learn, transact, invest, and expand their international network. REmatrix functions as a "one-stop aggregation of industry trends and transaction information." Our strategy for attracting lenders, advisors, buyers and sellers from around the world is to cater to individuals with similar professional interests, provide the best value for one's time on the Web, and ensure the scope of content and services is international.


December 27, 2008 – Toronto, Canada
Topic: Right Sizing In Recessionary Times


REmatrix.com www.rematrix.com

Is there a formulaic response to rightsizing in a recession?

Forbes Rutherford
Most companies, especially in real estate – whether it’s the manufacturing, servicing or transacting of real estate fail to recognize the hard reality that gravity does exist in finance and that market cycles by definition – do cycle. The failure to recognize this reality generally results in a reflexive management response, which often has the earmarks of a formulaic response.

To be frank, it depends on the leadership, the level of uncertainty relative to market circumstances and the degree of financial hemorrhaging. According to a Bain Consulting study as reported in the Harvard Business Review, there are three types of executives one might observe in the face of an impending recession. The first type was “over-confident and likely to under-respond; the second was “under-confident and likely to over-respond,” while the third type was likely to respond to an approaching recession in a “balanced” fashion.

REmatrix.com www.rematrix.com

How do you recognize the “over confident and under-responsive” executive?


Read the complete version of the interview at: http://rematrix.com/careers/careers_09sum-let-1.html