OMERS Leadership Under Fire
Michael, what were some of the biggest challenges Oxford faced in the early days of the pandemic?
There were many challenges, and there continue to be, but early on there were two main challenges for Oxford. First, the speed with which everything was changing and the breadth and scope of that change. We have business continuity plans to manage our 69 offices, we have emergency preparedness plans to manage our nearly 400 assets and we’ve dealt with all kind of emergencies. But, we’ve never dealt with the pace and breadth of this confluence of events happening all at once. It was very chaotic.
Second was the challenge of working in different parts of the word that were at different stages of the virus, which really meant it was difficult to provide a consistent message to our employees and partners as to how we were going to move forward.
As a global business, this last point is particularly challenging. How were you impacted by the fact that different geographies in which you operate were hit by the virus much later than others?
There was contradiction everywhere. We had some governments saying we are going to carry on and everything will be business as usual, then you had jurisdictions where governments were deciding to shut down.
On the same day, I had politicians calling me to say “You need to close. It’s irresponsible” while in the same jurisdiction politicians were telling us “You must remain open. You’re a critical infrastructure.” So that was a very demanding period on all of us personally and on our teams and it was very intense because it had such a human dimension to it. In some cases, we were requiring people to work, and in others we were telling them to. We made some mistakes along the way, but you make the best decisions you can in the time you have, and with the information you have. The one thing that was consistent everywhere at all times was our focus on the health and well-being of our customers, colleagues and communities.
Beyond ongoing changes to health protocols, how did government guidelines alter the way you ran the business day-to-day?
There were numerous changes, some of which seem simple enough to work through but actually require a tremendous amount of back-end work, which adds to the confusion. For example, the City of Toronto advised businesses in mid-March that their April 1 taxes due and payable for the next six months of the year didn’t have to be paid. It was a great initiative to provide relief to businesses impacted by the shutdown.
Well, that may sound like an easy thing to manage, but when you have thousands of tenants with electronic banking set up to automatically going to remit those funds, it’s an enormous task to manage.
Over a period of weeks, we had upwards of 100 different policy directives from jurisdictions around the world that we had to manage. And on top of that volume we had over 2,000 requests from our occupants to restructure terms of existing contracts. All of this takes a tremendous amount of time and resources. So as a leader you are trying to find ways to adapt your approach and mobilize your teams to work as quickly and creatively as possible to meet these challenges.
And how did you adapt?
For me it was trying to get to a place of clarity as quickly as possible. Where we could feel confident in the decisions we were making – decisions that would benefit not only the health of the business but the health and safety of our people and the communities where we work.
We recently had the pleasure of General James Mattis, the former United States Secretary of Defense, joining us for an Oxford Town Hall and he described the crux of a crisis being the confluence of unpredictability coupled with a lack of control. Of course, this is the exact opposite of what business leaders strive for when they make decisions. We want predictably and control. So the real challenge these past few months has been to lead from a place of unpredictability and confusion, to a place of clarity.
How do you get to that place of clarity?
Information is critical, but in reality during a crisis you never have all the information, or time to gather all the information, that you want. So you have to imagine the range of potential outcomes. You have to be creative and imagine things that you hadn’t experienced before and talk through those possibilities with your teams with full transparency. That is what helps you get to a point of clarity.
And we had to do that from both an operational standpoint and an investment standpoint. So as an example, as an operator, we had to figure out months ago what it would look like when we reopen. What are the protocols and practices that we are going to have to put in place? Are we going to health screen our employees? Are we going to health screen customers coming into a facility? These scenarios hadn’t even been raised yet, and wouldn’t be resolved by privacy departments or HR. We had to anticipate what those eventualities were likely to look like and prepare ourselves for that possibility.
On the investment side, we had to discuss our entire playbook and approach to investments given the state of the market. Should we change our approach? Might we consider things with a different risk lens than we had even only a quarter ago?
Keeping the lines of conversation and keeping leadership teams engaged and empowered as you go through these scenarios is critical for bringing overall clarity.
Over the past few weeks I have shared highlights of my discussions with leaders across OMERS and its portfolio companies around leadership lessons learned during the COVID-19 pandemic. What has really stood out to me through these conversations is the important role that organizational trust and making quick decisions, even if they prove to be wrong and need to be changed, play in moving a company through a crisis. It has also become clear that companies that value their people and the communities in which they live and work, and where compassion and care is shown, stand a much better chance of getting through the crisis strong and united.
Good interview with Oxford Properties’ President Michael Turner.
The focus was on leadership during a crisis, a timely topic, but being an investment person at heart, I would have liked more detail on Oxford Properties’ massive real estate portfolio and how they're coping with the pandemic.
In particular, are they following Ivanhoé Cambridge and taking massive writedowns on their retail assets? What do they see in the office space? Do they agree or disagree with me that there is a paradigm shift going on in real estate which will significantly impact the asset class going forward? Is the red hot logistics space way overvalued now and due for a major pullback in the post-pandemic world or is the secular trend still intact? Where do they see opportunities now regionally and internationally and across which sectors?
Again, I'd love to ask all these questions to Michael Turner, Nathalie Palladitcheff, Dennis Lopez, John Sullivan, Peter Ballon, Neil Cunningham, Darren Baccus and other top Canadian pension real estate experts.
When I chatted with Blake Hutcheson, OMERS' President and CEO and the former President of Oxford Properties, back in June, he said Retail is suffering due to the pandemic and that will remain a challenging area but they brought it down to 15% of the total portfolio.
Where I found his comments interesting was in the office space. He said that some companies will need more "elbow room" and increase their rental space, others will not as their employees work from home, and the WeWorks will find it hard to rent rotating office space. But he added "building a culture is very tough" via remote work. He estimates demand for office space will fall by "15% over the next 5 years in a worst case scenario" and reminded me these are long-term leases so the decline in demand won't be felt all at once (maybe 3% a year).
Anyway, all Canadian pensions are dealing with some major challenges in parts of their real estate portfolio.
In terms of what lies ahead, some real estate lawyers I know tell me developers with cash are rushed in to buy land and are deploying it in hot areas.
Maybe, but as I keep telling these lawyers, I watch what the big tech giants (Amazon, Google, Facebook, Microsoft, etc.) are doing because they set the major trends, as well as what the big banks, big accounting firms and big law firms are doing, and so far, I don't see people rushing back to the offices and that includes all of Canada's pensions.
One of my friends rents office space at 1250 René-Lévesque West here in Montreal which is where PSP Investments has its offices (it used to be owned by PSP) and he tells me it's a ghost town now, all these protocols for entering, couriers can't go up, all the coffee shops and restaurants are closed (except Madisons downstairs and the Provigo at the next door building), and you can't be more than two people in an elevator. Just that alone is a logistical nightmare, waiting for hours to get to your floor!
Yes, the pandemic will end, there will be a vaccine, life will resume but if you think it will be business as usual at the office, airports, and elsewhere, you're in for a major surprise.
Just like 9/11 is etched in our collective psyche, nobody will forget this pandemic, not in our lifetime.
Getting back to Michael Turner's comments above, I like the part where he said: "We recently had the pleasure of General James Mattis, the former United States Secretary of Defense, joining us for an Oxford Town Hall and he described the crux of a crisis being the confluence of unpredictability coupled with a lack of control."
Boy, if it's anyone who knows how to navigate through chaos and unpredictable situations, it's 'Mad Dog' Mattis, he's seen it all, especially being part of the Trump administration. I would have loved to be part of that Oxford Town Hall.
Now, while I was off, there were other important interviews OMERS’ CIO had with other senior managers at that organization.
In particular, Mr. Rai spoke with Mike Graham, who on April 1 was made Global Head of OMERS Private Equity. Here are some insights into what he learned about taking over in a time of upheaval, and about leadership under fire:
Mike, you took on the role of head of Private Equity April 1, just a couple of weeks into the pandemic hitting North America. How difficult was it to take over in that environment and how did you adjust your leadership style to manage through it?
It certainly wasn’t ideal and I’ve definitely had to adapt my leadership style and my approach. I was excited and prepared to start planning out a broader vision for the Private Equity group and instead we’ve been focused almost exclusively on shorter-term goals and getting through the ups and downs of the reality of what COVID has brought upon our portfolio companies. So, from a leadership standpoint that presents a very different set of skills that you have to use.
On the other hand, what I have enjoyed as a leader is that this crisis has allowed us to get to know each other better in a short time. Together we’ve worked through some very stressful situations which has built trust, and in particular I think the team has seen the trust that leadership has in them at all levels.
Trusting your people and your processes is crucial in crises like these.
We can’t make decisions quickly if there’s no trust. We all push and prod each other all the time and test our thinking within the Private Equity group, but ultimately we trust each person to make good calls. We’ve made it clear to the team that when it comes to making decisions our mantra is that speed in a crisis is more important than perfection. We’ve tried not to dwell or vacillate on decisions because it’s easier and more effective in these changing environments to adapt than it is to stand with your heels planted on the ground.
Successful decision-making has to be based on information and the sharing of information. How did you manage that with so many different portfolio companies in such a variety of sectors, each being impacted in different ways by the shutdown?
It’s all about over communication. We communicated all the facts that were available to us as much as we could to help arm people with the information they needed to make sound decisions.
The fact that we had insight into different sectors, and geographies, was a huge benefit. We saw early on the impact COVID was having on our businesses in Europe. We were able to draw on the consumer and the government actions we were seeing over there. We could also draw on data and trends from our portfolio companies in the earliest hit sectors to then help forecast what we might expect across the other businesses in the portfolio. A consistent cadence of open and transparent communication was essential through this process. We kept our eye on the short-term prize, which was to come out the other end of the crisis intact, so we could begin to focus anew on creating long term value at our portfolio companies.
On a personal, human level, what have you learned from this situation?
The most important thing I’ve learned is the need to act with compassion and humility. We’ve had some very tense moments but through it all, we respected each other, we supported each other and we’ve acted as true partners. Each of us is experiencing not only business hardships but personal anxiety on some level. In recognizing this, we try to set the proper tone in each of our meetings – a tone of respect, gratitude and compassion.
Lastly, on the point of humility, I think one thing that has become clear to me as a new leader is that I don’t know all the answers, and that’s ok. I ask other people for help more than I used to, and I think we’ve all been much more willing to ask for help these days, and that’s a great thing.
It is this last point of Mike’s that really stuck with me. Always be grateful and take care of those around you, whether it’s colleagues, friends or family. Kindness and compassion are the best medicines in a crisis.
I've heard really nice things about Mike Graham from various contacts of mine.
The point he makes on humility is so important, this pandemic has taught all of us how important it is to stay humble because we simply don't know everything about this virus and its long-term effects.
Lastly, Satish Rai spoke with Bruce Power's President and CEO Mike Rencheck to learn about the leadership principles that guided his company through these stormy waters (Bruce Power is owned by OMERS). Here’s what he had to say.
Amen to that, he's right, there’s no time to worry about perfection in a crisis.Mike, as an organization that provides power to nearly a third of Ontario’s homes, businesses and communities, Bruce Power didn’t have the luxury to stop and reflect on the pandemic and how best to adapt to it. How did you manage to keep the lights on and the province running under such difficult circumstances?
It was not just the lights, but also essential services that were critical to helping the medical community deal with the crisis itself. For example, harvesting isotopes that are used to sterilize medical equipment for front line workers, or continuing with some of our life extension projects. As you say, we could not pause, so we turned to four leadership principles to keep us moving forward. We had to be able to execute, clarify, adapt and soothe.
The first principle, execute, is based on the need to prioritize and make a plan, no matter how short-term, and execute on that plan immediately. Every decision we make, even during good times, is difficult, because the stakes are so high. But a leader cannot be afraid to make decisions as long as they are trying to do the right thing, even if it means risking making mistakes.
In a scenario like this, which none of us have ever gone through before, how do you determine what is the right thing to do?
Information and the sharing of that information are vital. That’s where the need to clarify comes into play. As long as the information and rationale behind the decisions are clear and are being constantly communicated, then leadership teams, staff and other stakeholders feel comforted in that shared understanding, as much or as little as there may be. Knowing what the right thing is to do can be difficult but, in these scenarios, almost any decision is better than no decision, or delaying a decision for too long. Remember, it is never too late to do the right thing as more information becomes available or a crisis unfolds.
And as things evolve that’s where the need to adapt comes into play?
Exactly. Making these tough decisions is easier when you go into the process with an understanding that you will need to adapt. Plans will change more than once or twice. Accepting this allows you to be less rigid and more creative in your decision-making.
As an essential service how did you balance the need to keep providing Ontarians with the power they need, while still ensuring the safety and wellbeing of your teams and the people in the communities you serve.
It’s a delicate balance. When you have 6,500 people working for the organization and you know operations must continue, you have to take immediate actions, and with that you’re evaluating risk the entire time. For example, a spread of the infection in a facility where you need highly trained individuals working at a reactor would mean the need to shut down the operation entirely. We couldn’t afford that, and neither could the province.
Once deployed, our business continuity planning teams looked at various scenarios of how the virus could expand and progress, not only in the community but at site. We then actioned accordingly to ensure controls are in place to protect those people.
We also knew from the onset that we would need to make changes to our human performance toolset to help our workers with the added stress of this uncertain new reality. This toolset was just recognized by the World Association of Nuclear Operations for Excellence. It was developed by our frontline leadership and then deployed to the roughly 3,500 people we have working from home. It’s just as stressful having to look at critical components and calculations for the project work we’re doing, while you’re sitting at home without anybody to talk to, as it is to be in the frontline.
That level of stress and responsibility must take a great toll on your workforce. How do you manage that as a leader?
I will start first by saying that we have the very best and most professional and qualified workforce in the world, I really believe that. These jobs are always highly stressful, but when you add in the unique dynamics of COVID-19 to the equation, leaders need to have the ability to soothe. In order to do that, leadership must be present and accounted for. That means being physically present if the expectation is for others to have to be present. It means keeping lines of honest communication open all the time. And, it means creating and promoting a culture of compassion and care for one another and for the communities we serve. In difficult times, senior leadership being present – physically and emotionally, means everything.
There are many valuable lessons to be learned from this discussion with Mike, but one he touched on and that I feel is often overlooked is that there’s no time to worry about perfection in a crisis. There’s simply no time. Sometimes good is good enough, and then you can adapt as the crisis evolves.
And CGTNBizTalk spoke with Bruce Flatt, CEO of Brookfield Asset Management. Take the time to watch both interviews, lots of great insights.
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