“Believe in tomorrow,” Blake Hutcheson, President and CEO of OMERS

Blake Hutcheson:

My fundamental view is if you focus on your people, if you focus on your culture, if you focus on your brand, and if you are forward looking, results come.

Goldy Hyder:

Welcome to Speaking of Business, conversations with Canadian innovators, entrepreneurs, and business leaders. I’m Goldy Hyder, president and CEO of the Business Council of Canada. It’s hard to believe it’s almost two years since the first COVID-19 case was confirmed in Canada. Remember when we thought the pandemic would last a few weeks or at worst, a few months? One lesson we’ve learned since then, is it’s really, really difficult to predict the future. It’s even more difficult to make long term plans that will stand the test of time.

Goldy Hyder:

But that’s exactly what Blake Hutcheson tries to do every day. As the president and CEO of OMERS, he oversees the pensions of more than half a million current and former municipal employees across Ontario. He needs to look way down the road to ensure members can rely on their retirement incomes for decades to come. No pressure there! With that vantage point, I wanted to get his perspective on Canada’s economic recovery and what ingredients he thinks we need to grow the economy in years to come. Welcome to the podcast, Blake.

Blake Hutcheson:

Thanks for asking. Thanks for your leadership. Happy to be here.

Goldy Hyder:

Well, let’s jump right into it. Beginning of a new year, we spent this season talking about Canada’s economic recovery, and what are the ingredients we need to rebuild stronger after the pandemic? And I know it’s a bit probably cliché to say this, but COVID-19 has just changed so much of how we live and work. And I want to start with asking you, how has it affected you?

Blake Hutcheson:

Well, it’s interesting. As you know, I led Oxford Properties for close to 10 years. And then the board of OMERS approached me and said, “You’ve run a pretty good business, would you mind considering coming into OMERS?” Fortunately, I had a period of a year-and-a-half to get acclimatized as president of OMERS. And I was scheduled to be the CEO on June 1st of 2020. And when everything hit, as you well know, with COVID, the board turned around and said, “You’re it. Let’s go.” I was presented with the privilege of being the CEO of this 100 plus billion dollar plan.

Blake Hutcheson:

Right about the time that markets were off 35%, the Canadian dollar was down 15%. And there was lots of noise in the game. And so, it was a trial by fire. And so, how did it affect me? Listen, when I look at leading businesses, I’ve had the opportunity to be a CEO for over 25 years in my career of various businesses. And I look at leadership skills, management skills, and then technical skills. And in the case of OMERS, that means investment skills. You need all three. You need to be a leader, you need to be manager, you need to be an investor.

Blake Hutcheson:

And I was tested in all three in a serious way. From a leadership standpoint, I’ve always said, leadership is not a title, you have to earn it with your team, with your board, with those around you, with every interaction every day. And so, when you’re a brand new CEO, you’re on your toes trying to earn people’s trust and respect day in, day out, not as easy when markets are melting down and the complexities there. I’ve never seen a more difficult time to manage through turbulent times trying to jealously protect your people and their wellbeing, making that your first priority above all else, above returns, and everything else from your den, in your office, at home with technical inabilities as I am well known to have, a younger person would have

Blake Hutcheson:

been able to translate the management direction better than I could, but you’re very, very heavily tested from a management side. And then you got to get right on the investment front. And so, management skills, investment skills, leadership skills, all tested to the nth degree, probably the toughest time in my career. I’ve never worked harder like most people, not a complaint, just an observation. And yet, it’s probably also the single greatest opportunity I’ve ever had.

Blake Hutcheson:

When these opportunities present themselves, you rise to the challenge, you get in the game, you lead to the very best of your ability, you’re available to your teams 24/7. From a management perspective, I’ve got a terrific senior team. We all got closer than ever before. We had Sunday meetings where we didn’t have pressure for two, three hours, just making sure we’re all okay, we’re all focused. We had a difficult first half. There’s no question. And yet since that time, we’ve used it as a real opportunity.

Blake Hutcheson:

And it is a tragedy what’s going on around the world and the people that have been affected. There’s no question about it. And yet I lived through the early ’90s, when markets were devastated. It was one of the greatest opportunities in my career. I lived through ’08 and ’09. After the meltdown, it was an amazing opportunity. And the truth is, from an investment standpoint, this window in history, as sad as it is, on so many levels, has created, I think, one of the great investment opportunities of our generation to lean in, be thoughtful, and really unlock outsized opportunities as a result of the changing world that we’ve all experienced. A profound impact on me, personally profound impact on our team, no point in lamenting it. Get in the game, use it as an opportunity.

Goldy Hyder:

It is what it is I guess. You mentioned your team several times there, and I’ve heard you talk about both leadership and teamwork. Tell me a little bit about how you feel the issues like mental health and diversity and inclusivity, and these other extra things on top of everything else that businesses are dealing with. These are important for a range of reasons. You had COVID, you’re a new CEO, you’ve got a new team, you’re trying to do the transition, and markets are down. Where did these other issues beyond the safety and wellbeing of your employees fit in in terms of these mental health and diversity, which I’ve heard a lot about from CEOs?

Blake Hutcheson:

Well, nobody ever says it’s easy when you step into a leadership role. And you have simultaneous goals and responsibilities. Many arrived on the doorstep at the exact same time. The two you even mentioned are very much …

Goldy Hyder:

Well, Black Lives Matter happened right in the summer.

Blake Hutcheson:

Exactly. All of it came at us. And you have to rise to the challenge, you have to get your priorities straight. And you sometimes have simultaneous priorities that all stack ranked to the same place. And so, from a mental health, taking that alone, I mean, it’s interesting, we’ve got … Call it 115 to 120 billion of assets. We’ve got 30 great infrastructure businesses, we’ve got 20 private equity companies around the world, we have $2 billion in ventures and growth, we’ve got 750 real estate assets through Oxford, we have $50 billion in the markets.

Blake Hutcheson:

And yet, if you ask me any time of the day or night, what’s our most important asset? It’s our people, full stop. And so, we had to get our arms around our people. And we had to make that our single greatest priority. Not only their wellbeing, but to your point, mental health, and make sure that they knew that we were empathetic. And I think we fared pretty well. I looked at our health care spend, it was up 15%. It was up 50% in terms of mental health. I looked at our requests for accommodation, they were up 500% during that period.

Goldy Hyder:

Wow.

Blake Hutcheson:

Off a fairly low base, but it’s a very compelling number. To ignore that aspect of the business, you would ignore at your peril. Because how can you get anything done without great people in good health? And you need them to be in their best shape for the organization to be in best shape. We had a new head of HR who’s been terrific at making this a priority. I look quite prescient, actually, because I hired a chief medical officer in 2019, a brilliant, brilliant doctor, practitioner and mind.

Goldy Hyder:

What made you do that?

Blake Hutcheson:

What made me do it is we work for 500,000 people, which is an aging population. And I really want to get our arms around their needs and their priorities. And we needed, at the senior table, a great medical mind. That was part of it. We’re investing in life sciences in a serious way. And having someone at the table from an investment perspective mattered, and my wellness agenda for the team mattered. And so, I brought this individual in. They may have been the most popular speaker on the circuit for us over the past couple of years.

Blake Hutcheson:

His name is Doctor Aw. Terrific add. And so, he had a series of goals at the beginning. We’ve kept very detailed science based objectives that we’ve ticked off every quarter in all of these important areas. And we’ve gone from being an organization that made this a priority to an organization that I think is really best in class these days. And it’s a combination of the need and it’s a combination of adapting to the times. And it’s a combination from the contribution of some very good people on our team.

Goldy Hyder:

Before I keep going down the economic track, I want to pull back a little bit. You talked about your team, and I’ve heard you say the answer to the question, what keeps me up at night is my people, and in a positive way, caring about your people, being worried about your people, make sure investing in your people. I want to pull back to Blake as a kid growing up in Huntsville and watching his dad and the family business. And tell us a little bit about that, and how those experiences might have shaped the person you turned out to be today, and particularly the kind of leader you turned out to be today.

Blake Hutcheson:

Well, there’s a curveball of a question, but I’m happy to take it on.

Goldy Hyder:

I’m sure you know how to swing at a curveball.

Blake Hutcheson:

Yeah, there you go. Well, listen, I’m really fortunate to have grown up in a little town. I think it’s a microcosm of society. I think it was a privilege to understand how economies work and how communities work and you knew that when your family got a big job, you’d hire a few people, new houses would get purchased, and it would have a ripple effect. And so, I think I was really blessed to grow up in a small community. And both my grandfather and my father, they’re the successful ones in the family, not me.

Blake Hutcheson:

My grandfather was a great entrepreneur who built a lumber company of size. I think there were 45 countries in the world back in his time, and he was exporting product from that little town, to over 40 of them. And my father was a serial entrepreneur who used an aggregate business as his cash cow to build roads and develop small properties and things of that nature. I grew up with two entrepreneurs, those are two of my best friends. They influenced much of what I do. We used to sit around with my dad after dinner and collect his receivables.

Blake Hutcheson:

I went off to a couple of fancy schools, to Western, to London School of Economics, to Columbia. And each time dad would say, “I hope it taught you cash flow because that’s all that matters. And I hope it taught you some communication skills because that’s what you’re going to need. The rest of it’s noise. And so, get back to work.” Was he right? Those two skills, I’ll tell you, are probably the most important … You don’t have to make big pockets of money every year, but you need to keep the cash flowing or you’re not in business.

Blake Hutcheson:

You need a couple of pops when you’re young and a couple of pops when you’re old. The rest of the time, you have to be able to stay at the table, and 100% right. And I think communication skills, even accelerating today with all this technology, are absolutely essential for you and for me and for all of us. And that means all forms of communication, not just what we’re doing today. Those were true. And be true to yourself and trust people and expect the same back and work hard. There’s no substitute for hard work. Cycles.

Blake Hutcheson:

My grandfather often taught me the lessons of cycles, and it’s helped me to see through multiple cycles through my entire career and never overreact on the upside or the downside. Those foundational years with two …

Goldy Hyder:

Lot of wisdom.

Blake Hutcheson:

… those entrepreneurs have been really foundational to me and very helpful.

Goldy Hyder:

You said an interesting statement in that response, you said, being from a small town like Huntsville, helped you understand how economies work. And I want you to expand on that because this is a very urban country today. And yet we know the rural backbone of the economy and the role of the rural society in Canada. All around the world, there’s a lot of tension between urban and rural now. The urbanization is creating that. How do we deal with that here in Canada, country of this size, a country of this diversity and geography?

Blake Hutcheson:

Well, I mean, it starts with recognizing that those divisions aren’t a helpful place to start, that our communities are beyond anything that’s parochial, and that we need to try to get it right at all levels of government, all levels of business, all levels of society, as opposed to creating divisions and vacuums and issues. And the British North America Act laid out jurisdictions, which do create natural frictions in this country between the feds and the provinces, particularly. We happen to work for 1000 municipalities. They dovetail into the province.

Blake Hutcheson:

And I don’t know about you, but trust is the currency of the kingdom. And if you can work together, with governments, with business, with communities, with all stakeholders, you get things done, whether it’s in a small town or a big town. And by the way, if there’s no trust in the room, that’ll never happen. There was a great op-ed piece by George Shultz, I don’t know if you saw it at Christmas, 100 years old, just before he died, that basically said, “Trust is the gold of the kingdom.”

Blake Hutcheson:

And that when it’s in a room, whether it’s the locker room, the classroom, the boardroom, the military room, you name it, anything can happen. When it isn’t in the room, nothing can happen. To me, the ticket for getting ahead as a society is putting down the differences, working together in a trusting way. And small towns do that. All the goodness that comes out of small towns is volunteerism. It’s the various clubs because there’s not big checks to cut of people lending their time, whether it’s beaches or raising money for hospitals are or theater or arts of any nature.

Blake Hutcheson:

It’s all volunteerism. It’s a community spirit. When the city councilors are on the same street as the police and the firemen or the firefighters and the business people and the teachers, it’s hard to differentiate. We’re all in the soup together, you got to get along. And so, those are things, to me, that are foundational.

Goldy Hyder:

Yeah, fundamentals.

Blake Hutcheson:

And they’re fundamental. And the urban versus rural, you understand, because infrastructure tends to get to urban locations where you can amortize it over more people. The rural acrimony is probably well founded. But to me, we just have to think more as a community, we have to interact more as a community, and we have to have more trust.

Goldy Hyder:

There’s a lot of wisdom in that answer. But one of the themes I want to pick up on is that notion of trust. It’s fragile. It takes a long time to get it, pretty easy to lose it. Most studies say that people are losing trust, in fact, in institutions, and in many cases, CEOs. What do we do about that?

Blake Hutcheson:

Well, it’s everywhere, right? I mean, what’s happening in China and U.S./the Western world comes down to one simple thing, a lack of trust. And for good reason, both ways. I’m not saying one’s more right than the other. It starts at the very highest level. And when people promote their own agendas and it becomes deleterious to trust and when it happens, at the top of the food chain, it ripples right down through. And so, leadership starts at the top, setting a tone on the top matters.

Blake Hutcheson:

And sadly, in society, we’ve had a lot of people at the top of the food chain who haven’t been setting great examples. We don’t need to get into examples. There are lots that haven’t and lots that have. I don’t know. I mean, I’ve also seen studies that say relative to politicians and other thought leaders in our society, people are listening more to CEOs.

Goldy Hyder:

Indeed, that is true.

Blake Hutcheson:

And the truth is, it’s a privilege to have these responsibilities and it’s also taking into consideration. I work for one of our Maple 8 Canadian pension plans. I take the responsibility very seriously. I’m privileged to work for 500,000 people. But I also think it’s important to use this platform from time to time to make my country a little better, to make my province a little better, to weigh in on issues where we can influence public policy, or we can influence thinking. And it is, I think, incumbent upon our leaders to do more than worry about their bottom line. It’s to use the exquisite platforms that they’ve been given the opportunity to lead to make a difference.

Goldy Hyder:

Well, I would say that COVID has served just that purpose. The stories that we’re hearing on these podcasts, of people who put country above all else, the health and wellbeing of their people above all else. You said it yourself earlier. And I think that over time, it’s about Canadians and others appreciating the partnership and the role that business leaders play. It’s very interesting, the recent survey showed that people trust the communications from their employer more than they trust the media or more than they trust others.

Goldy Hyder:

It’s very enlightening that they would say that, so a lot of positives to build on there. Forward looking, we talked earlier about that’s really your schtick. That’s what you’re supposed to do and do well. What do you see in 2022 here in terms of at least a Canadian picture on the economy. And more broadly, is there a reason for optimism here?

Blake Hutcheson:

My approach to running any business, and probably especially this business, is my fundamental view is if you focus on your people, if you focus on your culture, if you focus on your brand, and if you are forward looking, results come. And a Canadian pension plan, we often joke, a quarter is not three months, a quarter is 25 years. And so, in order to build for 25 years, I want the right people, the right culture, the right brand. We have to be forward focused, innovative, on our toes, thinking about the future, adapting, finding new opportunities, finding new ways.

Blake Hutcheson:

When that happens, the future looks after itself. And I think that’s very consistent with anybody who’s running something that’s a 60-year-old institution that will be here for 160 years. And I fundamentally believe, by putting those main things in place, the rest will follow. In terms of the short term, Goldy, I’m very optimistic. I’m incredibly optimistic. We have low debt levels across our platforms at a very cheap cost of funds, which we’ve all enjoyed for a long period of time.

Blake Hutcheson:

We have a wide aperture to high growth areas with businesses that are unlocking outsized returns. There’s definitely some inflation on the horizon, which on one side of our balance sheet hurts from a paying pension standpoint. On the other side, we are largely exposed to privates, infrastructure, and real estate are roughly 45% of our book. And last time I checked, when there’s 4% inflation, $1 a year from now is worth 96 cents in your pocket and $1 a year from now is worth a dollar four in a hard asset.

Blake Hutcheson:

And so, when I sit here today, I like our portfolio, I like our positioning, people have money in their pockets, the stimulus has brought a lot of the good fortune to many of our organizations. Are there some headwinds on the horizon, including trillions of dollars’ worth of dry powder and capital available for good ideas, including the potential for rising interest rates, including the pitfalls of supply chains and what it’s doing to many of our markets, including some of the noise that we’re seeing that’s stultifying growth in China. Those are there, but we are incredibly optimistic.

Blake Hutcheson:

We’ve just finished a year, I can’t tell you my earnings yet. You’ll be impressed and pleased. I know our pensioners will. And so, it’s been a sensational year and what a turnaround from the year before. My view is for well positioned businesses, this is one of those times where there are outsized opportunities ahead, lots of reasons to believe in tomorrow, lots of reasons to believe in this country, and lots of reasons to believe in the future.

Goldy Hyder:

I think that’s exactly what our listeners are in the mood to hear. That’s well said, Blake. One area that a lot of companies, in fact, I would suggest almost every company I talk to on this podcast, is dealing with ESG and the importance of business leadership on the climate change agenda. What are you doing at OMERS on that front?

Blake Hutcheson:

Late last year, we announced a commitment that got a fair bit of press, that we are fully committed to a 2050 Net Zero program across our entire portfolio. Last year, we announced a 20% diminution in our greenhouse gas emissions between that period and 2025. Every five years, we will renew our approach and our targets and our goals and we will adjust our book accordingly. I know the innovation of our team. I know that legislators will be working with all of us to get there.

Blake Hutcheson:

I go back to the community effort, it will require a community effort that is well beyond our platform. And again, I’m hopeful. And so, we’ve made some pretty far reaching goals. We’ve made some very specific short term goals. Today, we have about $18 billion invested, which is call it 20% of our book in properly classified green assets. We are ambitious to look at green bonds. We continue, depending on the business, to find new low carbon opportunities. And so, we’re very much focused in the game. It is a priority. And we’ve got a plan.

Blake Hutcheson:

I will say, though, as a Canadian, I’m equally proud of the approach we’re taking, which is one that takes into consideration who our stakeholders are. We’re an Ontario-based plan that’s in this country called Canada. We’re significant investors in Canada, and the future success of Canada will affect all of us profoundly. And so, the flip side of all the points I’ve made in terms of where we’re opening our investment aperture is that we’re not going to divest of assets for the sake of it.

Blake Hutcheson:

We believe that we can invest in well-placed, well-meaning transition fact-based companies in this country with a view towards helping not just their bottom line, but society at large. I think Canada has a pretty unique opportunity to help the world get off certain high carbon options, coal and otherwise, outside of our borders. This isn’t a domestic conversation.

Goldy Hyder:

No.

Blake Hutcheson:

And so, everything in our plan is in recognition of being here in the Canadian context and trying to work with our legislators and other businesses in this country, to help us all arrive in a safe place together and not at the expense of each other.

Goldy Hyder:

That probably sets up my second to last question here rather well, which is we’re asking all of our guests this year, is there a big idea that you think could transform Canada? And if so, what is it?

Blake Hutcheson:

If you got a couple hours, I got about 40 for you.

Goldy Hyder:

You got a Coles Notes version of this I can listen to?

Blake Hutcheson:

Well, I’ll just draft off your ESG question, because I think that’s the most topical today and it goes back to my small town roots. It takes a village to tackle this problem together. And the only big idea is to stop communicating goals and objectives on an isolated basis, company by company, division by division, province by province, and at a national level, because that’ll never get us to where we all aspire to, to arrive. And so, I’ve watched … I saw Australia announce a $12 billion investment this week in a gas plant that will generate $125 billion of GDP, incremental growth, which will help the neighbouring countries bring their emissions way down, even although it probably means that’s a pretty high carbon plant for a period of time.

Blake Hutcheson:

And so, I’m not saying that’s right and I’m not saying it’s wrong. But what I do get concerned about is trying to get to the place we need to get to without a long term plan, involving business, involving governments, involving the citizenry who are engaged in this topic, being very thoughtful about it in five-year increments, and collaborating and working with each other, not against each other. That, to me, is probably the topic of the day.

Goldy Hyder:

It’s probably a very Canadian response to some extent. We know our own selves well. We’ve got to work together better, is what you’re saying in essence.

Blake Hutcheson:

Yeah, and I haven’t seen enough of it yet. And I think we’re all being asked to take this on in isolation and we don’t win in isolation. We win when we work together.

Goldy Hyder:

Well, speaking of winning, and this is probably the most important question I’m going to be asking, at least for Ontarians I suspect, if not more, you’re in the business of predicting the future, you can look way down the field here. In this case, I need you to look down the ice to June. Is this the year that your Leafs hoist the Stanley Cup above their shoulders?

Blake Hutcheson:

Oh, man. I’m old enough to remember the last time.

Goldy Hyder:

That’s why I’m asking. Things are cyclical. Every 50, 60 years, these things happen.

Blake Hutcheson:

I’m an optimist. I’m an optimist. I got to believe. I got to believe. Yeah, absolutely.

Goldy Hyder:

Absolutely, he says with a lot of confidence.

Blake Hutcheson:

Absolutely.

Goldy Hyder:

Worst case scenario, the boys can join you playing lacrosse, which is I understand how you spend your summers anyways.

Blake Hutcheson:

Yeah, that’s a better game, at least for me it is. And I still play. I’ll give you the math. I grew up playing. There’s a Masters league that’s 35 and older. This would be my 25th year. And I still play with my friends from my hometown, many of whom are OMERS members. And they have my back on the floor and I have their back in terms of their future pension. And they don’t ever stop reminding me.

Goldy Hyder:

I was going to say.

Blake Hutcheson:

And I need their support on the floor. I’m still playing. It’s still part of what excites me to wake up in the morning. And I feel most blessed to be playing that game, which is our national sport. Some forget it. We have two national sports, a summer and a winter. And I think we live in the greatest country in the world. And I think we have an unbelievably huge opportunity here at this window in time to work more together, to unlock some pretty exciting things together. And OMERS has a big role to play in that fabric.

Goldy Hyder:

Well, Blake, it’s because of leaders like you and people like you that that’s possible. Thank you for doing this, and thank you for sharing, not just the OMERS story, but your own story. I think listeners leave here a lot wiser than they came in.

Blake Hutcheson:

Appreciate you asking, and keep up the good work. We’re proud of you.

Goldy Hyder:

Thank you so much, my friend. Blake Hutcheson is the president and CEO of OMERS, the Ontario Municipal Employees Retirement System. If you would like to hear more of our Speaking of Business conversations with innovators, leaders, and entrepreneurs, I encourage you to subscribe to our podcast. Search for Speaking of Business wherever you get your podcasts, or simply go to our website at thebusinesscouncil.ca, that’s thebusinesscouncil.ca. Until next time, I’m Goldy Hyder. Thanks for joining us.