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The Best-Laid Disaster Plans Are Merely Works in Progress

October 10, 2005
Related Topics: Change Management, Featured Article
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Even before Jennifer Raeder knew whether her own home in New Orleans was still standing, she was on the phone urgently trying to determine how many of her company's employees were safe. As director of human resources at Entergy, a 14,400-employee energy company, it was her responsibility to locate workers and help them get back to work.
Like most large companies with locations in the Gulf Coast, Entergy had plans for redeploying people in the event of a catastrophe. It knew how to make sure that payroll kept running and bills got paid. What it did not anticipate was the staggering number of employees whose homes would be damaged--more than 1,100.
By looking at the human resources experiences at Entergy and two other companies--Sodexho USA and McDonald's--employers can learn how to better prepare for the workforce management challenges posed by calamitous events. As a result of Hurricane Katrina, an estimated 160,000 homes were destroyed and 900,000 people lost their jobs. Economic losses total $125 billion or more.
From getting employees resources in spite of power and phone lines being down, to the larger issues of relocating and finding them housing, human resources executives are at the command center, making sure that company employees are ready and able to return to work.
For Entergy, whose New Orleans subsidiary filed for bankruptcy on September 23, keeping its workers is crucial to its survival. The firm pegs damage from Katrina at $750 million to $1.1 billion, including $325 million to $475 million in damage in New Orleans.
"This is a job that requires 24/7 service to our customers," says Mike Bakewell, a New Orleans native and leader of the company's business continuity effort. "We need all the people we have."
Communication challenges
After a hurricane it typically takes companies a few days to locate all of their employees. With Katrina, it took three weeks. In its effort to find workers, Entergy posted 800 numbers on its Web site and broadcast public service announcements on the radio asking employees to call in.
At Sodexho, a company in Gaithersburg, Maryland, that provides facilities and food services to hospitals and universities, the process of locating employees was more complicated. With 1,400 employees at 35 separate client sites, the company wasn't sure who had evacuated. After two weeks, the firm still hadn't heard from 430 employees.
Realizing the urgency of the situation, Peri Bridger, senior vice president of human resources for Sodexho North America, leased a plane to fly over Houston with a banner instructing employees to call its 800 number. Sodexho also placed three human resources managers and several district managers at the Astrodome to work with the Red Cross to serve food to evacuees.
"We found 110 employees, but then those people got shipped to other places," says Peter Gerard, senior director of human resources. "The problem was you kept finding people and they would disappear again."
Since both regular and mobile phone service was down for several days, many companies relied solely on sending text messages through their cell phones, which worked even though regular mobile phone service was down. Entergy had satellite phones, but Bakewell still struggled with getting messages to all 10,000 employees who were in the field working to restore power.
To address the problem, he had fax machines--and generators to run them--shipped to all the staging areas where employees were working, and faxed out daily status reports updating employees about where power had been restored and what still needed to be fixed. "These people were working 14- to 16-hour days," Bakewell says. "The least we could do was give them a sense that their work was doing something."
McDonald's, which had 200 restaurants and about 8,000 workers in the disaster zone, took a grass-roots approach. Two days after the hurricane hit, Steve Russell, senior vice president of human resources, set up a command center with 40 staff members in the company's Chicago headquarters.
Russell instructed managers taking calls to encourage dislocated employees to go the nearest McDonald's and post a sign with its 800 number. About 1,500 workers, or 19 percent, are still unaccounted for. The company assumes most have relocated to other states.
Administrative hurdles
Once employees did call in to work, often their first concern was getting paid. Because of power outages, many banks and ATMs were out of service for days. At Sodexho and McDonald's, where many workers do not have direct deposit and often live from paycheck to paycheck, this was an urgent priority.
"Usually when something like this happens, you can just send money to the neighboring town," Gerard says. "But in this situation, there was no place close by that wasn't flooded."
Gerard had three human resources directors searching the phone books for banks that could dispense the cash it needed. "We were talking about tens of thousands of dollars," Gerard says. The issue was that most banks didn't have power or phone service, and even if Sodexho could get someone there on the phone, the bank would have to be willing to cash its payroll checks without being able to electronically verify that the funds were there.
After 48 hours, Sodexho identified a few banks in Meridian, Mississippi, that were willing to supply the cash. Gerard and his staff also wired money to human resources managers in areas close by, like Baton Rouge, Louisiana. Many managers personally delivered the money to employees at various locations where they were staying.
McDonald's Russell made use of a pay card arrangement through Bank One that had begun as a pilot plan a couple of years ago. The program was designed to transfer employees' paychecks electronically to cards that the employees could use like debit cards.
"We never thought of it as something to do for an emergency situation, but it proved to be a great solution," Russell says. McDonald's distributed 2,000 pay cards to employees.
On top of getting paid, employees were also worried about being able to go to doctors out of state and getting refills of their medicines. Making sure that workers continued to have health care was easier than getting their paychecks to them because many health care providers lifted time restrictions on refills and allowed policyholders to go out of network without paying a penalty.
Sodexho is promising employees health care and jobs for now, but on September 16 it stopped paying employees who had not returned to work. The firm looked at what other companies were doing in terms of employee pay and then discussed what it could afford to do, given that so many of its clients' operations were down, Gerard says.
Sodexho also is giving employees up to $2,500 in grants through a fund the company set up. McDonald's agreed to pay employees for the two weeks following the hurricane, and has provided more than $500,000 in loans to needy employees. The amount of the loan depends on the employee's status with the company, Russell says, declining to elaborate.
Entergy, on the other hand, is paying workers until it finds them jobs within the firm. "This was a decision we made early because we need these people to come back to work," Bakewell says.
Race for housing
Before Bakewell and Raeder could begin focusing on finding housing for their displaced employees, they had to figure out what to do for the 10,000 Entergy employees pouring into the disaster area to restore power. By September 7, the company had set up tent cities in seven locations throughout Louisiana and Mississippi equipped with cots, food, water and medical supplies for all of its workers.
The tent city concept had always been part of the company's disaster recovery plan, but this was the first time it had been put into action.
Sodexho's Gerard had a similar issue. During and after the storm, three of its Louisiana hospital clients--North Shore Regional Hospital, West Jefferson Medical Center and Slidell Memorial Hospital--remained open. But many of the employees working at the facilities had either lost their homes or driven to work from places located hours away. They needed a place to stay.
Gerard paid $52,000 for seven 27- to 39-foot camper trailers that each sleep six to 10 people and have kitchen facilities. Other employees are sleeping in empty hospital rooms.
McDonald's leased 24 two-bedroom condominiums and reserved 24 rooms in a hotel in Biloxi, Mississippi; 30 hotel rooms in Gonzalez, Louisiana; and 10 trailers in campgrounds outside of Biloxi where employees are living until they can find other housing. The company also has created a Web page featuring available jobs and rooms in the homes of McDonald's employees.
"We have a number of employees that are offering their home to displaced workers, and we are facilitating matching them up," Russell says.
Similarly, Sodexho is allowing employees to open their homes to displaced workers, but the company is hesitant to make it part of corporate policy. "This is unchartered territory," Gerard says. "We wouldn't want someone to offer their home and have something bad happen and then we have corporate liability."
Before Gerard could start reviewing the 200 pages of notes he had on how Sodexho responded to Katrina, reports of Hurricane Rita dominated the news. This time the company was proactive. It had established an 800 number, had disseminated it to employees and was collecting contact information for storage in a single database.
Since company officials didn't comprehend Katrina's magnitude initially, there was a delay in getting emergency contact information to employees. But the company was able to get fact sheets out to district managers three days before Rita hit.
McDonald's is discussing a system that could get its own hurricane damage status reports to company officials. In Katrina's wake, it took several days for the company to get a sense of the extent of the damage to its restaurants and employees' homes. Next time, Russell wants to have procedures in place to get such information, rather than rely on government agencies.
The rebuilding process for McDonald's has begun, but it still has 70 restaurants closed and does not know when they will reopen. In the meantime, the company is allowing evacuees to work in any restaurant they choose, and will continue that policy until all stores are back up and running.
For Sodexho, an ongoing challenge now is relieving hospital staff. "We have employees working in severely understaffed conditions in 10-day cycles," Gerard says. The company has leased cars so managers can carpool from nearby areas like Baton Rouge and Lafayette to relieve them.
In recent weeks, Entergy has identified internal jobs that can be filled by displaced employees and is focusing now on getting housing for them. So far the company has relocated 1,500 employees. With hundreds of thousands of customers still without power from Katrina and Rita, and no timetable for when the New Orleans office will reopen, its employees are taking it day by day.
Raeder, who is temporarily living in a furnished apartment near the company's Clinton, Mississippi, office, recently learned that her New Orleans home is still standing. But she and many of her colleagues don't know when they will return home.
"None of us knows the answer to that question," says Bakewell, who is also living in temporary housing. "We're here indefinitely, with a job that has to be done. We aren't even at the point of asking the question about returning home."
Workforce Management, October 10, 2005, p. 23-32 -- Subscribe Now!

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