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Dangerous Business

June 1, 2004
Related Topics: Workplace Violence, Global Business Issues, Expatriate Management, Safety and Workplace Violence, Featured Article

Pat Wuhrman was sound asleep in Baghdad in March when the first mortar shell hit about 500 yards away from his bed. As director of human resources for Iraq operations for Fluor, a 30,000-employee global engineering and construction company, the 54-year-old management veteran was in the Middle East to check in on the company’s 200 employees working in Iraq. He hadn’t anticipated that his mission would include diving for cover in his underwear as more mortar shells exploded nearby and a couple of U.X. Cobra helicopter gunships launched an attack from above.

    A few days after the perilous episode, Wuhrman returned to Fluor’s facility in Greenville, South Carolina, where he now handles the specific human resources issues involved in recruiting, hiring, paying and supporting employees in a danger zone. It’s a job that is getting more difficult by the day. Since his return there has been a steady drumbeat of escalating violence against U.S. contractors--including the grisly murder and mutilation of four contractors in Fallujah and ghe beheading of Nicholas Berg, an independent electronics specialist who’d gone to Iraq to help with reconstruction.

    One of Wuhrman’s primary tasks is to make certain he hires the right people and that they know what they’re getting into. "Before our employees go to Iraq, they have good comprehension of what they will be engaged in, and we review information about their assignments," Wuhrman says. "Our disclosure statements cover subjects ranging from unexploded ordnance to terrorist attacks."

    Much has been written about the huge salaries that employees can earn in Iraq and the hefty profits companies can make. Not surprisingly, money is a significant hiring incentive to those who volunteer to work in hazardous places. But Wuhrman says that money isn’t the only attraction. "A lot of people volunteer out of a sense of mission. Many do it for reasons of patriotism. Some go for adventure.

    "We don’t recruit except for going to a few job fairs for ex-military people," he adds. "People come to us. We have a database right now of 1,200 people who want to go to Iraq."

    A human resources executive might imagine that it would be tough to recruit employees to work 16-hour days that can begin with the donning of flak jackets and Kevlar helmets and a morning commute in a convoy with armed escorts on the lookout for men bent on murder and mayhem. But when salaries range up to $20,000 a month (with the first $80,000 per annum tax free), it’s not hard to find people with the right skill sets who are willing to live for months in giant shipping containers or mobile homes far away from their families.

    Because inflated salaries are powerful bait for luring employees to high-risk hot spots like Iraq, firms usually select their expatriate workforce from volunteers, as Fluor does, instead of using a "take this job or else" tactic. Short-term assignments and contracts--often three to five months of work, followed by a few weeks of rest and relaxation--are the norm. At the end of that time, employees usually are given the option of re-enlisting or coming home. Companies also prefer to send, or hire, people who have already proved themselves in challenging foreign posts. In the vast army of private security forces now in Iraq, which is estimated to be between 15,000 and 20,000, and is the third-largest contributor of armed forces after the United States and the U.K., military experience is preferred and security clearances are golden.

    Ideally, candidates are screened to make sure they’re not volunteering for the "wrong" reasons, and employers provide or contract out virtually every kind of employee support, from housing and food to satellite phones and videos. The ballooning costs of keeping employees safe and cared for can be borne because the government helps to underwrite the many unforeseen expenses involved in reconstruction.

    Even in relatively safe locations, the financial stakes for employers seeking to establish beachheads abroad are high. According to ComPsych Corp., whose services include employee-assistance programs and crisis intervention, a failed relocation for a top executive can cost a company as much as $500,000. "When you’re looking at a long-term assignment for someone making $125,000 a year, a [successful] three- to five-year assignment could cost the company in excess of $1 million, with the move itself the smallest of those costs," says Christy Quimby, ComPsych’s manager for international operations.

    No one keeps a tally of American civilians working in Iraq or tracks the number who have been killed or injured there. Many companies won’t even say how many people they have deployed and are mum when they are killed. Thomas Hamill, who was kidnapped in early April while working in Iraq for Halliburton subsidiary Kellogg Brown & Root, managed to escape from his captors in May. Still, Philip Deming, owner of Philip S. Deming & Associates, a security and risk consultancy in King of Prussia, Pennsylvania, says that the high--sometimes stratospherically high--salaries are offered for a variety of work in Iraq and other global hot spots to lessen concerns that job applicants and employees might have about being kidnapped, tortured or murdered.

    Deming says that Hamill is an example of an employee who "is exactly the kind of person you don’t want" to hire in a high-pay, high-stakes area. Low milk prices had forced Hamill to sell his cows and close his family dairy farm in Mississippi. His family was buried in debt and medical bills from his wife’s heart surgery. When people are motivated primarily by money, Deming says, they aren’t good hires. "They’re not in a constant surveillance mode," and take risks they can’t fully appreciate because they’re desperate. He says that better candidates are already financially secure, have proved their abilities in other hostile environments abroad, have displayed self-assurance in difficult circumstances, and are extremely flexible, inventive and adaptable in working with people of other cultures.

    In a written statement, a Halliburton spokesman responded with this comment: "It is a disservice to the individuals who volunteer to work on this dangerous mission [to state] that only individuals with international experience in similarly perilous and hostile territories are preferable hires. KBR is very clear in terms of this being a dangerous mission. Part of a recruiter’s mission [is] to talk potential employees ‘out of going.’ Mr. Hamil [sic] was hired because of his qualifications." Halliburton reported in early May that 33 of its workers have been killed since the beginning of the current conflict in Iraq last year.

"We did a survey of job-seekers asking, ‘If you could make twice your normal pay, would you accept a posting in Iraq?’  72 percent said yes."

Recruiting and hiring
    When Washington Group International began planning to bid on Iraqi contracts, it sent an e-mail to employees asking who would be willing to go there to work. Out of 20,000 surveyed, 400 answered yes. The kind of people attracted to Iraq are self-starting Robinson Crusoes who thrive on challenges in difficult conditions, says Jack Herrmann, vice president for corporate communications at WGI, an engineering, construction and management firm with 26,000 employees in 30 countries. "They’re ‘can do, get it done’ types," Herrmann says. Many prefer working in an environment with a stripped-down bureaucracy, a minimum of meetings and a dress code that stresses protective gear over suits and ties. "None of our people, despite the escalation of violence we’ve had over there, have asked to come back," he says.

    "We did a survey of job-seekers asking, ‘If you could make twice your normal pay, would you accept a posting in Iraq?’ " says Bob Podsiadlo, vice president of Think Resources, an Atlanta recruiting firm that specializes in power generation, delivery and installation work. Of the 616 respondents who completed the January survey, "72 percent said yes." Some employers dangle incentives much greater than that, Podsiadlo notes--three and four times the domestic average wage. The work opportunities in Iraq "materialized at the ideal time" for the many energy specialists left jobless after the collapse of Enron and the drying up of new domestic power-plant projects, Podsiadlo says.

    The enduring mystery is why salaries remain so inflated, given the profusion of qualified candidates willing to take these jobs. "Everyone feels these people are overpaid, but I don’t feel that way," says Robert Band, president and COO of Perini Corp., which has task orders and contracts in Iraq and Afghanistan for up to $1.5 billion. "These are very dedicated and loyal employees, and a lot of their satisfaction [derives from] getting a job done in a tough, tough place."

    Band declined to specify how many employees Perini has on the payroll in Iraq, but says that the company’s workforce is 5 percent American or British--most of whom occupy senior management positions--40 percent are "third-country nationals," and the rest are Iraqis, all of whom work as subcontractors or trade workers. Contrary to the notion that Iraq draws single, don’t-fence-me-in loners, only 15 percent of Perini’s expat workforce are single. Rather than recruiting new people, Perini prefers to send executives who have already proved themselves in logistically challenging locations such as Angola, Haiti, Nigeria, Liberia and Afghanistan.

    ComPsych Corp.’s Christy Quimby says that ideally, volunteers should be asked, "What is prompting you to explore this opportunity?" She says that many people may be trying to escape debt, avoid legal issues or end relationships. Such motivations are not necessarily deal breakers, she says, "but by running away from something, they’re not thinking about what they’re running to. Or they’re just thinking about the money."

    The bulk of employees that American companies are using in Iraq are Iraqis. They work for a fraction of what their American colleagues receive, but can present numerous challenges for employers. Many Iraqis complain that they are relegated to low-paying scut work when they are capable of doing the better-paid jobs that are being given to individuals brought in from countries such as the Philippines, Thailand and Afghanistan. But employers often find their hands tied because of bad decisions imposed early on by the U.S. military regarding civilian hiring rules, says Jean AbiNader, director of the Arab American Institute and owner of Ideacom. The company works with Berlitz to sensitize employers to working with Iraqis. Virtually any person who had an education or a decent job during Saddam Hussein’s regime was required to declare allegiance to the Baath party, AbiNader says. Yet any affiliation with the Baath party automatically disqualified an applicant for a U.S. security clearance. In late April, the American administration announced that it would ease its policy of "deBaathification."

    AbiNader advises his clients to "use Iraqis whenever possible, as opposed to third-country nationals, and spend time training them," and not just because doing so saves money in the short term. "That’s an investment in the future," which will help to change the negative opinion of the United States that so many Iraqis have. "Ten years from now, they’ll say, ‘The Americans gave me skills and opportunities,’ " instead of feeling resentful about having been exploited. Training the Iraqis to perform such jobs also helps to quell insurgency, AbiNader adds, and serves an even greater end: the creation of thoughtful and talented stakeholders in a new democracy. "We treat them like foreigners, when in reality we’re the hired help," AbiNader says. "They feel as if they’re occupied instead of liberated."

High costs
    Washington Group has so far booked about $450 million in task orders in Iraq. It may do as much as $3.1 billion in business there at the behest of the Coalition Provisional Authority and Army Corps of Engineers, but it is the company’s practice not to reflect numbers on its books until it has signed task orders for its various projects--repairing a turbine generator, refurbishing a hospital--in hand. It has the third-largest total possible contract capacity in Iraq, led only by Bechtel and Kellogg Brown & Root. Experts estimate that security costs have ballooned from 10 percent to 30 percent of all contract costs for American firms doing business there. Herrmann won’t comment on these estimates, but acknowledges that the costs are huge. Washington Group has hired two security guards for each of its 350 employees, 70 of whom are Americans, in Iraq. That’s 700 highly paid policemen who earn $500 to $1,500 a day.

    The question, of course, is how companies can swallow these extra costs. All the contracts WGI has in Iraq are "cost reimbursable," Herrmann says. Washington Group’s main client, the Army Corps of Engineers, "reimburses all our costs as long as they’re deemed reasonable."

    For companies involved in the construction of utilities and power plants, media organizations that supply the latest international news, or charities chartered to serve people rendered desperate by wars and political turmoil, toiling in hostile, perilous environments is part and parcel of the basic mission. Such organizations, as well as those whose extra security costs are reimbursed by government contracts, tend to have a much higher tolerance for risk than, say, a flower importer that may decide to forgo the dangers of using Colombia as a source for roses.

    Salaries for the Steele Foundation’s American security specialists, who are all ex-military, range from $10,000 to $20,000 a month in Iraq. After the increased insurance costs in general liability, emergency-evacuation protection, medical and dental, death and dismemberment, and mandated Defense Base Act coverage are added up, the total cost of insurance premiums paid to cover the company’s employees in the most dangerous areas of Iraq can be as high as $70 for every $100 spent in payroll, says Todd Lane, chief financial officer for the San Francisco-based firm. That means that if an employee is paid $100,000 for five months’ work, the additional cost to the company would be $70,000. (For Iraqi workers, who represent 75 percent of Steele’s 600-person workforce in Iraq, the cost is closer to $20 per $100 in payroll.)

    There can also be costs not usually associated with the relocation to a satellite branch. "A number of companies take out kidnap and ransom insurance, but they won’t tell you that they have it," says James McGinnis, a senior partner at Global Impact, a crisis management and threat risk assessment firm headquartered in Toronto. Should it be needed, the situation unfolds very much as depicted in the movie Proof of Life, starring Russell Crowe and Meg Ryan. "They have a third party come in and negotiate the ransom and give emotional and psychological support to the family," says McGinnis, a former member of Britain’s Independent Commando Squadron. Until April, premiums to cover valuable executives in high-risk places were about $1,000 a month, but now all bets are off, McGinnis says.

    As long as there is a dollar to be earned, businesses accustomed to operating in dangerous places find ways to maximize profits and minimize risks for the employees they deploy. When employers do decide to close up shop and go home, it’s usually because terrorism and violence have so decimated a region that there is no longer any money to be made, says Geoffrey Latta, executive vice president of ORC Worldwide, a benefits and compensation consultancy in New York. "There’s no money to be made because there’s no skilled labor force, no infrastructure," and no indigenous markets because of rampant, grinding poverty, Latta says. "We don’t even provide data for Liberia anymore. There’s just no demand."

Workforce Management, June 2004, pp. 32-40 -- Subscribe Now!

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