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Global Business Under Siege

January 1, 1997
Related Topics: Global Business Issues, Managing International Operations, Featured Article
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Wednesday, 8 a.m: The crisis team is in a sweat. Maps, loose documents, marking pens, scrawled notes litter the large oak tabletop in the boardroom. Talking to the group is the head of security. Around the table sit the CEO, the general counsel, the director of public affairs, the CFO and the director of HR.

“Yes, it’s true,” says the security chief. “As you know, Murphy — who’s head of production and quality control for our Latin American operations — was meeting with local managers for our assembly plant in La Republica. He has been reported missing. Yesterday, after he failed to arrive at his meeting, our local manager, Mr. Jimenez, called his hotel. Murphy wasn’t there. Neither was his rental car. Jimenez checked again this morning. His luggage is in the room and he hasn’t slept in his bed. He has been missing for 24 hours.”

Questions around the table: Do we have a crisis yet? Are we going to call his wife to see if he called her? If she hasn’t heard from him, how are we going to handle that?

The phone rings. It’s Murphy’s secretary. His wife called because he hadn’t called home the night before. She’s worried. More questions: What should the secretary tell the wife? Do we want to call the local police? Do we know if the police in La Republica are corrupt? Incompetent? Do we want to enlist their help to see if he’s in a hospital? Have we made any friends in the government? Maybe the U.S. Embassy would be the better place to start. What if it’s a kidnapping? What is our policy on paying ransoms? Is this a country where payment is illegal?

Four hours later. The group is sure it’s a kidnapping. A man with a tough-sounding voice gave Jimenez directions to where he would find ransom instructions. There’s a handwritten note from Murphy to his wife and a neatly typed one demanding $3 million.

The tension is palpable. How shall we deal with the authorities? The HR director is concerned about employee morale. Four other expatriates live in the area. What about Murphy’s family? Should we give his wife the handwritten note? Who will make an emotional assessment of her? Will she be able to withstand this pressure, or might she become so stressed that she’ll create new difficulties for the company? Is the family in danger? Should we send someone to the country to assist?

Another phone call. A writer from The Wall Street Journal has heard that an executive has been kidnapped and is calling for a quote. How will we handle the media? Do we know a journalist at this or another publication who will work with us?

A note is passed to the security chief. Another executive — an expatriate from another company — also is missing. And there’s whispering that during the recent labor strikes, threats were made against company personnel. How do these events affect our hostage? What do we do?

It could happen to you.Although this story of terrorism is fictitious, it’s played out in real life again and again in varying scenarios with varying degrees of success. It’s performed equally often in simulations by crisis management teams at companies with managers who realize they need to prepare — and practice — if they’re going to do business in a dangerous world.It’s not just the fiery jetliner terrorist attacks we hear about in the media. In fact, these are quite rare — although public reaction to them is strong because the acts randomly target a broad audience, creating a sense of general alarm. It’s also the estimated 10,000 to 15,000 kidnappings each year, threats against products and death threats to corporate executives.By the definition in Webster’s New World Dictionary, terrorism is the “use of force or threats to demoralize, intimidate and subjugate” individuals. Terrorism most often is used to describe acts of violence that are politically motivated. Similar acts of violence are economically charged. In some countries, the degree of civil unrest and the level of serious crime are as virulent as terrorism. Extortion, shipment hijackings and the increasing episodes of violent street crime are examples of this. Global HR managers must be competent to address all threats to overseas personnel and resources, regardless of the motivation.“It’s not a peaceful world,” says Brian M. Jenkins, deputy chairman in the Los Angeles office of Kroll Associates, an investigative and security firm. “Depending on how you count them, there are several dozen wars, armed conflicts, [areas of] guerrilla activity and major terrorist campaigns taking place around the world. And better than 60 percent of all international terrorist attacks are directed against the private sector.“In addition to armed conflicts and politically motivated conflicts, there’s growing organized crime that’s a reflection of the end of the Cold War in the former Soviet Union and Eastern Europe, and the economic liberalization of China.” In fact, asserts Jenkins, “When it comes to these economically motivated activities again, clearly the corporations are the No. 1 targets because they’ve got the deep pockets. This is strictly business. These are new dangers that companies aren’t used to.”
And there are a lot of businesses venturing out into the global marketplace. While it used to be only a small number of firms — the oil companies and the construction firms (and their tight, protected communities of expats) — with global operations, today relatively modest companies are beginning to operate internationally. To illustrate the point, a 1996 United Nations report indicates multinational companies almost doubled international investment in 1995 to $315 billion (U.S. companies alone doubled their 1994 figures to $96 billion).The effect of terrorism and crime on these companies is astounding. Although dollar amounts are hard to come by, an estimate by the U.S. Office of Counter Terrorism put the cost of one London bombing by the IRA (Irish Republican Army) at $1.5 billion; the cost of a kidnapping may run $2 to $3 million.But, it’s not just about money. These threatening environments have a significant impact on people — as companies try to recruit people to these locations, coax them to stay on the assignment and ask them to abide by the security measures. It’s about the morale of the people who are there, and if a major event occurs, the morale of employees corporatewide. What is the impact on families? How will the environment affect lifestyle and freedom of movement? Will expats have to live like fugitives? Thus, HR is integral to front-line defense, and there’s much HR can do because security is really a people issue. It involves assessing the risk, designing and living with security and responding to any crisis.

Global risk assessment is a logical first step.Companies such as Kroll Associates, Control Risks Group and International SOS Assistance Inc. are in the business of understanding risk and helping prevent and prepare for it. “Businesses are obliged to do very sophisticated global risk analysis,” says Jenkins. “Firms must look at a wide spectrum of dangers.”
From national disasters to man-made terrorist attacks, the key question is this: If this plant shuts down, what’s the impact on the rest of our company? If the plant is the only maker of a component part required by other divisions of the company, what will happen if the part is unavailable for a week? You see this division of labor particularly in high-tech industries in which chips and other components of computer systems are manufactured all over the globe.
“Short period shutdowns can have cascading effects on the business,” says Jenkins. And plant shutdowns mean loss of work for employees. The biggest area of vulnerability is always the effect of an attack on people. So, the real issue is protecting people, including those who operate the plant.How would you go about your first venture out? A wise move is to consider consulting with a firm that specializes in global security. Obviously, each company has its own specific needs with its own specific culture that will help formulate its security measures. But every company interested in protecting itself and its people should begin with a thorough evaluation.
That means asking such questions as what are the political situation and the economic situation in the countries you’re moving into? What are the local security risks? What is the business environment? Is there a lot of corruption? Will the bidding process be fair? What about the security of information? In many parts of the world there’s aggressive industrial espionage, particularly in highly competitive environments and developing nations.

Choose a security system that fits your environment.Once the initial assessment has been made, the next step is to answer some questions about security. Evaluate questions such as what kind of security program do you need, and what are the likely costs? This is the point at which to develop an overall strategy. What kind of security system for the facility is necessary? Will the company need guards, alarms or a fence around the perimeter? Will it be best located in a high-rise with tight security?The assessment should extend beyond the confines of the corporation. A look at local conditions should help in determining where employees should live. Do they need to live in compounds, or will they be safe in regular housing? Do they require drivers or other forms of guards? Are there ways to alleviate the stress of tight security measures?
“While the details vary from company to company and country to country, your goal is not to present a soft target. You’ve got [to make your company and employees] as hard a target as possible so [terrorists and criminals will] go elsewhere to find a victim,” says Frank Waldburger, director of Security Services for Philadelphia-based International SOS Assistance Inc.Products need to be protected, too. One of the major problems in the world right now is the theft of computer chips, easier to transport than gold. A truck carrying this high-stakes cargo to market is worth millions of dollars. A company needs to assess how to protect itself against hijackings, thefts and armed robberies outside of the facilities.

Be prepared for surprises.Finally, despite all the security efforts, events will occur. It may be a threat against a product, a bomb scare or a catastrophe that shuts down operations. Any of these could create a major crisis. Therefore, a key ingredient to the success of any crisis management is to identify the key people who would make decisions, create a crisis management team and define what its members will do. Identifying individuals and creating a crisis management structure consistent with the corporate structure (will it be centralized or regionalized, for example) is a crucial step. Then, the team should train and practice. And the company needs to determine at what point to call in security consultants.Most security firms can help develop procedures and manuals. They’ll aid in creating evaluation plans. But it’s important for individuals on the crisis management team to know these procedures before they need them -- and to practice implementing them.One crisis team simulation by Kroll Associates proves the point. The crisis management team of a food manufacturer had undergone a simulation three months before an actual product tampering. When the real problem occurred, it took 48 hours to identify the situation, alert the individuals who could remedy it, remove the product from the shelves, conduct the necessary laboratory tests and reinstall the safe product. The crisis was averted. According to the company, without the practice, it would have taken much longer to respond and the company even might have lost market share.

HR can help expatriates and traveling executives by keeping them informed.HR plays a vital role in every stage, from the preparation through the crisis response. One of its most vital roles, however, is keeping employees safe by guiding travelers toward the tremendous array of information services and daily bulletins available through specialized services online or via the telephone. These services provide travel advisories and give detailed descriptions about recent happenings relating to security and politics.One fairly comprehensive source of information about terrorist activities you should be aware of is the U.S. Department of State’s “Patterns of Global Terrorism” Web site (http://www.hri.org/docs/USSD- Terror/93/append.html). Here you can find a chronology of significant incidents and background information about terrorist organizations.“HR should give employees and their families as much information as possible about the destination. They should be as straightforward as possible about the dangers and what the cultural issues might be,” says Shirley Gaufin, currently vice president of human resources at Pasadena, California-based Parsons Corp. and formerly vice president of HR for San Francisco-based Bechtel Group Inc. Gaufin was employed by Bechtel when it relocated 16,000 people during the height of the Gulf War to the Persian Gulf. Moreover, she says, “Put them in touch with others who already are at the job site, provide adequate R&R or home-leave, be sure there’s adequate medical care and evacuation services, if necessary.”These are efforts the Church of Jesus Christ of Latter-day Saints also advocates. Currently the church has 50,000 volunteers around the world. These individuals are missionaries and support staff and their families. Because of the nature of their work, they always live among the population. Furthermore, a high percentage are 19- and 20-year-olds, many of whom never have been out of the United States before. Consequently, says Richard Bretzing, managing director of security for the Church, the church creates a strong community in the destination to provide support for these individuals.Knowing how crucial it is to keep people informed, the Church has a very effective communication system -- so missionaries constantly are receiving communication from the United States. “One thing is necessary and very helpful: maintaining contact with the expatriate community in whatever environment they’re living. Embassies are helpful in keeping them informed about the changing security environment.” When there’s trouble, he says they depend heavily on the strong relationships they have established both with American embassies around the world and host governments.Benefiting from the experiences of other corporations and preparing to handle events in the most effective ways will make a positive impact on the financial picture. Most importantly, keeping the company safe translates into keeping employees secure.Charlene Marmer Solomon is a contributing editor and co-author of the new book “Capitalizing on the Global Workforce: A Strategic Guide for Expatriate Management.” E-mail charsol@aol.com to comment.

Global Workforce, January 1997, Vol. 2, No. 1, pp. 18-23.

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