VideoWhen a major disaster strikes, business becomes personal. After the Gulf Coast was ravaged by Hurricane Katrina, Leo Denault, CFO of New Orleans–based Entergy Corp., Louisiana's largest company, spent much of his time on each daily management call trying to confirm the whereabouts of the company's 2,800 New Orleans–area employees. "At first, the number of missing people was very, very large," he says. Within a week, though, Entergy had located 99 percent of its workers. A weary Denault says finance-department employees are pursuing all avenues to find some still-missing colleagues, including tracking down children at college to ask if they've heard from their parents. To provide assistance to displaced employees and customers, Entergy has established the Power of Hope fund, with donations thus far totaling $2.7 million.
Charles Atwood, Harrah's Entertainment's finance chief, was attending to an urgent personal matter in the midst of pre-hurricane planning for the company's three area casinos: moving his 92-year-old mother from her home on the Gulf Coast of Mississippi to Las Vegas, where he lives. Atwood, who grew up in Mississippi, and Harrah's CEO Gary Loveman, who had lost his home in North Carolina to a previous hurricane, were both acutely aware of the possibility of a high human cost as they raced to help their nearly 8,000 employees in the affected area.
While the company has yet to determine the extent of the damage to its Gulf Coast properties, Atwood hasn't yet focused on that task. "People are a lot more important than buildings," he says. Harrah's established an 800-number for employee assistance at the onset of the storm and has received nearly 5,000 calls from workers seeking aid. The company has provided cash and shelter to affected employees, opening an assistance center in Gulfport, Miss. Atwood says competitors have called to offer jobs to displaced Harrah's staffers.
Like other small businesses in the Gulf region, PetroCom LLC, a privately held mobile-communications company in greater New Orleans, is racing to care for staff and restore operations within the next 90 days, before term limits expire on its business-interruption insurance. The insurance will cover lost revenue and relocation costs, which amount to roughly $5 million including property damage.
Things could be worse. In accordance with its disaster-recovery plan, 40 hours before Katrina hit, PetroCom started making hotel reservations and relocating administrative personnel to Houston and technical staff to Lafayette, La. About half of its 70 employees were evacuated, and were provided with medium-term lodging, money for personal expenses, financial-aid forms, and maps.
By returning some degree of normalcy to those displaced, PetroCom also restored worker productivity more quickly. "In the end, I think we're saving money, because we got back online from a revenue-producing perspective a lot faster and have notified vendors that, for example, our shipping address has changed," says CFO Dennis d'Aquin.
PetroCom's major operational challenge was that dedicated phone lines it leases from BellSouth and AT&T for out-of-network calling were down from the flood. To restore service, its insurer agreed to cover costs to build a new network facility in Lafayette, where the company now reroutes calls through its satellite.
Its more troubling problem — and one facing many Gulf-area businesses — is housing for employees. While its Harahan, La., headquarters was largely untouched, about 20 percent of PetroCom's staff lost their homes. D'Aquin doesn't know how much the Federal Emergency Management Agency or homeowners' insurance will help PetroCom cover employees' personal expenses. Its board of directors has started a fund to help. "Depending on how long this [relocation] lasts, money may run out," he says.
He also worries that employees will want to return to New Orleans before PetroCom is ready to move back, or that they will decide to leave the area entirely to reunite with family members relocated to other cities. "The struggle with the employees is going to be in three to six weeks, when Jefferson Parish says it's open for business, and we tell our employees, 'You cannot move just yet, because the department needs to operate and be supervised as a group,'" explains d'Aquin. "We will need to stay together in Houston for at least 60 to 90 days."
Three young employees who were not New Orleans natives have quit since being relocated.
While d'Aquin claims that nothing other than the hurricane's severity surprised him, he would still like to improve disaster preparation. For starters, he hopes to guarantee long-term lodging in Houston and Lafayette to his employees. He also wants to rebuild the new Lafayette hub in Houston and is in negotiations with the company's insurers to have them cover that cost, but says that reimbursement "remains to be seen." — Craig Schneider and Kate O'Sullivan
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