After the Storm

Life for the business community in New Orleans has certainly been a struggle since Hurricane Katrina and the subsequent floods virtually destroyed the city back in August 2005. For some companies the financial strain was impossible to bear; nearly 7900 businesses in the city and state of Louisiana closed between the second quarter of 2005 and the fourth quarter of 2006. Regrettably, many of the businesses lost have been small, family-run establishments with a long history in the city – irreplaceable in the eyes of local residents and the thousands of tourists who’ve frequented the city. On the bright side, two years later surviving businesses are finally getting back on their feet; most encouragingly, considering there is still much work to do, the city is proving a breeding ground for new entrepreneurial opportunities unconnected to its traditional oil and tourism industries.

“Katrina had an incredibly devastating effect on many businesses, especially small companies,” says Robin Keegan, Director of Economic Development at the Louisiana Recovery Authority. “Most of the businesses in New Orleans and the state are small, with 10 or 20 employees. Many of these were not only hit by Katrina, but also by Hurricane Rita three weeks later. People lost their business, and their homes too. Records from their businesses were submerged in water and just sat there for weeks. The impacts were tremendous in terms of physical, tangible loss – business continuity records, the migrations of local populations, and the virtual end of tourism. Katrina left a significant impact on these communities and businesses.”

Recovery since the disaster has been a slow and painful process, but the city is gradually reemerging and proving its resilience in the face of adversity. In many ways, Katrina has wiped the slate clean for the city, providing a multitude of new business opportunities. “Our city is rich with entrepreneurialism right now,” enthuses Keegan. “We’re rethinking everything. There is a particular focus on bringing in ways of building manufacturing with a mind to sustainability and hurricane resistance. There is a desire to make the city a greener place in terms of the buildings we are restoring. Business owners want to make sure our culture is preserved as we rebuild.”

Focus: Capital One

A few days before Capital One was set to acquire Hibernia Bank, Hurricane Katrina hit New Orleans. Matt Schuyler, Capital One’s chief human resource officer was widely reported to have taken dramatic and somewhat unique steps to assist employees and even soon-to-be employees. Like everyone in America, Capital One was stunned by the magnitude of the devastation left in the wake of the hurricane. “It was an incredibly difficult time for the people of Mississippi, Louisiana and communities throughout the Gulf Coast,” Schuyler says. “Hibernia associates – many of whom we’d already been working with closely to plan for the integration of our two companies post-acquisition – were not immune from the tragedy. They suffered devastating losses and it was a natural reaction for us to do whatever we could to help.”

Ensuring that Hibernia associates and their families were safe was the top priority for Capital One. With associates dislocated and dispersed to communities across the region and to other parts of the country communication was understandably complicated. Capital One did a number of things to overcome that challenge, including setting up a 24-hour employee information hotline for associates to check-in and report what assistance they needed. The bank also conducted extensive outreach online through web sites and blog postings to make people aware that help was available.

Capital One also sent teams to the area to help facilitate the bank’s efforts to get its operational systems and branches up and running again, in order to help meet the needs of its customers and the community as a whole in this difficult time.

The vast majority of Hibernia’s branches that were impacted by Katrina have been rebuilt or replaced and today, under the Capital One brand, the bank is carrying on the strong legacy of Hibernia and its commitment to its customers and communities. More recently, Capital One also acquired New York-based North Fork Bank and now has more than 730 bank branches in New York, New Jersey, Connecticut, Louisiana and Texas.

Although you might imagine the HR challenges presented post-Katrina were compounded by the acquisition process, this isn’t entirely true. “Our acquisition and integration planning processes began well before the hurricanes of 2005,” states Schuyler, “with teams from Capital One and Hibernia working closely together to establish a successful partnership and help ensure a smooth transition. This partnership helped position the bank to meet the challenges of restoring operations, reopening branches and responding to the needs of the 3100-plus impacted associates.”

The Capital One infrastructure and Hibernia business-continuity plans were utilized to restore bank operations as quickly as possible, and address needs and concerns of displaced employees and customers. The bank optimized technology to keep associates and customers updated on the bank’s status, from establishing toll-free hotlines posting messages online through message boards, and much more.

Since Katrina, businesses of all kinds in the city are faced with the challenge of recruiting in a city with a reduced workforce. “At Capital One, regardless of the market, we are always focused on finding and attracting the best people available and offering a workplace that’s second to none,” says Schuyler. “But today, although a lot of progress has been made, the New Orleans area is still recovering from the floods that followed Katrina. Attracting and retaining top talent is always a priority for Capital One, and we aggressively recruit for what is now our largest business-segment, banking.

“We have a variety of programs throughout Capital One to engage and retain our talented associates. For example, our focus on the Future of Work enables us to provide flexible work arrangements that give associates the freedom to balance their professional and personal lives. We’re creating an environment that supports work when and where it is most effective, while creating openness for better connection, collaboration, and innovation.”

The flexibility enables associate mobility with technology such as laptops, BlackBerry devices, instant messaging, and a VoIP phone system that allow users to activate their phone number at any workstation they select. These integrated offerings align with the flexible work arrangements that many managers offer to provide a tremendous amount of flexibility for associates to work when and where they are most effective – in the office, from home, or on the road.

Capital One also has an award-winning development program, which includes Capital One University and their Leadership Development Programs. “We’re proud that Capital One was named number two on Fortune Magazine's Top Companies for Leaders. We take great pride in this accomplishment, as it shows our commitment to retaining and developing our top talent,” confirms Schuyler.

Focus: Hancock Bank

Another bank that was severely affected by Katrina was Hancock Bank. Hancock is located in Gulfport, Mississippi, 15 miles from the landfall of Katrina. The bank’s headquarters are half a mile from the Gulf of Mexico. The hurricane rendered the building completely unusable. The head office contained all the company’s operations: professional back office, accounting, HR, data, technology. They lost almost everything. On top of this, six of Hancock’s banking facilities along the coast were completely destroyed.

Shane Loper is Chief Operations Officer, a title that makes him responsible for technology, human resources, operations functions, the customer contact center online banking, ATMs. “I’ve got a pretty wide array,” he smiles. “After the hurricane, we relocated our technology to the SunGard facility in Chicago, some of our operations to Baton Rouge (where we have a corporate facility) and other operations to Smyrna, Georgia. Today, our headquarters are back in the same building, which has been completely rebuilt. That was completed last March, when all our people back in the building.”

Today, the bank is back up to the number of employees they had before the hurricane. But, as Loper points out, the issue is not necessarily driven by the number of employees; “the issue is driven by being able to have people that will move into the area when we need a specific skill set, to get them to move into the area because of the housing costs, specifically driven by the inability to secure insurance at a reasonable level. It’s difficult for us to recruit talent from other areas, because those folks know that the housing cost here is high, insurance is high. Based on demand, the cost of labor has also gone up. As a bank we are back to the number of folks, but it’s difficult to recruit because of this labor pool.”

Luckily for Hancock, they’re managing to find the right sort of talent. “Lots of the people we’re finding are originally from here, and wanting to get back in this area. It’s just that the recruiting process takes us longer.” Also, as Loper says, putting together a good compensation package and having good incentives helps.

When I ask about the current employment outlook, Loper tells me he has just returned from an economic outlook seminar, where discussion was around the fact that between November 2000 and October 2007, there has been about a 20,000-job loss in the civilian labor force. “And when I say job loss I’m talking about numbers of people that are not here to fill jobs that were here in 2000,” he states. “Compare that seven-year period and we’ve lost about 20,000 people in that time period. That tells you that there’s a lot of folks that have left. They are trickling back as the recovery goes on, but slowly.”

Hancock also looks after new recruits by organizing housing. “For anybody that we recruit into the area, as part of our process we will deal with temporary housing as part of our bringing them back to the area to work for the company. The area has a number of initiatives that are underway, through the Gulf Coast Business Council and the Renaissance Corporation. They have very defined plans to secure grant money for building affordable housing. The business community – along with public leadership – have banded together to try to solve that as a community, as opposed to specific employers stepping in. So we as a major employer are obviously involved in those entities to help that get moved forward.”

Business continuity

Having a business continuity plan in place is essential for any company in case of disaster – as Hurricane Katrina so clearly demonstrated. The storm was an event almost incomprehensible in its magnitude, and was impossible to completely protect against. Nonetheless, having a robust business continuity plan in place is now more essential than ever, particularly when it comes to the safeguarding of records and data “One of the major problems in recovery for many of our small businesses, as well as many of our large businesses, was poor record keeping,” admits Keegan. “Records must be kept by electronic means, not just physical books. Companies need a backup system that is redundant and located offsite. This is a real critical mechanism for businesses.”

Other measures Keegan advises to have in place include having a contacts list so employers can find out where their employees are, and to have a disaster fund in place. “This fund can then mitigate the challenge of a business closure for a couple of weeks or, as it was in our case, a couple of months.” Finally, all companies should ensure that they are adequately insured, a measure many businesses did not have in place – resulting in an inability to cope with the financial implications of rebuilding and restarting their business.

New Orleans is already proving that there is light at the end of the tunnel and is slowly but surely creeping towards recovery. Encouragingly, a recent survey by the Political & Economic Research Council revealed that nearly two out of every three small-business owners say their long-term prospects of recovery are good and are positive about the future outlook for commerce in the city. Lloyd Dennis, for one, is optimistic about the long-term prospects. “Businesses are going to continue to do well here,” he predicts. “The city is in growth mode and there is a lot of investment around. Thanks to the huge amount of construction, there’s a lot of good wages in town, and businesses are going to do well as a result. I don’t know whether we will end up completely dependent on hospitality again, but as long as rebuilding is going on, the future looks good.”

Keegan also shares this confidence: “We have an energetic community of locals that are very supportive of their local businesses and want to make sure the city thrives. There is a lot of dedication to buying and shopping local. Owners have realized that they have a lot of capacity for changing their business models and strengthening their position so they are stronger than before Katrina. They have a lot of resiliency for staying open and contributing to the recovery of the city and state,” she concludes.

Capital One: the facts speak for themselves

Hurricanes Katrina and Rita had a devastating impact on the people, facilities and infrastructure of Hibernia. Capital One associates rallied immediately with resources to help the organization and future colleagues start their recovery.

• 3500 associates were displaced by Hurricanes Katrina and Rita
  
• Five weeks: Capital One associate volunteers staffed a 24-hour call center, to allow Hibernia associates to call in and report their status, all 3095 associates were accounted for
  
• 2900 associates received $1000 emergency grants
• 1000 associates were provided free temporary housing