One Year After Katrina, New Orleans Employers See Operations in New Light

By Bridget Testa

Aug. 25, 2006

Despite the difficulties of life in New Orleans one year after Hurricane Katrina, business is returning to normal for many organizations. That doesn’t mean things are the same as they were before.

The catastrophic hurricane, which caused $135 billion in damage as it roared through Louisiana and Mississippi in late August 2005, marked a permanent shift in the region’s business and workforce operations.

Employers such as Sodexho, State Farm, Entergy and Tulane University struggled with common post-hurricane issues for their workers. They had to find emergency and temporary housing, provide financial assistance, extend health insurance and other benefits beyond the usual sign-up dates, relocate personnel and put people back to work.

These organizations, and quite possibly every business and institution in the city, have documented the lessons learned and are developing plans for the future so they won’t be unprepared should another catastrophe hit. For Sodexho and State Farm, the effort closely follows disaster planning, whereas Entergy and Tulane have made more structural business changes.

Finding and paying employees
Immediately after Katrina, food and facility services provider Sodexho faced its biggest challenge: finding its 1,400 widely scattered New Orleans employees. The company went to great lengths to locate them, bringing in personnel from unaffected states to look for workers at their homes. They also assembled teams to make phone calls and rented a plane with a banner bearing Sodexho contact information to fly over the Houston Astrodome, where thousands of people from New Orleans had been relocated in the weeks after Katrina. It also set up an 800 number so employees could access information and leave their contact numbers and addresses.

Once Sodexho located employees, its next challenge was paying them. “The majority of our New Orleans employees are food service workers, housekeepers, porters and utility workers,” says Sharon Matthews, senior director of corporate human resources. “They’re an hourly wage population, and they live paycheck to paycheck.”

The solution: “We wired money to hundreds of locations,” Matthews says.

Today, 70 percent of Sodexho’s New Orleans employees are back on the job in the city. The other 30 percent either quit or never contacted the company and were terminated on December 31. The company hired replacements for them, and its 75 primarily educational and hospital services accounts in the city are up and running.

Finding and paying 1,400 employees in a crisis spurred Sodexho to develop a new employee tracking system. Employee location data had to be input manually into a spreadsheet after Katrina, but the new system is Web-based. The 800 contact number established during Katrina has become the company’s lone disaster number. “We also now ask employees to regularly update their contact information,” Matthews says. “We want not only their numbers in New Orleans, but elsewhere too.”

Once Sodexho located employees,
its next challenge was paying them. “They’re an hourly wage population, and they live paycheck to paycheck. We wired money to hundreds of locations.”
–Sharon Natthews, Sodexho

Wire transfer remains the best emergency method for Sodexho to pay its hourly employees, who are most comfortable with their weekly paper checks. “We have done a big campaign on direct deposit,” Matthews says, “but we don’t try to force employees to do anything.”

Sodexho is also looking for a way for employees to take company information with them in the event of another disaster. It hasn’t quite settled on the final form, but the content will include what to do, whom to contact at the company and how to do it, and the information the company will need from the employee. Sodexho has also established an executive team whose members will make emergency decisions. It’s proactively contemplating disasters that could be worse than Katrina. “There is already a task force working on avian flu,” Matthews says.

Personnel reserves
For insurer State Farm, dealing with disaster is core to its business. It’s not surprising that the company has a specially trained catastrophe services force of 2,600 employees ready to travel to stricken areas within 24 hours and stay for as long as six months to handle claims.

Independent adjusting firms, with whom State Farm has contracts, assist the first line of defense by dispatching adjusters to ease the workload.

“After Katrina, we had a shortage of re­sources, even with our catastrophe services people,” says Morris Anderson, a spokesman for the company. State Farm called on its independent adjusters, asking for additional help beyond the contracted numbers. “As an example, whereas we may typically have had 150 adjusters committed from a particular company, we may have asked them for 50 more,” Anderson says.

Ultimately, 2,750 to 3,500 independents were called in to handle claims in Louisiana, in addition to the 2,600 catastrophe services employees. Today, about 100 to 150 State Farm employees remain in Louisiana, handling claims from Katrina and Hurricane Rita, which devastated the region just three weeks later, causing an estimated $10 billion in damage.

Expanding the number of adjusters requested from independent firms and using its operations center technology to handle claims virtually are two methods State Farm has added to its arsenal of emergency plans. It’s also trying to establish a bigger pool of temporary clerical employees who could help with the paperwork that would follow another Katrina-size crisis. “It was a big challenge to get enough people [to Louisiana],” Anderson says.

Decentralizing HQ
Energy company Entergy’s corporate headquarters staff of 1,500 was housed in two buildings in downtown New Orleans when Katrina struck. Afterward, corporate headquarters was temporarily moved to Jackson, Mississippi.

“Our challenge was finding housing on the fly for 1,500 employees,” spokes­man Morgan Stewart says. Entergy responded by paying for housing for employees from October 1 through July 31. By the end of that period, the 1,000 employees whose homes were destroyed or otherwise rendered inhabitable had been able to file claims and find new lodging.

Entergy also created the Power of Hope Fund, which raised $4.2 million through donations from employees, the industry and the company. The funds were distributed to employees through more than 4,000 grants averaging $1,000 each. Operation Restore Hope brought in donations of furniture, clothes, cleaning supplies and other necessities throughout Entergy’s operating region of Arkansas, Louisiana, Mississippi and Texas. Employees took what they needed, and the rest went to the Red Cross.

The experiences were incorporated into Entergy’s new business continuity plan, which was created “to deal with the storm but also any catastrophes in the future,” Stewart says.

“We learned how to redeploy and provide housing and furniture for employees,” Stewart says. “We did that on the fly after Katrina, and we’re now solidifying that as part of the planning process. We also learned that corporate employees didn’t all have to be in the same place. We could distribute them.”

The knowledge that corporate headquarters and its staff could be decentralized came in handy when the company moved its headquarters back to New Orleans in April. One of the two buildings it had previously occupied was ruined, so employees were shifted to other locations. “The majority are back in New Orleans, but there are operations that have moved,” Stewart says. “We’ve established primary offices in Hammond, Louisiana; Little Rock, Arkansas; and Jackson, Mississippi.”

Corporate employees associated with those operations have moved with them. Hammond will host back-office functions. Little Rock will become the company’s information technology center, in addition to serving in its original role as the company’s Arkansas headquarters. Jackson was already the company’s Mississippi headquarters and home to its nuclear power operations. Now it will also handle energy transmission functions. The Woodlands, near Houston, had been home to system planning and fossil fuel operations. Now it will add some financial operations.

A university’s struggles
Tulane University, the largest private employer in New Orleans, sustained $400 million in losses, including $160 million in property damage, and the school closed for the fall 2005 semester. Of the 110 buildings spread across the university’s two city campuses, 85 were damaged by wind and flooding. Ultimately, only two buildings were irremediably ruined, but repairing and renovating the others was costly.

While nearly all faculty and professional staff returned to the university when it reopened in January, there’s still a severe shortage of skilled and unskilled workers to handle duties such as plant operations and maintenance, electrical needs, security, day care and custodial work. “We’re struggling to meet mandatory plant-operations personnel requirements,” says Anthony Lorino, CFO and senior vice president of operations for the university.

Tulane has increased wages to better compete for trade employees in a city where hourly workers appear to be in shorter supply than professionals are. The university has also expanded job advertising to local television, print ads and billboards, in addition to ads on the school’s Web site.

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