For CEOs, a Test Like No Other
Nobody taught John Kneeley the hugging part, and at first he wasn’t sure how well he handled it.
It isn’t in Lee Iacocca’s autobiography or Donald Trump’s or in any business school curriculum. Like scores of other chief executives whose firms were directly affected by the World Trade Center attack last week, Kneeley fell back on his own instincts and resources--and found out exactly how deep they were.
Chief executives of hundreds of businesses hurt by the attacks face enormous challenges in comforting families and co-workers of victims while also rallying their troops to carry on.
Perhaps their greatest challenge is that the sheer magnitude of the destruction, and the psychological effects on workers, goes far beyond anything most business leaders--or anyone else, for that matter--have been trained to handle:
* A total of 286 businesses, associations and government agencies had offices in the two towers, according to real estate research firm CoStar Group. Including damage to surrounding buildings, the attack gutted one-fifth of the office space of lower Manhattan, the capital of global finance.
* The attack decimated some of Wall Street’s most glittering talent, at financial firms such as Keefe, Bruyette & Woods, Cantor Fitzgerald, Sandler O’Neill & Partners, Fred Alger Management--family firms that all lost family members.
* The dead and missing include nationals from 62 countries on every continent but Antarctica. As of Thursday evening, 241 people were confirmed dead and 6,333 were listed as missing, with hope for their lives all but vanished.
* Gone are computer data, licenses, contracts and other documentation that in some cases are irreplaceable. Paper files that constituted the sole historical archives of some businesses rained from the sky for minutes after the towers collapsed, littering streets for blocks around and eventually being swept away with the dust and other debris.
* Experts estimate the material toll--in insured damage alone--will exceed $30 billion.
What business manager could have boned up for a test like this?
John Kneeley thought he was prepared for anything. The 37-year-old had co-founded a small technology consulting firm, Martin Progressive, in 1996, and guided it into a competitive spot, with Fortune 500 clients and offices in several cities.
But on the morning of Sept. 11, Kneeley’s personal leadership test began with a violent jolt. The impact of the first jetliner blew out the windows of the firm’s 77th-floor office in the north tower of the World Trade Center, sending pictures and other bric-a-brac flying.
Though he wasn’t sure what had happened, Kneeley came out of his office and began calming shaken workers. He led people down the stairs, even as he personally expected to be back in the office cleaning up that evening. All 20 workers there that morning got out.
It was Kneeley’s co-worker and fiancee, Donna Swanson, who had the presence of mind to grab two briefcase loads of computer tapes containing financial records, contracts and other crucial data. Without the tapes, he said, he would have no business.
Through swirling black dust on the streets below the trade center, Kneeley and Swanson made their way north. Behind them, the tower crumbled to the ground.
They flagged down a passing car. Kneeley grabbed his cell phone and called his Chicago office, which by then had become a communications center for the stricken firm. Others from the New York office already had alerted Chicago to say they would meet at a 42nd Street law firm where one of their spouses worked.
En route to the borrowed office, it occurred to Kneeley that when he arrived, “There are going to be 40 people who are looking to see how I respond to this.”
Once inside, he hit the ground running. “I said, ‘Let’s start making lists: who was up in the building, who should have been up in the building, and people we shouldn’t need to worry about.’ We started pretty quickly behind that calling around for space, knowing that there was going to be a couple million feet of space missing from Manhattan.”
Spurring Kneeley on was the knowledge that the failure rate among small-business tenants in the World Trade Center during the 1993 terrorist bombing was frighteningly high. By some estimates, nearly half of the 350 companies there at that time subsequently went out of business.
“They failed for reasons of not reacting quickly enough, not having a contingency plan,” Kneeley said. “We also did know we had to make a very strong statement of being back with office space.”
Kneeley had it all covered, it seemed.
For small businesses such as Martin Progressive, the issue is survival.
At larger, public companies, chief executives have been pushed hard in recent years to focus on shareholders, to deliver wealth to investors through cutting costs, developing new markets, boosting worker productivity and whatever else it takes.
But in a human crisis, management experts say, the CEO has to put shareholders and even the fate of the company aside and concentrate on the hardest-hit constituency--be that customers, employees or the public at large.
Jim Burke, chairman and CEO of Johnson & Johnson during the 1982 Tylenol scare, continues to be held up as a model for putting consumers first.
When a handful of people died after ingesting cyanide-contaminated pills, Burke ordered the recall of some 31 million bottles with a retail value of more than $100 million, a move that caused J&J;’s market share to drop 7%.
The number of tampering cases was so small that a more limited response might have been justified, but Burke wanted to send the most powerful message of reassurance possible.
“They performed well in the Tylenol crisis because they followed the part of their credo that said consumers’ health comes first over profits,” said Ian I. Mitroff, USC business professor and author of “Managing Crises Before They Happen.”
Not incidentally, the goodwill that flows from selfless behavior can lead to tangible gains. It can’t be quantified, but business experts are certain there is real money in the halo that still surrounds Johnson & Johnson.
By the same token, missteps in a crisis are harshly judged.
Executives at Ford and at Bridgestone/Firestone have been roundly criticized for finger-pointing in the wake of fatalities and serious injuries from tire blow-outs. In trying to assign blame, the companies have been seen as placing corporate pride ahead of consumer safety.
Expressing Emotions Not Easy for Some
In the World Trade Center disaster, of course, the key constituency for a CEO is not customers or the outside world, but employees and their families.
Since leadership at its heart is a dialogue between the top brass and the troops, the way a CEO communicates and even the way he or she feels can determine how effectively a crisis is handled.
To get where they are, most corporate leaders have learned to hide their emotions and project themselves as hard-charging, can-do types. Yet in disasters, especially where lives are lost, employees, shareholders and customers may be more likely to relate to a CEO who wears his heart on his sleeve.
But expressing emotion may be a skill that can’t be taught.
ESPN sportscaster Chris Berman once said it’s useless to try to develop a persona for the camera. You might as well be yourself, he said, because after a few hours in the spotlight, that’s who shows up.
Nobody who saw a sobbing Howard Lutnick last week doubted those tears were real.
In anguished television interviews, the chairman of Cantor Fitzgerald, one of Wall Street’s toughest trading firms, said losing his brother and about 700 other employees--many in their 20s and 30s--had changed the way he wants to spend his life.
“I’ve got to take care of these families,” he said. He also pledged $1 million to a Cantor Fitzgerald foundation for families of all trade center victims.
Lutnick has become the “role model of the CEO in crisis,” said Alysia Vanitzian, a vice president of the Employers Group, an association of 5,000 California companies.
So naked an expression of grief would not be welcome in every business setting, however.
Japan’s Fuji Bank lost 19 employees, including 12 Japanese nationals, who worked on three upper floors of the south tower.
Immediately after the attack, Fuji’s Tokyo headquarters got in touch with the missing workers’ families in Japan to let them know what was happening, spokesman Shuji Yonezawa said. Bank managers and senior officials followed up with visits to the families’ homes.
“As we think about the family’s pain and feelings, we haven’t felt it appropriate to provide a blanket response,” Yonezawa said. “Even if the head of the company doesn’t say it, our employees all share the same feeling--that we care about each other.”
The tone of the response may seem austere--cool, even--but it is in keeping with what Japanese employees expect from their leaders, according to a Japanese diplomat.
“People want to solve their problems by themselves,” said Akihiko Ishimoto, an official in the Japanese consulate in New York. “They don’t want to talk about their misfortune with people from the outside, just with friends and relatives.”
In the United States, even at large firms, “the CEO’s natural instinct is to step in and take charge of everything,” said Stephen G. Hanks, chief executive of engineering giant Washington Group International. “In this context, you just can’t do it. First, you’re not qualified, and second, you can’t be everything to everybody.”
Hanks learned that firsthand when his wife phoned him as he was about to begin an early-morning management meeting at WGI headquarters in Boise, Idaho. Turn on the TV, she told him.
The first jetliner had just struck the north tower. WGI had a 91st-floor office with 190 employees in the south tower.
WGI’s employees had begun evacuating, reaching the 78th floor before a voice on a public-address system encouraged them to return to their offices. About five WGI employees went back upstairs. The second jet struck the tower minutes later.
WGI had a crisis management manual for industrial accidents. Hanks assembled his top managers and began ticking off a checklist in the manual. They assembled a phone bank to try to account for everyone. By Thursday, 13 people still were missing.
The company arranged benefits for victims’ families, brought in counselors and transferred workers from elsewhere to relieve New York staffers who aren’t ready to return.
Hanks considered making personal visits to the families of missing workers but was advised it might be too stressful for them, at least at this early stage. He plans to visit all of them over the next six months, however, to “extend our appreciation and our condolences.”
“I’ve never had to do anything like this,” said Hanks, a 23-year veteran at WGI. “There really isn’t a rule book here.”
Dealing With Tragedy by Focusing on Work
For some workers, sheer work is therapy, and it helps to have the boss matching them step for step.
Kevin M. O’Kane and his brother, Hugh J. O’Kane Jr., run Lexent, a company based near Wall Street and founded by their 86-year-old father.
They do telecommunications contracting and won a lot of business by responding effectively to the 1993 bombing, which knocked out critical phone equipment in the basement of the complex.
Since Sept. 11, Lexent crews have worked nonstop under the streets of lower Manhattan to recover service for customers such as AT&T; and WorldCom.
When the south tower collapsed, the dust cloud blackened the view from a nearby office where Kevin O’Kane already was mapping out Lexent’s response.
Like Kneeley’s company, Lexent was fortunate to not lose employees. But O’Kane’s crews are hard-hat New Yorkers. They play softball with cops and firefighters. Everybody knew somebody who died.
“I lost three friends in that,” said Kevin O’Kane, his voice dropping.
There was work ahead, however. Lexent crews needed the O’Kane brothers “to provide them with the structure they needed to do what they know how to do. Being focused on the task at hand has helped us deal with the tragedy,” Kevin O’Kane said.
Ed Reilly, president of the Manhattan-based American Management Assn., said executives overall are acquitting themselves well.
“The word around New York is that people are coping with this, the business community is pulling together,” Reilly said.
With a few days’ distance on his own initial performance, Kneeley sees where he slipped. “My response at first was very mechanical, ‘the company’s coming back together,’ before I realized these guys didn’t really care. They wanted to hear caring in my voice as well,” he said.
“I think I was ill-informed in terms of what people were looking to me for. People were looking for the humanitarian part. I kind of took a double-take with that. They don’t just want to hear that the company’s going to do fine. There have been a lot of long, long conversations with people, that they’re all right, that we need to thank the Lord that we’re OK.”
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Times staff writers Mark Magnier in Tokyo and Evelyn Iritani in Los Angeles contributed to this report.
