CEOs deal with losses bigger than financial ones

Business leaders help grief-stricken staffs

Terrorism Strikes America

September 23, 2001|By LOS ANGELES TIMES

NEW YORK - 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 companies were directly affected by the World Trade Center attack Sept. 11, Kneeley fell back on his instincts and resources - and found how deep they were.

Chief executives of hundreds of businesses hurt by the terrorist attack 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 - 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 cost Wall Street some of its most glittering talent. Family-owned financial firms such as Keefe, Bruyette & Woods, Cantor Fitzgerald, Sandler O'Neill & Partners, Fred Alger Management all lost family members.

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, eventually being swept away with the dust and 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 company's 77th-floor office in 1 World Trade Center, the north tower .

Though he wasn't sure what had happened, Kneeley began calming shaken workers, then led people down the stairs. All 20 of the workers in the office got out safely.

It was Kneeley's co-worker and fiancee, Donna Swanson, he said, 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 where they were working that morning crumpled to the ground.

They flagged down a passing car. By cell phone, Kneeley called his Chicago office, which by then had become a communications center for the stricken company. Others from his office had called Chicago to say they would meet at a 42nd Street law firm where one of their spouses worked.

En route to the law firm, 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 the borrowed office, 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 bombing there in 1993 was frighteningly high. By some estimates, nearly half of the 350 companies in the complex 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 the 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.

To get where they are, most corporate leaders have learned to hide their emotions and project as hard-charging, can-do types. Yet in disasters, especially where lives are lost, employees, shareholders and customers may be more likely to respond to a CEO who wears his heart on his sleeve.

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