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September 2006
The following article is based on The Center’s August 2006 webinar (a web-based interactive presentation of audio and video, polls, and audience questions). Archived video and audio of past Center webinars are available to Center members on our web site, as are reports similar to the one below. To learn more about Center webinars, contact Kit Manning.
In recent years businesses have become an integral part of disaster relief efforts. The U.S. business community raised $750 million after Sept. 11 and $1.2 billion after Hurricanes Katrina and Rita, with more than 250 companies giving more than $1 million each.
On a global scale, the 2004 tsunami in Southeast Asia prompted unprecedented international support from the U.S. business community, which contributed $566 million in cash or products and services. Compared to aid from governments, only four countries contributed more. Every industry and sector gave, regardless of whether it had business connections in the area. Almost 150 companies gave more than $1 million each.
In August 2006 The Center for Corporate Citizenship at Boston College hosted a webinar for its members to discuss what experts had learned from their experiences managing disaster relief, recovery, and reconstruction, and how businesses could prepare for “the next big one.”
Guest speaker Stephen Jordan, Vice President and Executive Director of the U.S. Chamber of Commerce Business Civic Leadership Center (BCLC), discussed BCLC's Business Disaster Assistance and Recovery Program, which brings together major stakeholders in disaster response — regional and federal representatives from business, relief and charity organizations, and government — to work toward better coordination strategies for disaster response. (BCLC’s publication, From Relief to Recovery, looked at the 2005 U.S. business response to the Southeast Asia tsunami and Gulf Coast hurricanes.)
Also presenting were two executives from Kaiser Permanente: Dinah Dittman, National Director of Community Relations, and Skip Skivington, Interim Vice President of Supply Chain and Director of Operations for Operations, Procurement, and Supply.
The Response Process
According to Stephen Jordan, the disaster response process has three vital components: lives (health and welfare); living environments (shelter, infrastructure, schools, hospitals), and; livelihoods (reviving businesses and jobs).
The response to a humanitarian crisis is a five-stage process, each requiring different responses from business:
- emergency response
- relief
- recovery
- reconstruction
- mitigation and preparedness
“Businesses play only a minor direct role in the emergency response phase since it involves maintaining public order and search and rescue efforts, which are usually best left to the civil authorities,” said Jordan. “They certainly have a role in providing funds and products for relief, but it is a role common to all contributors, not unique to business.”
Business’s special competence, asserted Jordan, is in helping with recovery. When it comes to repairing or reconstructing infrastructure, businesses have the strategic skills, knowledge of the business environment, and patience to assist with what is both longer term and more technically complicated. Finally, every business in a potential impact zone, which excludes few businesses, has the responsibility of preparedness and mitigation.
Jordan emphasized that in order to be effective, businesses must not only prepare themselves but also help their communities prepare. When choosing which community organizations to partner with, it is important to look not only for expertise, but also financial rigor. It takes experience and rigorous systems to monitor cash and prevent shrinkage in chaotic situations like a disaster, so look for a proven record and expertise in financial control.
Why Businesses Get Involved
Businesses have a number of motivations for getting involved in disaster assistance, said Jordan. Perhaps the strongest motivation is direct impact — companies have to respond when they are in the impact area.
They also respond because of pressure from employees or because of company values. Or they may be reacting to stakeholders — for example, when their supply chain or customers are affected or expect them to help, or when the government or NGOs request assistance.
Media exposure also plays a role in raising expectations among stakeholders, employees, and customers. Relief workers often remark on what they call a “CNN effect,” that once a disaster hits the news, there is always plenty of assistance.
When deciding whether to get involved, individual companies should assess the severity of the disaster, the public authorities’ capacity to cope with the situation, and the business’s own capacity to help based on its budget, capabilities, and logistics.
Lessons learned about the recovery process
Businesses should keep in mind a number of key facts as they design, implement, execute, and monitor their disaster assistance programs:
1. Embedding recovery early in the process is crucial for the return of a community; if people do not return to their community in six months, the likelihood of them ever returning decreases significantly.
2. Disaster recovery often comes in two booms: the first, the “nostalgia boom,” is driven by those who return and want things to be just as they were before the disaster. As people realize that some of the old patterns will never work again, however, a second boom is driven by new patterns of activity. Be ready for that second wave.
3. Risk management and capital access go hand in hand. Without access to insurance, developers will stay away.
4. Successful recovery is driven by “magnets,” whether beach front property, new industry, or incentives, and subsidies.
5. Expectations may get distorted. Most companies are not in the disaster relief business, and getting involved may reduce their capacity to commit in other areas such as assistance to schools or hospitals.
Advice to business
Jordan’s final advice for business included:
- Pre-plan communications, partnerships, contingencies, and goals — but always leave room for discretion.
- Separate pledging from committing in order to distribute the money pledged more equally among relief, recovery, and reconstruction.
- Communication is key. Brief employees and stakeholders about both process and goals.
- Consider supporting either a specific niche or the entire disaster process, but don’t just provide relief.
- Don’t fund start-ups. Work with organizations you know, or that have a proven track record.
- Restrain unsolicited initiatives and unaffiliated volunteers.
- Ask for results and plan for the future. The stakes are too high not to ask for high performance or to embed mitigation against future disasters.
Kaiser Permanente’s experience
Kaiser Permanente engages approximately 148,000 employees and caregivers and more than 12,000 physicians, serving more than 8.5 million members in nine states and the District of Columbia.
After Hurricane Katrina, Kaiser Permanente offered a multi-pronged response to the relief efforts, including cash contributions, medical assistance, and significant volunteer support.
According to Skip Skivington, although there were 3,000 Kaiser Permanente physicians and employees volunteering to assist with disaster relief, the logistics in the field of coordinating with federal and local health officials were challenging. Also, being willing to volunteer and being able to cope with the realities of disaster relief sites were two different things. Conditions in the field were very rugged and minimal, and included staying in the shelters where care was delivered. The two Kaiser Permanente medical teams that deployed to Houston, at the invitation of local health officials and the Surgeon General’s office, encountered severe shortages of medical supplies, long working hours, and cramped and minimal accommodations. However, each of the 43 Kaiser Permanente staff who volunteered in Houston, and the over 200 others who served through the American Red Cross and other relief organizations, said that they were honored to do so and would quickly volunteer again.
Another recurring theme: Communication is key. During Hurricane Katrina and other major natural disasters in 2005, Kaiser Permanente’s senior vice president for Community Benefit sent an email every Friday to all employees and physicians updating them on the situation and the company’s response. However, because many employees did not have access to computers at work, printed flyers were also distributed every week by union stewards. The company also maintained a web site with important information and links, such as The Better Business Bureau’s Wise Giving Alliance and VolunteerMatch, to help employees be educated donors and volunteers.
The company also found great benefit from daily coordinating calls with a cross-functional Disaster Relief Steering Committee. Dinah Dittman said that having a fixed time for these calls made it possible for people to call in from wherever they were and to coordinate staff recommendations to senior management regarding the company response to changing disaster relief needs in the field.
Disasters require long-term recovery efforts
In the midst of the disaster, people tend to focus on people over place, the immediate over the distant, and the dramatic over gradual improvement. Therefore the relief stage gets much more attention than recovery and reconstruction.
After Katrina, people learned that preparedness needs to begin much earlier in the process, with more attention to capital access, insurance, investment, and infrastructure. Because they know this terrain, businesses are in a good position to advocate for and devote some of their resources to recovery and reconstruction, and distribute money pledged more equally among relief, recovery, and reconstruction.
Businesses also have an important role in advocating for more generous and timely gap financing for those affected by disasters. The U.S. Chamber of Commerce helped the government set up business relief funds in New York City after Sept. 11 and in New Orleans after Katrina, offering small businesses $500 to $10,000 to support their cash flow until they were up and running again after two or three months. However, a FEMA study found that the challenge for most small businesses is not re-opening their doors but keeping them open, with a 40 percent failure rate for small businesses in the impact zone after one year. While the SBA is quick to approve funds, its dispersal lags far behind — at the moment they still have yet to disperse $4 to $5 billion already approved.
Finally, your company may have more experience in certain areas relevant to disaster relief, recovery, and reconstruction than the relief agencies themselves. At present, 75 percent of the business aid contributed is in cash, either from business coffers or raised from employees and customers. Only 25 percent is in goods and services. You might consider shifting some of your company’s contribution to areas of its expertise when it is greatly needed.
How to measure success
Because each disaster is different, an absolute benchmark of success is difficult. Relief, recovery, rebuilding and preparedness all have their own goals. For relief, it is how few lives are lost, how little property damaged, and how little disruption the community suffers. Redevelopment aims at risk reduction and market opportunity — how quickly income, jobs, and the number of businesses bounce back, how good is the infrastructure, what is the quality of the design. New Orleans is making a major effort to rebuild its levees in order to send a signal that it is safe to build, insure, and invest there again.
In the end: offer your own expertise
Businesses have a role in contributing and raising money for disaster relief, but also in offering stricken areas and populations their core competencies, both philanthropic and non-philanthropic. Because Kaiser Permanente is a health care organization, it was able to get on the ground and provide medical relief services after Hurricanes Katrina and Rita. Most companies lack that competence, and can only provide funds or goods during the immediate relief stage. However, they should look at how they can contribute their own special expertise, especially in the recovery and reconstruction stages, after the television cameras have moved on.
This article is based on The Center’s August 2006 webinar. To learn more about Center webinars, click here, or contact Kit Manning.
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