Business response seen as crucial to disaster recovery

By Beth McConnell Apr 6, 2006
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The U.S. private sector donated $1.9 billion in disaster assistance in 2005 in response to the Southeast Asia tsunami, the Gulf Coast hurricanes and the earthquake in Pakistan.

That total set new records in corporate giving for disaster relief and recovery, according to the Business Civic Leadership Center (BCLC), an affiliate of the U.S. Chamber of Commerce. Companies have learned lessons along the way about the need to coordinate with relief agencies before a disaster strikes to best use the money or products that they donate. Also, BCLC leaders said, coordinating with local governments and establishing a presence at the scene of the disaster are crucial to provide the best relief and recovery efforts.

“Developing relationships with [relief and charity] organizations, public/private partners—that will be the 2006 legacy. Those relationships will be strengthened,” said Stephen Jones, vice president and executive director of the BCLC.

In the BCLC report From Relief to Recovery: The 2005 U.S. Business Response to the Southeast Asia Tsunami and Gulf Coast Hurricanes, author David London notes that 148 companies each gave more than $1 million in response to the tsunami, and 254 companies each donated that amount following hurricanes Katrina and Rita. As a whole, companies gave $104 million to relief efforts for the Pakistani earthquake.

About a quarter of the value of these donations were products and services, London wrote. Prior to 2005, the largest corporate outpouring for an event of any kind happened after the terrorist attacks on Sept. 11, 2001, totaling approximately $750 million in aid.

Last year was different because of the number and extent of the disasters, London wrote, as well as the “breadth and depth” of the private-sector involvement. Companies large and small, across the country, participated in disaster relief and studied how to make their internal and external disaster responses more efficient. Media attention raised awareness of the magnitude of destruction.

London profiled several top companies for their successful relief and recovery strategies. They shared some common attributes, he said in a webcast to discuss the report’s findings:

    • They had plans in place and policies to follow in the event of a disaster.

    • They donated cash and products and used their core competencies to make the most of the gifts.

    • They relied on local expertise.

    • They built on relationships with trusted nongovernmental organization partners.

    • They demanded accountability and transparency.

However, Jones noted, the goal is not to tally up which companies gave the most money.

“At the end of the day …we need to define solutions: How fast are people able to get back into their communities, restore the business community, how long was the quality of life disrupted. We can save lives, but if they don’t have communities to come home to, then the work is only half done,” Jones said.

Showing success in giving

Before 2005, private-sector businesses were rarely involved in the operational side of disaster response, London wrote in the BCLC report, and little effort was made to share information or cooperate with government and volunteer responders.

That changed after Sept. 11, London noted. Businesses played a significant role in communications, relief and recovery following the natural disasters in 2005.

The Dow Chemical Co. not only donated its products—such as filters and water purifiers—but also reached out to its suppliers to provide necessary items to the tsunami victims, London said in the webcast. “It expanded the response from the company and better strengthened the supply chain relationship,” London said.

Dow drew on its partnership with Habitat for Humanity, formed in the 1980s, to help through the recovery effort as well. “They’re offering sustainable solutions, like water management training, not just materials,” London said. “They teach communities how to better and more conservatively live and use their resources.”

Dow is studying how to establish an emergency team to respond to future disasters, London said, to protect the company’s interests and advocate for the communities where the company is located.

“Nobody can do disaster response alone,” said Dan Runde, director of the Global Development Alliance Secretariat for the U.S. Agency for International Development. “Companies bring resources, in-kind and cash, and expertise or on-the-ground information” from the employees who live in the affected area.

Companies got creative with how they used their donations and employee expertise for the tsunami victims. General Electric used nearly all of its resources, from providing water purification to sponsoring a star-studded televised fundraiser on NBC, London said. Jones added that Pfizer, the drug research and manufacturing company, dispatched a team of experts in post-traumatic stress disorder.

Still, more than a year later, recovery is slow in Indonesia. Of the 140,000 homes destroyed, 30,000 have been rebuilt. However, London said, funding exceeds demand: An estimated $10 billion is needed for recovery, and $10.5 billion has been pledged. More than $7 billion has been collected.

The private sector drew on the knowledge gained from the tsunami relief to help direct its recovery efforts after the Gulf Coast hurricanes, the BCLC said. Ford tapped the expertise of nearly all of its employees, compiling a cross-functional team from senior management, finance, human resources, marketing, government relations, security and information technology. Ford donated 275 vans, pickup trucks and SUVs, and it let the St. Bernard Parish Sheriff’s Department in Louisiana have the use of its mobile command center.

“By involving a range of departments in the planning process, Ford applied broad skill sets to the Katrina response,” London wrote in the BCLC report. “Finance officers offered advice on cash contributions while government relations representatives worked through the red tape.”

London noted that Ford sent specialists to St. Bernard to train them on how to use the command center. And despite the decline in the automotive industry, participating in the relief effort boosted employee morale, and senior management is committed to continuing through the recovery phase.

Wal-Mart’s close partnership with the Red Cross got even closer after Hurricane Katrina, London said during the webcast. The Northwest Arkansas Chapter of the Red Cross assigned a team member to Wal-Mart’s emergency headquarters to serve as a liaison. “The merging of different disaster responders is exemplified here,” London said. The U.S. Department of Homeland Security also depended on situation reports from companies including Wal-Mart to shape the government’s response.

With 168 retail/wholesale locations, four distribution centers and 65,000 employees in the Gulf Coast area, Wal-Mart had a huge investment to protect. It has contributed $18 million in cash to the relief effort, $15 million in cash assistance to impacted associates, $8.5 million from customers and associates, and $3.5 million in merchandise.

Lessons learned

The BCLC recommends that businesses, non-profits and local governments adapt the following:

Engage locally. The businesses that contributed so significantly did so because of their understanding of the issues in the impacted areas. They depended on local business units and were informed by individuals in the disaster areas.

Overcome cash-vs.-product biases. While many relief agencies prefer cash donations, which can be applied to any need that arises, companies actually find it easier to donate products and services. The private sector and charitable organizations should work together, prior to a disaster, to learn how to take advantage of what each has to offer.

Form reliable partnerships. Businesses do not specialize in disaster relief; non-governmental agencies do. Forge strong relationships with agencies that have institutional knowledge and capacity for responding to natural disasters.

Invest in long-term involvement. The private-sector response focused primarily on relief immediately after the disasters. Consider a “full disaster response continuum,” London wrote. “Extended involvement in impacted communities can translate into viable markets and expanded commercial opportunities.”

Engage in robust predisaster planning and preparation. When formulating a disaster plan, companies should factor in the needs of the surrounding community and other stakeholders as well. They should know the capabilities and the shortcomings of the local government, so that they aren’t overly dependent on it for services it may not be able to provide.

Demand accountability. “Two-way communication is critical not only to ensure transparent use of resources but also to track progress and evaluate next steps,” London wrote.

For the full report, visit www.uschamber.com/bclc

Beth McConnell is associate editor for HR News . She can be reached at emcconnell@shrm.org

For the latest HR-related business and government news, go daily to www.shrm.org/hrnews

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