Open any trade rag these days, and you’re bound to yawn through yet another tedious article about the importance of disaster recovery. Fair enough. Since 9/11 and Hurricane Katrina, Bank Cops are pounding the table and demanding better DR planning. Finally, CIOs are getting the people and budget to assemble some hard core fall-back. Our industry is pointed in the right direction on that front.
Trouble is, the techie side of DR planning is just the tip of the iceberg. I recently had the pleasure of spending time with John Hairston, EVP and COO of $6B Hancock Bank in Gulfport, Mississippi, a man who has some haunting first hand experience in disaster ops. John and I spoke about his bank’s experiences with Hurricane Katrina, which hit the resort gulf town on August 29, 2005. Gulfport took a direct hit from Katrina, and Hancock’s beachfront corporate facilities were particularly devastated, including all corporate, technology, telecommunications and operational facilities.
This GonzoBanker is not going to drone on about making sure you’ve got written DR plans, testing, backup, redundancy, etc. No, this week we will focus on navigating the infinitely more crucial and fragile human element of disaster management.
“When you can’t find the light
That guides you through a cloudy day
When the stars ain’t shinin’ bright
And you feel like you’ve lost you’re way
When those candle lights of home
Burn so very far away
Well you got to let your soul shine”
–Warren Haynes, Soulshine
Find ’em, Teams
“The articles I’ve been reading [about DR] have not been very practical so far,” John told me when we began our discussion. “The real issues are management and people-oriented in nature. There were a few key decisions that had to be made first. Some of them seem so simple now, but they were enormous then.”
The first order of business was nothing so practical as reviewing Checklist Item #1. No, you have to get a little more primordial then that. You have to identify which employees are still alive and standing. No sense in sugar-coating that one.
“There was no means of finding out who was dead, wounded or alive,” Hairston lamented. “There was no communication available on the ground here. The county morgue was set up in refrigerator trucks across from our command center. For several days, the only lights in downtown were the Civil Defense and Hancock Bank buildings, and the area around the body trucks. The field-promoted coroner was a long-time friend of the bank. I remember the tears in his eyes when I asked him to send for me if any of our associates came in from the body searches. We literally had our associates searching for people who lived in homes close to the water just to find out if they got out or not. For a while, we had names rumored to be lost, only to walk into the command center and be mobbed with embraces from fellow associates.”
Hancock set up an emergency telephone line in Tallahassee that was to be used for all employee communications. The idea was for all employees to call in on a daily basis to report on their status and get the latest news from the bank.
In Tallahassee, Hancock assembled a database to track the missing and the found. Hairston added, “We trained people to call that number. As people called in, we’d ask them if they’d seen anybody else who we hadn’t yet found. We literally went one by one through our roster. Of 1,500 total associates, we got down to 100 missing pretty rapidly – within a week.”
“We then got down pretty quickly to a couple of dozen people who we were afraid could have been lost. Then one would call in from Kentucky or Houston, one in Des Moines. We eventually got down to zero. We didn’t lose a single associate, a miracle given the number of associates we had living in flooded areas with their homes destroyed. We had 190 associates whose homes ceased to exist. Out of that 190, we had people swim out. We had people clinging to trees. Some lost family members, but we didn’t lose any associates.”
With associates located, Hancock faced the daunting task of starting the bank over nearly from scratch. “We had 25 or 30 groups of people tackling things,” said Hairston. “They couldn’t communicate with each other, but they all knew what they had to do. Some were securing food and water using prearranged contracts with out-of-market vendors. Others were assembling clothing, medical supplies, tarps and radios. Still others manned the kitchen to feed the team.”
The bank’s primary command center – the entire 15 story headquarters tower – was lost in the storm. So, Hancock moved key operations to its nearby training center. Here is where the bank learned an unexpected lesson. By happenstance, Hancock’s training/command center was located directly across the street from Civil Defense headquarters.
Hairston strongly advised that “it’s extremely helpful to establish your command center near the Civil Defense headquarters. Even if you have to give Civil Defense the real estate, it’s tremendously beneficial to have them right there – even during the planning stages and evacuations. It’s helpful to have them close to you.”
That way, you get first hand information. Pretty much nothing else is reliable during a disaster.
The Vast Sea of the Unexpected
I asked John about the surprises or disappointments he encountered. His biggest surprise and disappointment centered around the lack of fuel. People obviously needed fuel to get to work, but there were no operational gas stations. Plus, some well-intentioned government decisions complicated an already bad situation.
According to Hairston, “The government seized three or four tanker trucks right off the bat, primarily for hospitals and first responders. That created a paranoia among the fuel jobbers, so they stopped sending fuel. And it damn near killed us. The government didn’t understand what happens when they start seizing things. They reasoned, ‘We only took three trucks!’ but they don’t realize that private sector jobbers then ceased sending trucks. We had people with no fuel to get to and from work.”
With gas scarce as dry land, Hancock acquired fuel from an “undisclosed location.” “We ended up being the fuel station for all of our associates,” Hairston stated. “We allotted five gallons per day per associate, and the bank paid for it.” They literally filled hundreds of cans per day, but only for associates. That was a difficult human decision. What about an employee’s cousin or sick uncle?
“With fuel, our supply dictated that we could only serve our associates. But we supplied food, water and clothing to a lot of people. Some families had no place to live and lived on the bank floor. Associates brought them mattresses and clothing just so they could be comfortable. We essentially ran a shelter.”
Phones were another problem. The bank knew phone lines would fail in a catastrophic event, but it did not expect DHS to commandeer phone lines and phone repairs. Hancock literally could not get work done by any telco without first having a telecommunications service priority code. TSPs are given in tiers, with banks being at the bottom of a four-tier hierarchy. The problem was, no one knew about TSPs. TSPs were implemented post-9/11 and had never been engaged before. Hairston remembers in decades past “we always had at most a four-day turnaround for Bell to get critical circuits reconstructed. It took us seven months to get it all back up. From a prioritization perspective, we were two or three weeks from getting ANYTHING meaningfully done to help us with circuits. Communication between us, the examiners, the Federal Reserve and DHS was difficult, to say the least, in trying to get those priorities established. We literally engaged the White House via the FDIC chairman in order to get our [TSP] set.”
Hairston recommends, “Number one, make sure you, your telco, and your regulators all understand the TSP process. Know the names and phone numbers of primary parties. Two, don’t bet on getting phones fixed, even with a good TSP code, because it’s not a good bet. Have a backup circuit path and a satellite backup on top of that on retainer. Move your hub way out of the danger area, because you’re hosed if your hub gets destroyed. Circuits we expected to have ready to communicate with our DR site in a couple days took a month to establish. Satellite is then your backup; it’s expensive, but it works.”
What about the many employees who left the disaster zone? “That was really tough,” according to Hairston. “The people who left were leaving a lot of work for the people who stayed behind. But you can’t blame them for leaving. We didn’t lay off anybody. Eventually, we told people that after a grace period [a few weeks after the storm] they needed to be back for duty. We didn’t penalize anyone for arriving later, but we did pay bonuses to those who stayed throughout, came back early, or did extraordinary things to help the company or each other. We paid several million dollars in bonuses to those who could have been at home working on their houses or comforting their families, but instead were here working. I will never forget those folks who carried the heaviest of burdens in those first critical days.”
As Hancock associates returned to work, they found out quickly that life as a bank employee had changed dramatically. Hairston remembers, “We had a lot of people whose jobs changed 100% because the buildings that they worked in were gone.” Gone. Two hundred associates moved equipment and boxes from the now defunct bank tower to dozens of locations throughout the city, state and region.
“We literally vacated an entire main bank building – 542 people – in one day,” recalls Hairston. “They were scattered everywhere – in Chicago [the bank’s IT recovery site], Atlanta [its check capture site], Tallahassee, Hattiesburg, Purvis, Baton Rouge.”
Negotiating the Human Factor
These sites were pretty well planned and predestined recovery centers, although not nearly enough recovery space was pre-allocated. So associates were scattered over multiple states and away from their homes. A big head scratcher was employees’ corporate credit card limits. The bank spent millions on typical IT DR expenses, and these were expected. “But we never foresaw a lower level manager with the need to spend maybe $100,000 a month on hotels, gear, jets, consulting – you name it – on the company card. And that was well above anyone’s limit. That caused unneeded frustration. It was correctable, but it took time and patience that we didn’t have.”
That led to one of the management team’s biggest challenges. They knew all along that their number one job had to be to keep the team together. To do that, they had to make a lot of fast decisions, much faster than most banks care to make, to make things convenient. “People were frustrated and emotional,” recalls Hairston. “Any step an associate had to take that wasn’t really necessary caused hurt feelings. If you couldn’t get a fast answer, especially for minor things, it was really frustrating. So we had to get very good at making fast decisions. If we had to send somebody to Chicago and their granny had no place to stay, we’d load granny on the plane and she was going to Chicago, too. There were no questions about ‘Is it in our policy to load a granny on a plane?!’”
They loaded up granny and moved the hell on.
For their associates that needed them, Hancock also made hundreds of interest free loans for much-needed cash, housing expenses, etc. The bank also had a grant commission (from bank and private contributions) to help associates who were the most grievously impacted get back on their feet. “People bought cars, fixed their houses. It was a big deal,” said Hairston. “We threw out policies and budgets in favor of fast decisions to KEEP THE TEAM TOGETHER. That was job number one. Our guiding principle was that if the team stayed together, then everything else was going to be fine. We uncharacteristically didn’t worry too much about a budget report until January.
“We also ran buses to and from Gulfport twice a day to get remote workers home at night. They needed to be at home to be with their families and work on their homes. Some people commuted for as long as four months for sometimes four hours per day on a bus. We provided shorter work days – maybe five hours of working and four hours of riding.”
Hancock had customers and the general public to address as well. They needed cash, fuel, clothing, etc., and it was pretty clear that Hancock Bank was one of the few entities that had its act together.
“If we had supplies, we gave them to people. That’s all you could do,” Hairston recollects. “If someone needed water, we gave it to them. If it was clothes, we gave it to them. Cash? We serviced everybody’s customers. In many of the markets, we were the only branch open. So we allowed anybody to have up to $200 in cash. We gave cash to people who had nothing other than a towel on. If they needed cash to get clothes, get out of town – we gave it to them. We gave out $40 million and only wrote off about $500,000. People would come in and say, ‘I don’t have my checkbook. I don’t have a bank account with you, but my bank is closed.’ We’d say, ‘OK, here’s $200. Give us your name, driver’s license, Social Security Number and address.’ They could give us their address, but a lot of addresses didn’t even exist anymore. Many people left and never came back, but that’s part of what a bank does. I mean, our mission is not only to make a profit. Our mission is to help people. That’s what we do for a living. So that’s what we did. Lots of people brought money back after the fact, people who we would have never found. All in all, I believe we did the right thing, and the market has tremendously rewarded us for it.”
Things are still far from normal in Gulfport or at Hancock Bank. They have made Herculean progress in a short amount of time, but the region is still hurting. It’s getting better, but it’s hurting. Hancock is also reasserting itself financially. In fact, the bank is now opening 1,000 accounts per week. With pride, Hairston stated: “The market knows we took care of them. We were the last to close and the first to open. They know we’re spending a lot of money preparing for the next time. They know we lost our house, too, just like they did. The market is being kind to us because they recognize themselves in us. We’ve grown 50% in the Mississippi market in seven months. We have a lot of tired associates, but they’re confident and proud.”
(Let’s get something straight very quickly here. I did not highlight Hancock’s recent success and growth post-Katrina to even remotely hint at an ulterior motive to this organization’s genuine and frantic stewardship during the disaster. Any inkling of success is simply offered as a much-needed and well-earned silver lining to a very dark cloud.)
This article is not about patting Hancock Bank on the back, though anybody with a heart would agree that they deserve a big one. That wasn’t the intent of the article, and it certainly wasn’t at the root of John Hairston’s comments. John and I both wanted to point out the very basic decisions, the insanely difficult decisions, and the downright gut-level human decisions that will confront and even dominate literally any bank in the country that faces a major disaster.
“Let your soul shine,
It’s better than sunshine,
It’s better than moonshine,
Damn sure better than rain.”
–Warren Haynes, Soulshine
Keep your team together.
Respek – smh