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Corporate Hurricane: Houston CEOs Race to Mend a Battered Workforce

The Wall Street Journal. logo The Wall Street Journal. 9/7/2017 Erin Ailworth, Vanessa Fuhrmans, Lynn Cook

Covestro is helping Jill and Javan Williamson, an employee, recover from Harvey. Colleagues helped clean out the house, and the chemical company is providing temporary housing and the use of a car.

Covestro is helping Jill and Javan Williamson, an employee, recover from Harvey. Colleagues helped clean out the house, and the chemical company is providing temporary housing and the use of a car.
© Scott Julian for The Wall Street Journal

HOUSTON — Chemicals maker Covestro AG set up a drive-through station for employees to pick up bleach, plastic tarps, gas and other emergency supplies. Occidental Petroleum Corp. is housing displaced staff in hotels and is giving out interest-free loans and $5,000 grants to pay for repairs. When Beaumont’s water service failed, Exxon Mobil Corp. used a fleet of 36 helicopters to deliver water to employees and their families.

“It’s a small price to pay,” said Jerry MacCleary, the North America chief for Germany’s Covestro, which was forced to stop production at its Baytown manufacturing site, its biggest in the U.S., after Harvey knocked out key local suppliers and many of its employees couldn’t get to work. “We can’t run this place without people.”

Never before in the modern era has a hurricane created such damage in one of America’s major corporate hubs. Houston, the nation’s fourth-largest city with 2.3 million people, has an economy roughly the size of Sweden’s and is home to more Fortune 500 companies than any American metropolis except New York.

Harvey’s record-setting floods, which have damaged or destroyed more than 300,000 homes in southeast Texas, disrupted lives here on a scale seldom before seen in the U.S., affecting executives and laborers alike. The scale of the problem is testing CEOs who see themselves as caretakers for their workers in and out of the office, and also as civic and community leaders in times of crisis.

Managers said they are focused primarily on giving staff the time and help they need to take care of their homes and families and cope with deep personal loss.

For now, the interests of employers and employees are aligned—both want to get their lives in order and get back to work. In the long run, their interests may diverge, if costs become intolerable. Companies will face pressure to get back to full strength to meet business targets to satisfy customers and shareholders, economists and analysts say. Missteps could harm corporate images.

It is a dilemma more bosses may soon face as a second major storm, Hurricane Irma, threatens to smash into the southeastern U.S. coastline this weekend.

The assistance companies are committing to flooded employees could be one of their biggest costs as they scramble to get back to work. Many businesses estimated that plants and refineries will be back to 100% in weeks but that it will be months before employees are.

An informal poll by the Greater Houston Partnership, the regional chamber of commerce, found that the typical company had 10% to 11% of employees with homes substantially affected by flooding.

“That’s a very high level of impact that’s hard to really make the office function as you’d like,” said Bob Harvey, the Partnership’s chief executive. Companies in some heavily flooded areas, such as oil and gas producer ConocoPhillips, were opting to keep main offices closed until next week.

Related video: Small businesses look to rebuild after Harvey


Productivity could drop 10% in the Gulf Coast region for at least the next two months, which would cause a $3 billion reduction in economic output, said Ray Perryman, a Texas economist and forecaster based in Waco.

Covestro, a maker of raw materials for adhesives, polyurethanes and other chemicals spun off from the pharmaceuticals giant Bayer AG in 2015, estimated 15% of its more than 1,000 Houston-area staff were hit by flooding.

Company managers assigned flooded employees a score to determine how much assistance to provide: Level 1 meant minor home damage and an estimated recovery time of less than a month; Level 2 indicated recovery could take up to three months and that some temporary housing was required; and Level 3 signified total losses or major home damage and as much as six months of recovery and shelter were needed. Of the roughly 150 employees who sustained damage, more than 60 were either Level 2 or 3.

“All the stuff we’re doing in the first couple of weeks, those are, in a way, the easier things,” said Mr. MacCleary, the North America chief. “It’s the longer term that’s tougher.”

Three miles from Covestro’s Baytown plant, a team of company employees worked Wednesday to finish stripping the inside of co-worker Javan Williamson’s three-bedroom home down to its studs—it had been flooded to 5 feet. Water covered the SUV in the garage and set the backyard deck afloat like a raft, saving the two dogs that had been left behind when Mr. Williamson—expecting only a few inches of flooding—moved his pregnant wife and two small daughters to a friend’s house for what he thought would be the night. A co-worker, Brett Ward, later waded with him through waist-high water to rescue the dogs.

On Wednesday, the family’s ruined belongings—nearly all of them—were piled high on the sidewalk around the house: a couch, a mirror, various toys. Mr. Williamson’s wife, Jill, said the couple’s wedding photos were a total loss, but some snapshots of the children would dry.

Covestro also lent the Williamsons a car and is arranging a furnished apartment for the family for three months.

“I never thought a company I work for would be so willing to put out these types of resources,” Mr. Williamson said. “Allowing me to be off work and not worrying about my job is absolutely critical.”

Companies now tending to their employees are likely in for a long haul.

Paul Kusserow, CEO of Baton Rouge-based Amedisys Inc., said it has taken until now for the home health-care company to fully recover from catastrophic floods last year that left a quarter of its 400 corporate employees with flooded homes and properties.

Mr. Kusserow estimated the company has spent “well into the millions” of dollars in housing, cash, counseling and other aid for displaced employees, plus countless hours helping them negotiate with insurers, purchasing supplies and finding quality contractors to rebuild workers’ homes.

“Even if it’s not a question of economics, you as an employer get so much in return,” he said. “What we got was a lot of good will and a lot of cohesion and loyalty.”

He said he believes the effort is one reason the company’s turnover rate has fallen to about 18% from the low-30% range before the floods.

Amedisys never hit a point where it considered pulling back and didn’t feel pressure from investors to rein in spending, he said. “Our board wrote checks, and I expected them to write checks,” said Mr. Kusserow.

He said he has gotten calls from companies in Houston and Florida asking for advice in building their own employee-recovery plans. “It ain’t that tough. You just got to give,” he said.

As Harvey inundated Occidental Petroleum Corp.’s Houston-area facilities with several feet of water, CEO Vicki Hollub tracked the whereabouts of the roughly 3,000 company employees in the storm’s path using a company app and spreadsheet—and called and texted some herself, along with other company leaders. Ms. Hollub knows many of the workers personally because she came up through the ranks of the company.

“I would see names missing,” said Ms. Hollub, adding, “We were trying to make sure we hadn’t missed anybody.” All staff were eventually accounted for.

The company estimates more than 400 employees had to evacuate their homes, and roughly half of those suffered damage.

“If employees are stressed about their personal situation, they can’t really do a good job, and we wouldn’t expect them to,” Ms. Hollub said.

BP PLC, which has 5,000 employees in Houston, shut down its corporate campus after its main office tower flooded. BP temporarily moved part of its wind business unit to Barber County, Kansas, and many oil and gas employees are working remotely from home. It has a plan to get roughly 60% of its Houston crew over coming weeks into shared workspace in its buildings that didn’t flood.

As he waded through waist-deep water around BP’s corporate campus last week, John Mingé, president of BP America, said he realized it isn’t just desks and cubicles that were swamped, but the company’s expansive day-care center, too. About 300 children are cared for from early in the morning until the end of the workday.

“This is going to create stress, and we’ll have to work through it,” he said of working parents who counted on campus child care.

At Exxon Mobil, which has roughly 23,000 employees in Texas and Louisiana, senior executives held a conference call each day with about 50 people keeping tabs on the status of Exxon business units and personnel, said Steve Hart, vice president of global logistics and leader of Exxon’s relief effort.

Mr. Hart and his team also guided operational priorities such as the refinery shutdowns and startups. He said he realized only later that some people on the calls coordinating the recovery were trying to manage their own flooded homes.

Some had moved in with co-workers and quietly kept doing their jobs. “They look at this as their role,” Mr. Hart said. “They know that this is what they need to do.”

Reno Castillo, an Exxon instrument specialist, was among a large crew of critical employees that stayed at the Baytown refining and chemical complex and helped safely shut it down during the storm.

He and others were stuck at the plant for days after floodwaters cut off access. He eventually got home—traveling at one point on a friend’s bass boat—where his house was also flooded with two feet of water. Exxon hired a crew to rip out drywall and clean up—one of more than 100 contractors the company has mobilized to help employees.

In less than a week, his home was ready to start renovations, and by Tuesday he was able to get back to work on the turbines in the Baytown plant.

“They were trying to get my life back in order as quickly as possible,” he said.

Once people get back to work, “their attention is going to be divided,” said Curt Ross, a managing director in the Houston office of recruiting and consulting firm Russell Reynolds Associates. “These people are going to be talking to insurance companies and adjusters and contractors for months.” He estimated it could be six months before workers return to full productivity.

“Given that people will need time off…absenteeism is likely to be a drain on productivity,” said Mr. Perryman, the economist. “Perhaps an even greater concern will be ‘presenteeism,’ where workers are physically present but preoccupied with family and property concerns.”


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