Business Contingency Operations - Lessons Learned and Observations
Editor's Introduction Louisiana Corporate was the most affected member of the corporate credit union network by Hurricane Katrina. Its story is one of resourcefulness, drive and a desire to serve its member credit unions in the worst of times. The corporate was forced to operate out of its back-up facility in Lenexa, Kansas for almost three months. Its employees were displaced, having to start their lives over so to speak in another state. Here, Louisiana Corporate CEO Dave Savoie reflects on the corporate's extraordinary journey. When the approach of Hurricane Katrina caused Louisiana Corporate to implement its business contingency plan on Saturday, August 27, 2005, none of us would have predicted we would be operating offsite until Nov. 14, 2005. We were expecting our usual and well-rehearsed "hurricane drill", a few days of operating remotely until the storm had passed. This was a different kind of contingency operation, one that totaled 79 days of offsite operation, over 20% of the work year or one day of every five of 2005 spent operating Louisiana Corporate remotely. Unfortunately, there is nothing uncommon about that story, after suffering the impact of both Hurricanes Katrina and Rita, it was the common experience of nearly every credit union in southern Louisiana. Nevertheless, any contingency operation of such a significant duration deserves an "after action" report in an attempt to derive some lessons learned. People Aren't Human "Resources" In reviewing our experience, a few key points stand out. First and foremost, disaster recovery and business continuity are about people. People make disaster recovery happen and people make business continuity continue successfully. The best written, most highly tested disaster recovery plan is just ink on paper that will not jump out of its three-ring binder and do one thing for you when the chips are down. Make no mistake, the written plan is vital, but people must animate its operation and however well planned and rehearsed it is, deviations will be necessary. One thing that differentiates people from written plans and laptop computers is a fundamental desire, even a need, to understand the importance of what they are doing. As a manager in a disaster recovery situation, hopefully you have already worked out the technical and logistical details of how you will conduct operations. Your most important jobs, in my experience, will be the following: * taking care of your people (well before 79 days of offsite operation, you will no longer refer to anyone as a human resource; they will be "people"); a large part of this will be your ability to articulate the "why" of disaster recovery, the importance of the jobs your people are doing each day; * deciding when to go into contingency operations and when to come out of them, i.e. "pulling the trigger" and "coming home"; and * modifying your plan to rapidly changing conditions, i.e. "thinking on your feet". Like just about every other credit union in southern Louisiana, our people were performing their jobs at our offsite location when they were unsure about the location of their loved ones and the status of their homes, and after they learned of the destruction of their homes. They were performing their jobs when TV coverage was showing their neighbors wading through water or waiting to be rescued from rooftops. They were still performing their jobs while negotiating with FEMA inspectors and insurance agents and contractors to try to start putting their own lives back together. They kept doing their jobs while getting their children enrolled in out-of-town schools and taking care of the living needs of dislocated relatives. During this period, Louisiana Corporate never ceased operations and continued to provide every possible service, product and function. That is a testament to the ability of our people to focus on the jobs while dealing with pressing and critical personal concerns. My advice to anyone who finds themselves in charge of such a situation is to do everything in your power to take care of your people, and define that term broadly. It might include spouses, children, siblings, parents, even pets. Cast a wide net. People cannot focus when they are unsure about the security of their day-to-day arrangements. To the extent possible, get your people settled down and taken care of. Let them know what the organization's goal is. If your goal is to provide all your services remotely and return to your home office as soon as its safe to do so, don't assume everyone knows that is your goal - communicate your goal clearly. Get everyone aiming at the same target. Once that is done, clearly communicate to your people the importance of their jobs during contingency operations. It's sometimes easy in our business to feel that we are not doing important work in a large sense. It's even easier to feel that way when you are watching your neighbors being airlifted from their rooftops. This is the time when every credit union employee should understand that the operation of the credit union system, as part of the American financial system, is as vital to civil order and people's welfare as standing in the disaster area handing out food and water. When credit union employees do their individual jobs, individual credit union members can access cash in their accounts and send cash to loved ones. In a disaster area, cash can equal survival. Our staff understood that the work they were doing was just as important as handing out ice and blankets, they were enabling people to get to their funds and take care of their needs. That's why we operated remotely for 79 days under the hospitality of U.S. Central and the Corporate Credit Union network, but in a larger sense, that's why all of us in the credit union business go to work everyday. It's important to stop and think about that once in a while. If we may offer a few other observations, one would be that your offsite operations may approach the quality of your normal on-site operations, but they certainly will be no better than the quality at which you operate everyday. The discipline of things like daily balancing with a zero tolerance for outages and keeping members' records current during normal times will serve you well when operating in a contingency situation. The skills your staff develop during normal operations by keeping the performance bar set high, will serve you well when times are rougher. It's like the guy who asked his doctor if he would be able to play piano after his hand surgery, and when the doctor said yes, remarked that he was elated because he could not play piano before. If you can "play piano" before your contingency operations, you will stand a much better chance of doing it during offsite operations. Being Small Has Its Advantages One other observation has to do with the trade off between economies of scale and flexibility of operations. The victory of the vastly outgunned American Navy in the Revolutionary war against numerically superior British forces is ascribed by many historians to the maneuverability of the American's quicker and smaller ships. Economies of scale exist, but like everything else in nature, they come at a cost, one of which can be rapidity of response and flexibility. The conventional post-Katrina credit union thinking that large numbers of small credit unions in Louisiana would be a liability may turn out to be wrong. The ability of small institutions to innovate, adapt and change direction rapidly may be just what the doctor ordered in the post-Katrina Louisiana credit union environment. Last, but not least, what stands out in the mind of all of us at Louisiana Corporate is what we consider to be the true "credit union difference". That is the unreserved willingness of everyone at every level in the credit union system to work together through times of crisis. We know we were beneficiaries of that willingness to help and we hope that we were also meaningful contributors to it. We were humbled and gratified by the many acts and offers of assistance we received and we hope that we were successful in providing assistance to others in the network. If credit unions all have less in common now than in the past, Louisiana Corporate can certainly testify that the credit union philosophy of helping our members and each other is alive and well. The credit union spirit is one thing Katrina could not claim and something that the critics of our system should never underestimate.