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Volume 32, Issue 1

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People who successfully overcome personal crises can grow to function better than before. Significant predictors are their coping mechanisms prior to the event and the support received as a consequence. Similarly, organizations, when faced with a crisis have been known to change into organizations that are stronger and sometimes better. Such transformation does not just happen. It requires leadership and a demonstrated concern for those affected.

As a result of Sept. 11, 2001, many New York businesses faced extinction due to loss of life and property. Two brokerage firms, Cantor Fitzgerald and Sandler O’Neill, were among the hardest hit. But like individuals successfully emerging from tragedy, these companies have been steadily crawling back. In both individuals and organizations, the will to survive, an ability to take in support, and the coping structures already in place prior to the tragedy will contribute to such a recovery.

Judith Herman, M.D., noted trauma expert at Harvard University School of Medicine, created a model of recovery for individuals suffering from trauma. This article discusses that model and then applies it to organizations by tracking these two financial firms’ journey from devastation to a new life.


 Understanding Trauma

A psychological trauma is a specific response to an event that overwhelms a person’s ability to cope. There are many events that can cause a traumatic response – it may be a one-time occurrence such as a terrorist attack or a long-time repetitive experience such as child abuse. The event itself does not constitute whether it is traumatic or not. It is the response that is significant.

A traumatic response generally occurs when the body’s normal coping mechanism of “fight or flight” cannot be activated. When neither resistance nor escape is possible, the physiological system of defense malfunctions. This leads to a disruption of the entire danger/threat response, placing the individual on high alert often long after the actual threat has passed. This temporary alteration of the brain is a normal response to trauma. If it becomes chronic, it becomes diagnosed as Post Traumatic Stress Disorder.

On an emotional level, trauma can shatter a comfortable and perhaps blind belief that the world is safe. Traumatized people can feel isolated and different. Robert Stolorow, psychologist and author writes, “…the traumatized person cannot help but perceive aspects of existence that lie well outside the absolutized horizons of normal everydayness. It is this sense that the worlds of traumatized persons are fundamentally incommensurable with those of others, the deep chasm in which an anguished sense of estrangement and solitude takes form.”

Trauma is generally referred to as a first-hand experience, seeing and/or living through one or more devastating experiences. Grief expert Barbara Paul identifies traumatic grief as a frequent response to the sudden or unexpected death of a loved one, often caused by suicide, homicide, or a catastrophic accident. This differs from normal grief, which is a natural process following a loss. In traumatic grief, the survivor did not even need to be present at the scene of the event to feel traumatized. It is the jolt and immediate loss that turns the survivor’s world upside down.

Organizational Crisis

Organizations can face many different kinds of crises. Mitroff, Pearson, and Harrington identify eleven different types of organizational crises: Criminal attacks, economic attacks, loss of proprietary information, industrial disasters, natural disasters, breaks in equipment and plants, legal, reputation/perceptual issues, human resources/occupational, health, and regulatory problems. They strongly recommend that all corporations develop response plans to every type of conceivable emergency, also with an understanding that there can be crossover crises with more than one category affected.

Organizational Trauma

My focus here is the sudden and unexpected outside catastrophic incident, such as violence, fire, acts of God, or terrorist acts. This is not merely a “crisis” but a complete organizational trauma. What differentiates these occurrences from most crises is that the entire organization including its leaders and “crisis managers” may be suffering from trauma or traumatic grief because they may have been witnesses to the catastrophe and/or suffering from a traumatic loss. Yet these leaders must help their employees heal from the event while at the same time restore the continuity of operations.

Superior Coping Skills

How an individual reacts to trauma depends to a certain extent on that person’s resilience. Most people’s responses run the gamut from being completely ineffectual to demonstrating various kinds of adaptive responses. Manfred F R Kets De Vries, psychologist and organizational expert, describes individuals with superior coping skills as having “hardy” personalities. He characterizes these people as feeling in control over events in their lives and perceiving change as a positive challenge to their personal development. He sees them as having affective, cognitive, and behavioral traits that encourage survival in stressful situations. They are the ones who often rise to become the leaders in organizational recovery and transformation.

Response to Individual Trauma

According to Dr. Herman, support and validation go a long way in the initial phases of healing, while hostile and negative responses may exacerbate the emotional damage. Not surprising, the outpouring of empathy and love to the World Trade Center survivors has been repeatedly identified as a source of comfort. Compare this to the experience of many Vietnam veterans or rape victims throughout history.

Her model includes three stages of recovery: The first is the establishment of safety. The second is remembrance and mourning. The final stage is reconnecting with people and normal life. When people suffer through a traumatic situation together, such as workplace violence, the commonality of experience should be tapped into immediately and used as a part of the healing process. These people are spared the incredible sense of isolation that accompanies a person’s witnessing or experiencing a traumatic event alone. In fact, this is the theory behind “debriefing” sessions, which are frequently given to survivors in a group setting so that they can share their feelings together. By Sept. 11, 2001, it was the accepted wisdom of most crisis professionals that all affected individuals should be offered an opportunity to participate in such meetings.

The thread tying Herman’s three phases (safety/control, remembrance/mourning, and reconnection) together is empowerment. As people regain a sense of empowerment over their lives and their destinies, they are headed for recovery.

Organizational Trauma Response

Dr. Herman’s model for individual recovery can also serve as a model for recovery from organizational trauma. In an event such as the World Trade Center tragedy, the trauma is operating on two levels. At one level is the mental health of the affected individuals, which in the case of Cantor Fitzgerald and Sandler O’Neill, are all the surviving employees. On the other level is the operational devastation. The people need to be functioning to get the operation back in gear. Without the operation, the company can no longer exist.

It is now well known how Howard Lutnick, CEO of Cantor Fitzgerald, was taking his son to kindergarten on the morning of Sept. 11, 2001. He later learned that 658 of his employees died, including his brother, Gary.

Less known was the tragedy at Sandler O’Neill, where senior partners Herman Sandler and Chris Quackenbush perished along with 64 other employees, leaving James (Jimmy) Dunne to pick up the pieces of the company.

I assume these two leaders (Lutnick and Dunne) were suffering from traumatic grief themselves as they salvaged the remains of their companies.

Herman Sandler had been Jimmy Dunne’s mentor and Chris Quackenbush was his best friend. Like that small percentage of people who mobilize in the face of crisis, Dunne declared to Fortune writer Katrina Brooker, “Let’s just say if I was determined before, I’m on fire now.”

Similarly, Lutnick told New York Magazine’s Meryl Gordon, “If you let your grief and sadness overrun your commitment to the company, then you’re going to bring down the people to your left and to your right.”

Obviously, these two leaders, both with “hardy” personalities, made a decision to empower themselves to breathe life back into their companies.

Just like the rape survivor who needs to be validated by a supportive environment, leaders can help their companies heal by demonstrating compassion throughout the organization. Since human connectedness is one of the tasks of healing, compassion is not only the morally correct response, but also the wise business decision.

Brooker writes about Dunne:

From the start, Dunne knew he wanted the firm to be generous; after all, family takes care of family, and that’s how Sandler always thought of itself. Like the other hard-hit firms, it created a charity fund, hired grief counselors for the families and set up a family center to help with the grim logistics of recovering, burying, and mourning the dead.

Gordon describes Cantor Fitzgerald’s rougher start in communicating compassion. On Sept. 15, 2001, Lutnick announced he would take victims off the payroll as of Sept. 30. This generated considerable anger among the victims’ families as well as some bad press, which the traumatized company hardly needed. Psychologists Karen Sitterle and John Delary identify the brief period following a workplace crisis as the time frame where employees tend to either side with or against the company. They call that time period the “trauma membrane.” Mentally and emotionally they may move back and forth, but at the end of that short time, their attitudes consolidate. Not surprisingly, this created a strong negative impact. Victims’ families as well as surviving employees categorized Lutnick as uncaring. In truth, Cantor Fizgerald has been at least as generous as the other hard-hit firms, but for much of the public, the early bad press stuck.

Managers face the task of facilitating both staff recovery and the return to normal functioning and productivity. In doing so management needs to help staff identify their strengths and build on these strengths for the future. Returning to work can be therapeutic, but managers should not insist that people take on more than they can emotionally or cognitively handle.

Organizational Recovery
First Stage of Recovery– Safety and Control

Dr. Herman’s first stage of establishment of safety includes focusing on control. This means first control of the body and later, control of the environment. Tom O’Neill, one of the founders of Sandler O’Neill described to Steve Kroft of “60 Minutes” on Oct. 7, 2001, how he was able to function at the job in those early days:

It comes at you in waves. You know, you’ll be sitting there and as long as I keep on moving, I’m all right. And you stop and, you know, it ... it’s ... it’s painful. But if you stay on ... on adrenaline, I mean, I think there’s ... I think you always work on adrenaline. I mean, it’s part of the business.

Heidi Olson, a Cantor Fizgerald employee who had left the firm in April 1999 and returned after the tragedy, told The New York Times, “People had breakdowns, people fainted. You sobbed and then you got on with it.”

Both descriptions vividly portray how people were going in and out of control during those early months.

The firms, themselves, were also looking to establish control. This meant hiring new employees, finding temporary and then permanent quarters, re-establishing technical and client connections, and getting back to work. In the initial days, other companies lent a hand in getting the firms reestablished. Some competitors even offered assistance, donating some of their own revenue. But mostly the firms established control on their own. USA Today described how days after the attack, Cantor Fitzgerald employees scattered into temporary offices while telephone and computer lines continually crashed. New people were hired and experienced people took over jobs that were beyond their previous level of experience. One employee suffered third degree burns and was working out of a makeshift office two days later. Fortunately, espeed, their publicly traded online unit had redundancy centers in New Jersey and London for all of its online transactions. Because of this disaster planning, espeed continued operating and delivered strong financial results in the fourth quarter, the first profitable quarter of the year and it occurred after Sept. 11.

Despite rumors to the contrary, Sandler O’Neill was in business a week after the tragedy. The firm announced its first new deal in late September and announced the first new hires on October 13, 2001. Larry Belinsky, a personal friend and neighbor of Chris Quackenbush left his job at KPMG to head up the newly-created Family Support Center. According to Belinsky, “In the beginning, people were consumed with the plight of the families and rebuilding the firm; that was the focus.”

By January 2002, they had moved into their new offices in midtown Manhattan.

By March 7, 2002, the firm was handling 225 stocks, down from 325 on Sept. 10, but still very much in business.

Second Stage of Recovery
– Remembrance and Mourning

People and organizations really cannot begin to mourn until they can establish that sense of control. In fact, while they are trying to get their lives (and jobs) back in order, it is often necessary to block the deepest feelings of loss. First of all, there is still some disbelief that the event actually occurred, and second, there is just too much to get done. A spouse suffering from traumatic grief once told me she did not really begin to feel the pain until the year following her husband’s death. In the first year she was numb while she went about doing what she needed to do to get her life together. Only in the second year was she able to mourn and ultimately come to grips with her loss.

Immediately following an organizational trauma, people cannot reflect and gain insight until the operation is back in order. Two months after the attack, Sandler O’Neill became profitable again. It was at that time Sandler employees began to deal with their own grief. Katrina Brooker writes:

In many ways, the incredible amount of work they’d done in the weeks after Sept. 11 had served as a balm, a way of forgetting the enormity of their loss. “This is the only place I’m happy,” one bond salesman had told me early on. Marc Malz, a grief counselor hired by Sandler says that the real impact probably won’t be felt for another few months.

Remembrance and mourning must occur before employees can come to terms with a new and different firm. New people are being hired who weren’t there at the time of the tragedy. People must mourn their personal losses so they can accept new colleagues ready to move the firm forward. Leaders must help employees mourn by permitting it to occur.

Dr. Jane Dutton, a psychology and business administration professor at Michigan University, wrote an article with collegues titled “Leading in Times of Trauma.” According to Dutton, “if people are allowed to bring their pain to work, they don’t have to expend energy suppressing it.” Ironically, this actually allows them to get back to work.

At Sandler O’Neill, people found comfort in telling stories about their former colleagues. Belinsky told me, “This firm is like a family. There was so much anger and righteous indignation that someone killed our friends. People were working hard to honor their friends.”

Final Stage
– Reconnecting to Normal Life

It is during this stage where there is a potential challenge to become even stronger and better than before. Herman suggests that as an individual transforms from victim to survivor, he or she may feel a new sense of pride and a healthy admiration of strengths and potential never known before. The deepening connection with one’s own capabilities leads to a greater connection with others.
Similarly, in this final stage, organizations can also find themselves transformed.

A management that can build and sustain trust during a crisis will deepen employee connections. Like the individual who is able to return to normal life, a firm can move into what organizational theorists Sarah Kovoor-Misra and Maria Nathan call a state of “healthy forgetfulness.” This does not mean forgetting that the incident occurred, but that they are no longer operating on high alert.

Even after a year, it is still early to see how Cantor Fitzgerald and Sandler O’Neill fare in this third phase. Yet even at this early time, there have been glimpses into the financial and emotional growth at both firms.
By March, Sandler O’Neill had hired 55 new people. Belinsky told me:

No one is replacing Chris Quackenbush. But Brian Sterling must go out and do investment-banking work. The new people they brought in have new ideas. They are accomplished people from Goldman Sachs, Merrill Lynch, Salomon, and J.P. Morgan. Every day we integrate more. No one is under the illusion that we’re where we were on Sept. 10, but we are continuing to work toward a new level of normal.

Lutnick discussed with Gordon how attitudes were beginning to shift at Cantor Fitzgerald.

We are perfectly comfortable with the fact that we are going to make good and bad decisions. But we have also come to the view that nothing bad can happen to us. It already has. So any mistake, everything we do — good and bad — we will just take it and go on with it, because really there is nothing really bad. There are just mistakes, which can be fixed tomorrow.

Jimmy Dunne told Brooker that he believes that he must make Herman Sandler’s firm great again. He is becoming more like Sandler, more patient and more forgiving. He says his office is becoming a place where people can come to talk

— like they did with Sandler. He says, “I realize now what a luxury it was for me to have Herman Sandler. I’m very much at peace with Herman.”

First anniversaries are frequently viewed as a milestone in mourning. Both firms sought considerable input from employees and families on how to handle that day. Both held private memorial services.

Earlier in the year, when Sandler O’Neill partners dedicated their new Manhattan offices, Herman’s widow Suki Sandler, spoke for herself and Traci

Quackenbush, thanking the partners for all the compassion they demonstrated to the grieving families.

Over the past few months I have seen the same vitality and commitment to excellence and moral values that launched the firm in 1988. And I know that Herman and Chris are proud of all of you. Which brings me to my third and last point. Traci and I have been talking regularly to the two tall, fun-loving guys up there. So far, they say you get an A+ for the work you’ve been doing. But they want you to know that you won’t pass the test unless you are also having fun doing it!

We hope that by now they’ve begun to have some fun again.

Nancy Green, M.S.W., M.S. (Organizational Change Management) is the Workplace Improvement Analyst for the U.S. Postal Service’s New York District. She has an advanced certificate in psychoanalytic psychotherapy and is a Certified Employee Assistance Professional.