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Lessons From the Recovery

Though the comeback was painful, IQ Financial Systems says the firm is better for it


NEW YORK — Each time news reached Edward Ho that another missing employee was found safe, he would open his spiral-bound notebook and cross off the name.

There was little else that Ho, a director and soon to be chief executive of IQ Financial Systems Inc., could do to help, stuck as he was on a business trip to Japan while the horror of Sept. 11, 2001, played out in New York.

Ho opened his battered tan notebook last week for the first time in nearly a year. There, in his cramped handwriting, amid phone numbers and to-do lists, were the four names he was never able to cross off: Melissa Doi, David Rathkey, Karen Schmidt and Courtney Walcott.

"It was very difficult," Ho said. "In a company this size, everybody knows everybody."

More than 2,800 people lost their lives in the World Trade Center assault. Beyond the human toll was a shock wave of economic devastation that hit New York City's securities, tourism and commercial real estate industries with full force. Property damage and loss of revenue has been estimated as high as $80 billion.

The attack blew a $5-billion hole in the city budget, largely due to lost tax receipts. More than 80,000 jobs were lost, including an estimated 13,000 shifted to other locations, according the Fiscal Policy Institute.

Hundreds of businesses failed, but IQ Financial Systems, or IQFS, survived. Although the comeback trail has been painful, a year after the disaster, Ho and his colleagues say the company may be stronger than ever.

Among the lessons they have learned are that dislocated workers need to get back together quickly to recover their sense of shared purpose; no manager should be without an up-to-date list of employee phone numbers and e-mail addresses; customers need reassurance nearly as much and as soon as workers do; and, despite the outpouring of support that a crisis may bring, business is still business, and not everyone wishes you well.

IQFS makes software that helps banks and securities firms manage their commercial-loan portfolios. The private firm is about 70% owned by Deutsche Bank's venture-capital arm and the rest by company management. At the time of the attack, IQFS was based on the 83rd floor of 2 World Trade Center, the second tower to be struck and the first to fall.

Many Avoided Attacks

Of about 110 IQFS employees who worked in the trade center, Ho estimated that no more than 40 reached the office that morning. That was not unusual. Some workers often began their day at client sites. Many also took advantage of flexible starting hours to cut commuting time.

Two people who did reach the office were sales manager Lisa Stone and software development chief Ken Katz, who told their stories in interviews last week. Like others who made their way down from the 83rd floor, they have harrowing memories of seeing the explosion and fire in the north tower and of escaping through crowded stairways while their own building shuddered from the impact of the second plane.

Katz walked north amid the dust and fluttering paper, finally catching a cab and persuading the driver to take him all the way home to Long Island.

On her way home to the Upper West Side of Manhattan, Stone stopped at a SoHo publishing house where a friend worked. She recalled people staring at her because, dressed in a sharp suit for a client meeting that afternoon, she somehow arrived "without a hair out of place."

Ho, who had watched the attacks on CNN in his Tokyo hotel room, quickly began the frustrating task of trying to reach colleagues in New York by phone.

"About one in 20 calls was going through," he said.

It was near midnight in Tokyo, and it would be the first of five straight sleepless nights for Ho. With international flights grounded, it would take him that long to get home.

Phone service was spotty in New York as well, but IQFS executives managed to contact one another that afternoon and evening.

They realized their first task was to determine who was missing. Nobody seemed to have a complete employee list, but everyone had at least a few names and numbers. By pooling their information, they cobbled together a phone and e-mail tree, assigning each manager a group of employees to contact.

It was important to be sensitive and not bombard anxious or grieving families with calls, Ho said, but it also was crucial not to rely on second-or third-hand information about people's whereabouts.

"We wanted to know, 'Did you personally talk to so-and-so?' before we could say for sure they were safe," he said.

Within two days, the list of missing employees in Ho's notebook had shrunk to fewer than 20 and by the weekend, to four, the number that became final.


Need for Foresight

Even as they were arranging for grief counselors and dealing with stricken relatives, IQFS managers realized they needed to look ahead.

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