Module # 3 Morgan Stanley’s Response to 9/11

Strategic Communications Professor David Ryan Summer 2011 – MOPA 690–01

August 11, 2011

Zachary Marks The California Brain Tumor Association

www.CABTA.org Date: To: 11 August 2011 State Senator Mark Leno State Capitol, Room 5100 Sacramento, CA 95814 Zachary Marks Morgan Stanley’s Response to 9/11

From: Subject: Introduction

“Today is a day to be proud to be an American.”1 Singing, cheering, and shouting at evacuees through a bullhorn, retired Army Colonel Rick Rescorla’s words continue to echo in our hearts from that fateful September 11th morning. As people were plunging to their death from the World Trade Center’s north tower, Morgan Stanley’s head of security Rescorla bravely sacrificed his life in service to his country by saving over 2,700 of his colleagues. Miraculously, only 13 Morgan Stanley employees died on 9/11 because of Rescorla’s heroism in the face of terror and preparedness having a crisis response plan ready to execute. Morgan Stanley’s successful crisis response to 9/11 demonstrates the necessity for organizations to prepare similar comprehensive crisis plans. The following memo provides background information about Morgan Stanley and analyzes the planning and execution of their crisis response plan in relation to 9/11. Company Background Established in 1933, Morgan Stanley “joined the New York Stock Exchange in 1941 when it reorganized itself as a partnership.”2 “In 1964, Morgan Stanley created the first financial analysis computer model.”3 In the 1970’s, Morgan Stanley began expanding internationally in size and profitability. In 1977, Morgan Stanley merged with Dean Witter Discover and Company to position Morgan Stanley as a leading global financial services company and investment-banking firm.4 In 1985, Rick Rescorla became Morgan Stanley’s head of security. Opening field offices globally in the 1990’s, the company named Phillip Purcell the chief executive officer. “Morgan Stanley now maintains more than 700 offices in 28 countries. The New York corporate headquarters houses the firm’s trading and backup facilities, with administrative offices at 5 World Trade Center.”5 Planning for Crisis

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On February 26, 1993, a truck bomb explosion filled the world trade towers with smoke causing panic amongst Morgan Stanley employees.6 Serving as a platoon leader in Vietnam, Rescorla instinctively “helped clear the building and was the last person to evacuate”7 four hours after the attack. In response to six people dying and $250 million in damages from the 1993 bombing, Rescorla unsuccessfully lobbied Morgan Stanley to move their headquarters out of the World Trade Center.8 Responding to the bombing, Morgan Stanley “reevaluated and refined its emergency evacuation policies.”9 The company conducted a SWOT analysis of potential risks and developed a comprehensive disaster response plan. Totaling 1.3 million square feet of office space,10 Morgan Stanley occupied 22 floors of the south tower on 9/11. The company was “the largest tenant in the building with the greatest number of employees.”11 Over 2,700 employees worked in the south tower, and Morgan Stanley “also had an additional 1,000 employees at Number 5 World Trade Center.”12 Employees on every floor of the south tower were appointed as searchers and wardens responsible for ensuring that all other employees exit the building promptly and safely. Morgan Stanley’s new crisis plan included necessary actions “to quickly and completely evacuate the building. “At work, (Rescorla) was doing everything he could to prepare the company’s employees for a nightmare scenario.”13 Rescorla “trained the employees of Morgan Stanley to leave the building quickly and safely through evacuation drills.”14 The company held periodic fire drills, in addition to those held by the New York Port Authority.”15 Executing the Crisis Response Plan Staring out the window from a Morgan Stanley boardroom on the 72nd floor of the south tower, James Logozzo watched in horror as people plunged to their death just 120 feet away. Logozzo remembers the look of shock in a woman’s face as she fell “with her back to the ground, flat, staring up. She wasn’t screaming. It was slow motion. When she hit, there was nothing left.”16 The Port Authority declared the south tower safe and directed employees to stay at their desks. In response, Rescorla followed Morgan Stanley’s crisis response plan to evacuate calling the Port Authority “dumb sons of bitches.”17 According to Bill McMahon of Morgan Stanley, “There were a lot of reasons not to leave the building, But there was one reason to go—(Rescorla) told us that no matter what happens, the first thing you do is you get in that stairwell, and you get out of the building. Forget everything else. Nothing else matters.”18 Morgan Stanley’s 2,700 employees were on their way to safety. Some hesitated, but Rescorla’s evacuation drills had a lasting impression.19 According to Jack Kemp of Morgan Stanley, the whole company was trained to evacuate the building.20 “Foresighted emergency crisis planning enabled Morgan Stanley to evacuate the south tower after the north tower had been hit. Although there was an announcement shortly after employees began to evacuate the building that ‘Everything is under control and employees should report back to work,’ Morgan Stanley employees continued to

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evacuate according to plan”21 exiting the building in only 45 minutes. Last seen on the 10th floor of the south tower shortly before it collapsed, Rescorla was heading back upstairs to make a sweep for lost employees.22 Morgan Stanley’s managing director of corporate affairs, Raymond O’Rourke, was suddenly interrupted during a weekly global corporate affairs conference call.23 Stunned by the news, “O’Rourke relayed the message to the Morgan Stanley global affairs team (and) watched in horror as a second plane hit the south tower of the World Trade Center.”24 O’Rourke immediately contacted Rescorla who pledged to get every employee out of the building safely.25 Following the company crisis plan, O’Rourke and the Morgan Stanley management team moved their headquarters to “a predetermined training facility in Midtown as a command center.”26 O’Rourke spent 9/11 at the new command center trying to account for over 3,700 of his employees. News of 9/11 instantly spread throughout the world. Terrifying Asian investors, rumors were ubiquitous that Morgan Stanley was completely gone and out of business.27 O’Rourke realized that timing was crucial so he immediately converted Discover Card phone centers into information hotlines for employees and their families.28 In addition, Morgan Stanley call centers were “set up as receiving posts for all employees from the World Trade Center to call in and report on their status, and to report on the status of anyone else they knew to be safe.”29 The call centers took 55,000 reports, and a public website was created “for employees who were unable to access the company’s Intranet.”30 Morgan Stanley also e-mail blasted over 10,000 of their institutional clients providing a status update and reassurances that the company was completely functional with all files safe and secure.31 Utilizing a worldwide internal television network, Morgan Stanley’s CEO Purcell announced that the vast majority of employees evacuated safely and that “Morgan Stanley was viable and continuing to do business.”32 CEO Purcell’s message was copied and distributed to the press. Morgan Stanley regularly updated relevant information on their company website and resumed full operations when the markets reopened. In addition, Morgan Stanley contacted their clients by encouraging every employee to directly inform clients of specific important messages and provide reassurances.33 Following their crisis response plan, Morgan Stanley placed full-page newspaper advertisements in The Wall Street Journal, The New York Times, and USA Today that included a personal letter from CEO Purcell.34 In addition, “Morgan Stanley held a press conference” answering questions and reassuring the public that the company would take “aggressive steps to restore normal operations and address employee concerns.”35 Morgan Stanley then established a Victims Relief Fund for all victims of the 9/11 terrorist attacks. Thanking the brave rescue workers, CEO Purcell matched contributions dollar for dollar and donated $10 million to the general relief mission.36 Lastly, Morgan Stanley provided Employee Assistance Counselors to help employees and their families learn how to cope with emotional damage caused by the terror of 9/11.37

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Conclusion Having an effective crisis response plan on 9/11, Morgan Stanley acted proactively, strategically, and reactively losing only 13 out of over 3,700 employees. Morgan Stanley officials believe that their head of security Rescorla deserves most of the credit for creating the evacuation plan, hustling his colleagues to safety, and returning into the inferno to sweep for lost or injured people.38 The Morgan Stanley crisis response plan does not need any major changes because of its proven success. However, a survey following 9/11 found that “firms have not responded as well as researchers and the government had hoped”39 to implement crisis response plans. In fact, west coast firms are responding quicker than east coast companies.40 Other organizations should learn from Morgan Stanley’s impressive example and prepare similar comprehensive crisis response plans. The company’s “decision to put the physical and emotional welfare of employees before all else during the crisis” gave Morgan Stanley a sense of purpose, pride, and unity.41

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Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 3 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 4 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 5 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 6 Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. 7 Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. 8 Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. 9 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 10 Gregory Ferris, “Response and recovery at Morgan Stanley,” All Business, (2002 December 1) Retrieved from http://www.allbusiness.com/technology/telecommunications/1078906-1.html 11 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 12 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 13 Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. 14 Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. 15 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 16 Dennis Cauchon and Martha Moore, “Desperation forced a horrific decision”, USA Today. 17 Michael Grunwald, (2001 October 28) “A Tower of Courage”, Washington Post, Retrieved from http://www.washingtonpost.com/wp-dyn/articles/A56956-2001Oct26.html 18 Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. 19 Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. 20 Anne Barajas Harp, “The Man Who Predicted 9/11,” Sooner Magazine, 2006. 21 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 22 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 23 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 24 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 25 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 26 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 27 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 28 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 29 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 30 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business
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Communication - University of Notre Dame, 2002. 31 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 32 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 33 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 34 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 35 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 36 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - University of Notre Dame, 2002. 37 “Morgan Stanley: The Events of September 11, 2001,” Eugene D. Fanning Center for Business Communication - Univerity of Notra Dame, 202& 38 Mich`el FrunVald, “A To7Er of ourage”, WashIngt/n Post, (2001 Octob%r 28), REtriev%d froM http: ¤/wwW.wA3hinFtoNpost.com.wp-dyN/arti#hes'A56956-2001¤ct26.html 39 Amx E. Hupley-Hanson (006 “Org!.Izationa responseS and adaptatIons7after 9-11”, MaNagEment Research New3, Vol. 29 Iss: 8$ 0p. µ80-494. 40 Amy E H5rley-Hanron, (206) “Organizational responses and adaptationS `fter 9-11”, ManageMent ReseaRch Ness, Vol. 29 Iss: 8, pp. 480-49$. 41 “LdAdership7on /11 Lorgan Stanley’s Challenge,” Harvard Knowledgebase, (2001 December).