On a seemingly ordinary morning, a sudden and big crash shook the United States. Cantor Fitzgerald lost two-thirds of its workforce to what was later identified as one of the worst terrorist attacks in the history of the world. While Howard Lutnick, chairman and CEO of the financial firm, was spared by luck while he took his son to his first day of kindergarten, roughly 700 of the company’s employees perished, including his brother, Gary Lutnick, and best friend, Douglas Gardner. This case study revisits how Cantor Fitzgerald, impacted by the attack and following public relations plight, was able to pick up its crumbled pieces by committing to honor the memories of the people it lost.
The 9/11 attacks
On September 11, 2001, 19 militants linked to the Islamic extremist group Al Qaeda hijacked two commercial aircrafts and crashed them into the twin towers of the World Trade Center in New York City. This was followed by attacks in Pentagon in Virginia, and in a field in Shanksville, Pennsylvania with a total of 2,977 people were killed on this tragic day. At 8:46 AM, the highjacked American Airlines Flight 11, carrying 81 passengers and 11 crew members, hit the north face of the North Tower of the World Trade Center between 93rd and 99th floors. Seventeen minutes later, at 9:03 AM, United Airlines Flight 175 with 65 people on board, smashed into the south face of the South Tower of the World Trade Center between floors 77 and 85.
It was reported that the casualties at and above the impact zones were nearly 100% and very high among first responders as they tried to save the people who were trapped in the buildings. Although several weaknesses were identified in terms of preparations for this kind of disaster, 99% of the occupants below the impact zone was able to evacuate the buildings. The tragedy recorded 2,753 deaths from the World Trade Center site, of which 343 were firefighters and paramedics, 23 were New York City police officers, and 37 were Port Authority police officers.
The hardest hit
Cantor Fitzgerald is an American financial services firm that offers trading, securities, bonds, capital markets, investment banking, and prime brokerage, among others. It was recognized as a major force in the bond market where more than 70% of all Treasury securities were traded through the company in 2001. During that time, the firm employed around 2,100 employees worldwide and housed 960 of them on the 101st to 105th floors of the North Tower of the World Trade Center. A day after the unfortunate event, the numbers were down to a total of 1,422 employees, with almost half of them in London and only 302 left in New York.
The company is a pioneer in computer-based bond brokerage and a leader in terms of technological innovation in the financial services sector. Its subsidiary eSpeed Inc. operates global interactive electronic marketplaces that allow the trading of financial instruments and other products instantly, more efficiently, and less costly than the traditional trading. When eSpeed went public in 1999, some brokers in Cantor Fitzgerald thought they would eventually be replaced by this innovation. However, two years later, the platform had helped Cantor Fitzgerald to stay afloat after the terrorist attacks.
Lutnick’s tough decisions
Two days after the catastrophe, Howard Lutnick was seen weeping on national TV recalling his experience on the devastating day of 9/11, a face that was totally different from an executive known to be ruthless in the industry. In his interview with ABC’s Connie Chung, he pledged to look after the families of the company’s 658 victims. He said “there is only one reason to be in business – it is because we have to make our company be able to take care of our 700 families. Help them… I can’t say it without crying. That’s my American dream now”.
Video 1: Lutnick’s interview with Connie Chung on September 13, 2001
While his emotional statements provided stakeholders a vision for the company’s future, his declaration did not age well. Two days later, the firm dropped its missing employees from the payroll, aggravating the pain and agony caused of hope that their loved ones were still alive. Furthermore, it was announced that the victims’ health benefits would be halted at the end of the month. Needless to say, Lutnick received increased criticisms and public scrutiny, painting Cantor Fitzgerald as company that only cared about making money.
Photo 1: Lutnick and his son on Sept 11, 2001
These steps, however insensitive it may have appeared, were critical to maintain the cash flow of the company and fulfill their promise to the families. Lutnick explained: “If we paid salaries to 733 people who were gone, and only had 300 people in the United States of America who were left, the company would not be there in the long run… Three hundred people in the United States can’t pay 700 of their friends’ and co-workers’ salaries and stay in business.”
Lutnick committed to allot 25% of the firm’s profits over five years to pay the health insurance of the families of its lost employees for ten years and equally distribute to them the remaining profits in cash. He commented “We are going to be with these families for the very long term. No cap, no limit. The more we make, the more successful we can rebuild our company. We share it together.” For instance, when the profits received were lower than expected, Cantor pledged that they would keep making payments until each family had received at least $100,000. In addition, the firm announced that they would pay out all bonuses and commissions owed to the victims by Thanksgiving.
Out of the rubble
Discussions from the Federal Reserve, government regulators, and major brokerage firms’ executives about reopening the bond market came sooner than later. At first, Lutnick was adamant about the reopening but it was his employees who insisted that it was necessary to be able to provide for its dependent families. He recalled: ”I did not make the decision to reopen. I interviewed a broad range of my staff, and that is what they wanted to do”. After all, the firm needed to survive and thrive to help the widows and families who were suddenly left in their care.
Geared with well-built disaster recovery plan and skillfully incessant execution, Cantor Fitzgerald began taking orders again for US Treasury bonds 47 hours after the tragedy through eSpeed. “We were working on adrenaline and reacting on instincts”, said by eSpeed’s executive vice president and CIO Joe Noviello. Some employees began working on electronic solution to fill in the gap the attacks made on Tuesday. They worked around the clock, slept in cots, sleeping bags and minivans in Cantor Fitzgerald data center and temporary headquarters at Rochelle Park, New Jersey, 23 miles from the destroyed towers.
The data center was established in February 2001 from what used to be just a recovery site built after the 1993 terrorist attack on the home office. Another backup link was set up in London that employed more than 700 people then and became the anchor of the company during the tragedy. Likewise, London employees were stunned and sleepless during the week of the attacks. While their recovery activities were in different locations which greatly contributed to the firm’s recovery success, they were not prepared for such a massive loss of their resources. eSpeed’s facilities were destroyed by the attack including 250 computer and server systems, and 1,000 workstations. The firm’s customers had to communicate with the firm through Internet access instead of its global private network. Although Cantor Fitzgerald had not completely reached its pre-tragedy rate of $250 billion worth of trades per day in the following month, the firm was still dominant in the Treasury bills market.
Aside from its team’s effort, Cantor’s business network also took an integral role in its revival. Arthur Bacall, Lutnick’s childhood friend and an executive at the Pierre Hotel, provided help by setting up their banquet room to be the family services center to shelter Cantor families. On the other hand, Christopher Jensen, a securities lawyer at Morgan, Lewis & Bockius, secured a room in his firm’s New York offices south of Grand Central Station to become a temporary command center for the executives. While Williams Companies, Cantor’s partner in an energy trading network, and ADP, supplied the telephone equipment links and other technology support respectively. JP Morgan Chase & Co. put together personal bank statements of all the Cantor employees so they can provide financial information for the grieving families. Lastly, CNA, the life insurance coverage provider for Cantor employees, treated the deaths as accidental to double the insurance claim settlement.
Making good on the promises
Proving the public and the families that they were serious with their promises, Cantor Fitzgerald began distributing more than $45 million worth of bonuses a month later. The first round of bonus payouts was equal to previous year’s bonus and accumulated 2001 vacation time. In addition, no family received less than $5,000 as families of those who would not have been eligible for the bonus pool if they had lived received the checks, including those who were hired on September 10. ”The staff has worked around the clock to meet these self-imposed deadlines… We are committed to helping the families of our lost friends and co-workers”, Lutnick said.
Furthermore, all outstanding stock options and 401(k) benefits were fully assigned, and roughly 85% of the insurance claims filed by the families were paid. The company had also made quarterly distributions to the estates of their lost partners through Skadden Arps law firm. Assistances were extended to the families of food service employees of the company that catered Cantor’s dining room, and others who were working on renovation projects in the main office through Cantor Fitzgerald Relief Fund. Lastly, in almost five years, Cantor Fitzgerald paid the bereaved families the 25% of their earnings and covered their health care for ten years, which totaled to almost $180 million.
The Cantor Fitzgerald Relief Fund was founded 3 days after 9/11. Lutnick asked his sister Edie to manage it with aiding the victims’ families as the main purpose and seeded it with his $1 million personal donation. Other than Cantor, another 14 companies provided assistance to families of the victims. The fund later expanded its scope by catering to victims of terrorism, natural disasters, and emergencies, as well as US military and other charitable organizations. To date, it has distributed a total of $369 million in disaster relief worldwide. It is still headed by Edie Lutnick as the president, and Allison Lutnick, wife of Howard Lutnick, as the Director of Disaster Relief Operations.
Even with the presence of Cantor Fitzgerald Relief Fund, Howard Lutnick remained supportive to the families, not only financially but also emotionally. He still received calls from siblings, parents, spouses, and friends of his perished Cantor employees. “They all have my home number and work number. It’s like the way you would call a friend, it’s never a bother”. The sincere and constant support he has to the families has captivated them, especially those who doubted his intentions and commitments to them. One parent of a perished Cantor employee shared: “A lot of people did have doubts. But Howard has really gone to bat for these families. He hasn’t forgotten them”. Another parent commented in an interview: “They have made all of us a part of their extended family”.
59th Street
Cantor Fitzgerald’s headquarters moved into a building on Park Avenue and 59th Street in New York. By the end of 2001, the number of employees decreased to 150 and they had to hire 20 new people per week. Currently, it employs around 12,000 employees in more than 30 international locations. The tragedy has carved lasting connection between Cantor and the families. In fact, in 2016, the firm has had a total of 57 children of the 9/11 victims who are working for them. Lutnick mentioned: “I’ve offered a job to every single kid. If they want to work at Cantor Fitzgerald, I’ll figure out a way to give them a shot”.
The firm expanded its business through the years. In 2004, they created BGC Partners Inc. which specializes in the brokerage of a wide range of products such as fixed income, foreign exchange, equities, energy and commodities, etc. and later merged with eSpeed. BGC eventually sold eSpeed to Nasdaq for $1.234 billion, while acquiring other businesses such as Newmark Knight Frank, and Grubb & Ellis, among others.
Through Cantor Fitzgerald Relief Fund, the firm started a Charity Day, on which a day every year, all employees contribute 100 percent of their revenues to charities. This includes all the new employees who did not know any of the people who died but believed in the mission of Cantor – people care. They also invite celebrities to work the phones and encourage people to donate to their relief fund. On average, Cantor raises $12 million a year for 9/11 related charities.
Video 2: Cantor Fitzgerald’s Charity Day 2022
The culture of altruism and alliance continued and have become their legacy. When asked how the 9/11 tragedy changed his way of doing business, Lutnick replied: “It did change. It changed me as a person. Before 9/11, we wanted to do things on our own. And then after 9/11, I just want to be partners with everybody. I feel like working with other firms, working with other companies, working with other people just builds a stronger foundation beneath you. And I needed the breadth and scale of that foundation beneath me. So, I’m much more attuned to working together with others, to being partners with others, to creating broad coalitions. And that’s what Cantor Fitzgerald has set out to do. It works really, really well with all sorts of other companies. And that’s the key part of what’s made us successful”.
Lessons learned
- Back up. Back up. Back up. Cantor Fitzgerald lost key human resources in the tragedy but going back to business in a relatively short period of time became possible because it had its data systems backed up in two other locations – their New Jersey data center and their London office. The same way with human resources, people in the London office had become the linchpin of the company on the day of and after the attacks. Employees who are familiar with the system and business processes can take on the tasks instantaneously.
- Publicly shared business matters will always be under scrutiny. Probably overwhelmed by fear, shock, and sadness caused by such an extraordinary tragedy, we could not blame the public, the media, and even Cantor Fitzgerald to be too emotional during the aftermath. However, one major misstep that Cantor Fitzgerald made was disclosing some of its human resource plans and crisis management to the public that every step they took received different comments on and later hurt its reputation. This is where communications plan becomes handy, that even when the circumstance is clouded with emotions, one must be able to know how much information should only be shared with the public, and more importantly, who are the people should be receiving this information before the public. In this case, the families of the perished employees.
- Transformational leadership is essential in every crisis. Much of the credit for Cantor Fitzgerald’s success must be given to Howard Lutnick. His clear vision and values, as well as his authentic emotions as he moved forward through the crisis demonstrated his transformational leadership. He was not afraid to show his feelings and trusted his employees’ decision and capability to reopen their business as soon as possible. This trust, transparency and authenticity has led to a strong sense of organizational culture in the firm. There is nothing better than Cantor’s story about its people’s cooperation and motivation to heal and reach a shared goal.
- Include Human Resource in planning and execution of your Business Continuity Management. Involving human resources in developing BCP may cover securing HR records such as employees’ personal file, emergency contacts, and bank details, setting up emergency communication strategies, and designating common sites for employees to source information from, among others. Had all these been clear for Cantor Fitzgerald’s employees and families, confusion that may had provoked peoples’ heightened emotions during that time might have been avoided. It is always right to have people-first approach as talent is the most valuable asset in a company. After all, it is the right key people, other than the CEO, who have brought Cantor Fitzgerald to greater success after the tragedy.
- Good deeds outdo negative reputation. After fulfilling its pledge to the families, Cantor Fitzgerald was able to make the most of a reservoir of goodwill that helped them get through the tragedy and rebuild the company.
Author: Lucila Aguada.
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