Re: state EO programs

[John Logue <jlogue@kent.edu>]

Tom queried me about how we identify retiring owners.  Regrettably we 
really can't.

What we are doing is using the Harris Industrial Directory (manufacturing 
is our core
constituency because of the wage scale), screening for closely held 
companies with
25-250 employees, and mailing the seminar invitations.  Our reasoning for 
the employment
limits have been that companies with fewer than 25 employees are poor 
candidates for
ESOPs while those over 250 get plenty of professional advice.

We mail some other lists as well.

We've had a pretty full program for the last 5 years.  Registration has 
dropped this fall to
15 per program from about 35, probably reflecting the sudden economic 
downturn with its
pressure on companies and the reduction in multiples for valuations.

John

At 11:41 PM 10/24/2001, you wrote:

>Ms. Lawrence:
>
>I think Ohio and Vermont probably provide the best examples of what may be
>possible and desirable on the sub-national level (along with what's
>happening in Maine, Canada, and Sweden).   Even when it was still active,
>Hawaii's program never got beyond the following:
>
>- Sponsoring small-scale--but inadequately promoted--conferences about
>every other year;
>- Building a small library of EOP lit and offering limited technical
>assistance upon request;
>- Producing an annual "progress" report and Governor's Proclamations
>observing EOP Week in Hawaii (the latter received very little publicity and
>was also not heavily promoted); and
>- One attempt to identify and notify business owners approaching
>retirement.
>
>The annual report became our main promotional piece because there wasn't
>much progress to report, and because it was difficult to measure "progress"
>with precision (which was primarily defined as any increase in the number
>of ESOPs in Hawaii because that was thought to be the most quantifiable
>criterion).
>Our enabling legislation also mandated an advisory committee, which met
>with some regularity for almost ten years (from 1986 to 1995) until the EOP
>statute expired and wasn't renewed.   Our legislature approved renewal, but
>our Governor said we could do the same things without enabling legislation.
>So he vetoed it, and the Legislature didn't want to challenge the veto of a
>relatively insignificant bill.   (In fact, Hawaii's legislature has
>overridden a veto only once since statehood in 1959!)   Not surprisingly,
>nothing has happened since because it is now left up to the discretion of
>the Governor's Economic Development director.    He is a mainstream
>economist who thinks ownership doesn't matter.    The enabling statute was
>amended in the late 80s to add the importance of worker participation, but
>that didn't matter either in the sense that the program never had any
>dedicated funding or staff.   I did most of the staff work on a volunteer
>basis.
>
>As a result, I think if a subnational program in the U.S. could do only one
>thing, it should be to accurately--and annually--identify and notify
>business owners approaching retirement.   If done in every state, I think
>this could do more than anything else on the subnational level to broaden
>ownership in the U.S. at present.   Our one attempt at this in Hawaii about
>ten years ago was relatively ineffective, in part because the direct mail
>firm we hired to develop a mailing list said it was difficult to identify
>owners by age.   I thought perhaps Ohio had perfected this, but John Logue
>has told me they, too, have this problem.   Nevertheless, it is my
>impression that OEOC still has done this much more effectively than anyone
>else so far.
>
>So, in summary, I agree with your criteria below as the minimum a
>meaningful program should be measured by--with regular and successful
>identification of retiring owners being the key.   You may want to ask John
>for a short summary of how they identify retiring owners, or at least list
>him as a "how-to" reference along with your benchmarks if appropriate.   I
>also think Jim Houck mentioned the importance of enabling legislation, and
>I agree.    Even though it cannot guarantee the survival of a program, it
>can help.    But I think it should be relatively specific in terms of what
>the program can do so it is not left up to the discretion of each new
>gubernatorial appointee.   I seem to recall someone was working on model
>state legislation (was it Maine?), which also might be a good "how-to"
>reference.
>
>
>
> 
>
>                     Sara 
> Lawrence
>                     <sara@cfed.org>         To: 
> "'EOsubnat@cog.kent.edu'"
>                     Sent 
> by:                 <EOsubnat@cog.kent.edu>
>                     owner-eosubnat@co       cc: 
>
>                     g.kent.edu              Subject:     state EO 
> programs
> 
>
> 
>
>                     10/23/01 04:27 
> AM
>                     Please respond 
> to
>                     EOsubnat 
>
> 
>
> 
>
>
>
>
>
>Hello,
>I would greatly appreciate any feedback on the following:
>
>We are working on a project at the Corporation for Enterprise Development
>(CFED) benchmarking outcomes and policies at the state level that are
>promoting asset building and asset protection for state residents.  Within
>this "Assets Report Card" we are including state policies that promote
>business capital as one set of asset building strategies.  Within business
>capital, one of our measures evaluates  employee ownership programs at the
>state level.
>
>In this measure, we want to make sure that the program meets a certain
>threshold, so that we aren't praising a state that has an EO program that
>isn't good, or effective.
>
> From reading John Logue's recent article, I picked these out as
>requirements
>for a quality EO state program:
>
>-disseminates info
>-provides assistance with succession planning
>-encourages employee participation
>
>Do you think this is a decent standard, or do you have any suggestions on
>what we should or should not consider in determining a threshold for a
>quality EO program?  The difficulty here is that we want to define a
>standard for a quality program, yet we don't want to overwhelm
>state policymakers with requirements that seem impossible for state
>officials to consider.
>
>The end result of our project will be a set of criteria, where we can
>"check" or give credit to a state for having these elements in their EO
>program.
>
>Suggestions on what you consider essential for an effective EO program at
>the state level would be greatly appreciated.
>
>Sincerely,
>Sara Lawrence
>
>
>Sara Lawrence
>Corporation for Enterprise Development
>123 West Main Street, 3rd Floor
>Durham NC 27701
>919.688.6444
>http://www.cfed.org