Don’t wait for older workers to retire before you develop succession plans

Question: Here’s an issue we need to come to grips with — our key executives are approaching retirement. Additionally, as I look at our managerial team in general, I see more and more gray hair. What concerns me is that we’re not preparing for the exit of these key players. I’d like to see the company implement a formal succession plan. Any suggestions on how we should get started?

Answer: Succession planning is a crucial process for most organizations today. It is the process by which successors are identified for key posts and targeted career development activities are offered. While succession planning has always been a part of human resources programing, it has become increasingly relevant as organizations like yours confront the realities of an aging workforce.
Specifically, the Baby Boomers (i.e., individuals born between 1946 and 1964) are getting older and retirement time is just around the corner. There are major organizational implications in this. By definition, these are experienced individuals (they have been in the workforce for decades). Further, in many cases, they occupy important and strategic positions. So, when they leave, significant "know how" will leave, too.
It is also worth noting that demographic data indicates that there are fewer Generation X (i.e., those born between 1965 and 1981), or Generation Y (i.e., those born after 1982) employees to replace these aging Baby Boomers – the Baby Boomers are simply a larger age cohort. So, unless organizations prepare for it, when the Baby Boomers retire, the gaps may be formidable.
Cast against this backdrop, then, succession planning cannot be something that you are simply pondering or researching – it needs to be something you are actively practicing. Right now. Today.
You cannot afford to wait until tomorrow, because when tomorrow comes, somebody else will have retired and you may not have a ready replacement waiting in the wings.
Some benefits that organizations realize from implementing formal success plans include the following:
— Increased precision in employment selection and placement because of clearer targeting of organizational success factors.
— Comprehensive development of employees by offering systematic and structured developmental opportunities.
— Increased understanding of the skill sets of employees through the use of formal measurement systems.
— Fostering of a collaborative corporate culture based on the sharing of knowledge, insights, and experiences.

Typically, an effective succession planning process is comprised of the following ongoing activities:
Studying and documenting current positions and people – This step is absolutely foundational. The idea is to describe the activities that attached to each position in the organization (i.e., job analysis, role analysis, task analysis) and the characteristics necessary to carry them out (i.e., knowledge, skills, abilities, and personal attributes or behaviors). Some have compared this step to an audit. It is a valid comparison in that data are collected and studied so that gaps or surpluses can be identified.
Forecasting organizational trends – This involves looking forward and anticipating what the future holds. What products or services might be pursued (and eliminated)? What will be the implications of doing so in terms of the jobs the company offers and the people who will occupy them?
Developing a succession chart – In essence, this is analogous to what the Green Bay Packers do each year when they develop their depth chart. Brett Favre is the starting quarterback. Doug Pederson backs him up. Someone else is third string.
The same is done for each position on the team. This same approach is applicable to a business organization. Formally listing "who’s who" provides a structure for planning for the next aspect of succession planning, the creation of individual development plans.
Implementing individual development plans – Drawing upon the Packers example again, knowing that Doug Pederson backs up Brett Favre, the question becomes, "What does Doug need to know, be able to do, etc. to step in when called upon (i.e., when Brett retires)? Perhaps he needs some focused understudy time with Brett where Brett shares his perspectives, insights, best practices, etc.
Perhaps Doug will benefit from building his skills in the area of passing mechanics. And so on. In short, what needs to happen is the creation of a program of ongoing learning and development so that each player learns the "playbook" and builds skills so that he can become a player who makes increasingly responsible contributions.
Evaluating program effectiveness and making fine-tuning adjustments – It is important to note that succession planning is not a one-time activity. It is an ongoing effort because organizational members are perpetually coming and going.
The idea is to build a "system" which is dynamic and adapts and evolves to match changes in both the external and internal business environments. This means studying data gathered from the steps listed above and then making changes to ensure that the succession planning process remains on-target.

A couple of concluding thoughts. Historically, succession plans have been closely held, even secretive. Today, like other organizational processes, succession planning is becoming more open and free flowing. After all, if you are planning someone’s future, it makes sense to include him/her in that planning.
Additionally, if succession planning is well done it has the potential to shape the corporate culture. Think about it.
By following the steps outlined above, the company is, in essence, telling its employees, "You are important to us. We recognize you as a valuable asset. We want to help you achieve your potential. And, we want you to do that here, with us, rather than feel the need to leave us in order to move to the next level in your career."
Finally, succession planning reinforces the concept that employee development is an important duty for any manager within the organization. This message is consistent with the old adage about an effective manager being the one who works himself/herself out of a job.
By emphasizing employee development, the organization is clearly saying that one primary ingredient of the managerial success formula is to hire the best people and then develop them to the fullest.
By following the principles outlined in this article, succession planning can become an important part of the organization’s ongoing strategic agenda, rather than something that is done only when the boss retires.

Daniel Schroeder, Ph.D., of Organization Development Consultants Inc. (ODC) in Brookfield provides "HR Connection." Small Business Times readers who would like to see an issue addressed in a column can reach him at 262-827-1901, via fax at 262-827-8383, via e-mail at schroeder@odcons.com or via the Internet at www.odcons.com.

April 4, 2003 Small Business Times, Milwaukee

In his State of the Union address in January, President George W. Bush proposed two new savings accounts: lifetime savings accounts (LSAs) and retirement savings accounts (RSAs).
As of March, the president’s budget was still being debated by the U.S. Congress. While political commentators analyze the wisdom of the plan and the likelihood of passage, it is not too early to think about the impact of the proposals if they become law.
Here are some important points about each of the proposed savings accounts:
LSAs
— Each taxpayer could contribute $7,500 annually (the $7,500 would be indexed for inflation).
— There would be no income tax deduction for the contribution.
— There would be no age or income limitation on who is eligible.
— Contributions could be made even if the account holder has no earned income.
— Withdrawals could be made at any time for any purpose without payment of federal income tax.
RSAs
— The first three points above would also apply to RSAs.
— RSA contributions could not exceed earned income.
— Only withdrawals after age 58 or death or disability would be free of federal income tax.
Lobbyists representing life insurance companies have been working to change various provisions of the President’s budget bill, including RSAs, LSAs, and the proposed tax exemption for dividends. Why? Life insurance companies sell annuities. Most annuities are purchased with after-tax dollars.
When an annuity is paid out, distributions in excess of the contributions are subject to income tax. LSAs and PSAs would be tax-exempt, not tax-deferred. Assuming the same yield and the same expense ratio, the RSAs and LSAs would provide more value to the owner than an annuity, due to the tax exemption for the distributions.
LSAs and RSAs could also affect the tax-exempt municipal bond industry, as LSAs and PSAs would provide alternatives to a tax-exempt bond or bond fund.
LSAs and RSAs would offer single taxpayers the opportunity to save up to $15,000 annually, with all future growth tax-free. For married couples, the annual savings opportunity could equal $30,000.
The absence of any earnings requirement for the LSA would make this an opportunity for grandparents and family members to make gifts to young children.
Section 529 plans and other tax favored education accounts will still be available. The LSA would provide another option attractive to those who want to maximize investment control and flexibility on spending the distributions. Some commentators are concerned that the flexibility of the LSA would be too great. Instead of using LSAs to save for retirement, disability and education, taxpayers instead may use the account for short-term consumption.
The RSAs would consolidate retirement savings. Existing Roth IRAs would be unaffected, except for a name change. Traditional IRAs could be converted to RSAs (with payment of income tax). If the RSAs become law, unconverted traditional IRAs cannot receive any additional contributions, other than rollover contributions.
Until the legislation is finalized, it is too early to take specific action. If the RSAs and LSAs appear attractive to you, hold off on investments with back-end surrender charges that will make it difficult to use the funds for an LSA or RSA in the future.
If the proposals become law, then it will be time to do a specific analysis of the benefits of the RSAs and LSAs, compared with other options. Wait and make sure that Wisconsin adopts the federal changes.
Traditionally, Wisconsin, like most states, amends its laws to track changes to the Internal Revenue Code. This year might be different. Wisconsin has severe budget shortfalls. If significant cuts are made at the federal level, it’s not automatic that Wisconsin would adopt them.

Sally Merrell, a partner with Quarles & Brady in Milwaukee, is the immediate past chair of the Real Property, Probate and Trust Law Section of the State Bar of Wisconsin.

April 4, 2003 Small Business Times, Milwaukee

Small business owners beware. According to a recent report issued by the Association of Certified Fraud Examiners (ACFE), as many as one in 20 small businesses may be victimized by fraud.
In its 2002 Report to the Nation on Occupational Fraud and Abuse, the ACFE concluded that small businesses are the most vulnerable to occupational, or employee, fraud. In fact, businesses with fewer than 100 people are more likely to be subject to fraud than companies with more than 10,000 employees. And while the largest companies suffered losses of $97,000 on average, small businesses’ losses averaged $127,500.
Employee fraud is only one part of the problem, reports the Wisconsin Institute of CPAs. Small businesses need to be alert for customers and vendors who commit fraud, as well. Here are some of the ways CPAs say you can help protect your company’s assets from the unscrupulous.

Employee fraud
Scrutinize the hiring process. First and foremost, you must make every effort to hire the right employees. Conduct thorough background checks that verify past employment history, references, education and certifications, and the absence of a criminal record. This is particularly important if the employee will be handling inventory and cash.
Create a ‘no tolerance’ culture. The most proactive step you can take in preventing employee fraud is to develop a culture that emphasizes ethical business practices. Let employees know that you are committed to preventing fraud and have in place a written policy that informs employees of the consequences for unethical behavior. Be sure to distribute this policy to all employees.
Separate accounting duties. Small businesses are often vulnerable to fraud because they lack the accounting and management oversight found in larger firms. For example, in many small businesses one person is responsible for all accounting and bookkeeping transactions. Having the same person open mail, make deposits, pay invoices, reconcile bank accounts, and oversee petty cash creates an environment ripe for fraud.
Small business owners should consider having bank statements sent to their home where they can carefully examine them and look for large or unusual deposits or payments. Handing the open statements over to employees in charge makes it clear that they are being reviewed.
Keep in mind, too, that when it comes to check signing, it is wise to require more than one signature on large checks.

Customer fraud
Be alert for stolen credit cards. Purchases made with stolen credit cards are proliferating at an alarming pace. To help protect your business, insist that your employees keep the customer’s card in their possession until they have verified that the signature on the back of the card and on the sales receipt match. Employees should also be trained to look for suspicious behaviors that might point to credit card fraud. These include nervousness, attempts to rush the transaction through just before closing or making multiple purchases of identical expensive items, among others.
Verify Internet orders. If your business accepts online orders, you may want to look into a credit card fraud protection system. The Address Verification System (AVS), one of the most widely used, confirms that the billing address provided by the consumer matches the billing address that the credit card issuing bank has on file for that customer. You can obtain AVS from your merchant account provider. Also, you should be especially vigilant when you are asked to ship merchandise to an address that differs from the credit card billing address.

Vendor fraud, scams
Educate your staff. Businesses are frequently targeted by a number of scams, many of which have been going on for years. The best prevention is to educate your employees about the most common types of scams against small businesses and to limit your purchasing to people you know and trust.
Do your homework on suppliers. If you are considering a new supplier, check the company’s reputation with the Better Business Bureau. Paper pirates, as they are sometimes called by law enforcement officials, often telephone or visit small businesses to sell copier paper and office supplies that are overpriced and ultimately never delivered. Don’t buy from new suppliers without verifying their existence and reliability.
Monitor who chooses and works with vendors. As a business owner, it’s your job to stay on top of all aspects of your business, regardless of how much you may trust your employees. Make sure you periodically review the vendor selection process and ensure that the employee who selects vendors is not the one making all the purchases and payments. You don’t want to find yourself in a situation where an employee is paying himself or herself, instead of the vendor, and taking cash from your business.
Be wary of unusual invoices. Many small businesses are scammed by phony solicitations that come in the form of an invoice requesting payment for a directory listing. These official looking invoices are designed to mislead unsuspecting businesses into thinking that they come from a legitimate publisher. In many cases no such directory exists or, if it does, its distribution is typically very limited.
Train your employees to be on the watch for invoices with disclaimers. By law, an order form that looks like an invoice is required to carry a disclaimer in large type to the effect that, "This is not a bill. You are under no obligation to pay the amount stated unless you accept this offer."
Finally, be sure that those individuals making purchasing decisions know to be suspicious of callers offering bargains that must be acted on immediately.

The above was provided by the Wisconsin Institute of CPAs (www.wicpa.org), based in Brookfield.

April 4, 2003 Small Business Times, Milwauke

Poll: employees not worried about job loss, don’t see anti-Arab expressions

With war raging in Iraq, the latest national "America At Work" poll commissioned by the Employment Law Alliance shows that the vast majority of American workers do not believe the conflict poses a direct threat to their job security.
Scott C. Beightol, CFO of the Employment Law Alliance and a partner in the Labor and Employment Law Practice Area of the Michael Best & Friedrich law firm in Milwaukee, said the poll is believed to be the first national survey in which workers were questioned on the impact of war on the workplace just a few days before the fighting erupted.
Of those polled by the research firm of Reed, Haldy McIntosh & Associates, 84% said they’re not worried about losing their jobs because of the war with Iraq.
Of the nearly 1,000 people contacted by researchers, almost 40% said they personally know someone in their workplace who has been or is likely to be deployed. Highlights of the survey include:

Canal Street, the main east-west thoroughfare in Milwaukee’s Menomonee River Valley, will be redesigned in about half the time an engineering firm would normally take to complete the project.
The street, which currently traverses only about half the length of the valley — will be rebuilt and extended west to Miller Park to facilitate redevelopment of the 1,200-acre industrial valley.
Apart from completing the design process in the 12 months allotted by the city, designers will have to solve a plethora of obstacles, ranging from environmental remediation to flooding and stormwater treatment challenges.
Engineers have to figure out how to reconstruct 1.3 miles of existing roadway from 6th Street to 25th Street – and where to route and 1.5 miles of new roadway from 25th Street to the southeastern corner of Miller Park’s parking lot.
The new and rebuilt Canal Street will be a four-lane road with a 10-foot-wide path along the entire northern side of the road to accommodate bike traffic both ways.
"Normally we would do something like this in 18 to 24 months, instead of 12 months," said Paul Boersma, environmental marketing director for the Milwaukee office of HNTB Corp. "Using a team approach really helps."
HNTB is one-half of Milwaukee Transportation Partners, a joint venture with CH2M Hill.
The two nationwide firms, both of which have offices in the city, joined in June of 2001 and submitted the successful bid to the Wisconsin Department of Transportation for the redesign of the Marquette Interchange.
The partnership was awarded the design contract for Canal Street in January, according to Kristine Martinsek, who is handling community involvement for the project.
"We have formed an advisory committee that has met twice," Martinsek said. "We met once to get a general overview and once to look at design alternatives which will be presented at the public meeting."
The two proposed designs address questions of where the new sections of Canal Street should be routed, according to Martinsek.
Routing questions must address "missing existing utilities, creating more land for economic development, minimizing the size of bridges that need to be made and creating access for all the parcels adjacent to the proposed alignments," Boersma said.
The general public got its first look at design alternatives for Canal Street at a public meeting March 26 at Miller Park’s Uecker Room. However, according to Boersma, even after routing questions are answered, much of the design work remains to be done.
"This project will need to integrate with an overall environmental remediation project to handle contamination in the CNC Shops area (east of Miller Park)," Boersma said. "That will include capping of soils with clean soil caps. … We would expect the whole CNC Shops area to be raised from a few to several feet above its existing level."
While other professionals have already planned a series of created wetlands that will treat the stormwater for the west side of the redevelopment area, stormwater treatment options for the east side of the project are still up in the air, according to Boersma.
"We are much more space-constrained on the east side of the valley, but we would like to integrate some stormwater management features with some open spaces we are creating along the river edge," Boersma said.
The stormwater features will be designed to cleanse stormwater, rather than retain excess rainwater and prevent flooding, but the potential for flooding will influence designs in the west end of the valley, according to Boersma.
"On the west side of the valley, there are some larger flood plain issues that are being evaluated as part of the overall project," Boersma said. "We need to determine how to keep the flood waters from spilling out of the river banks."

April 4, 2003 Small Business Times, Milwaukee

When it comes to money and investing, doing it the right way is essential. Now, one person’s "right way" may not fit another’s, but every investor needs a game plan.
So let me offer some rules that apply whether you are a value investor, a growth investor, an active trader or just someone who believes in capitalism and wants a shot at building a retirement portfolio or a stash for the kid’s college fund.
First and always:
Think before you dig into your pocket. Do your homework. Read, read and read. Don’t rush into any investment, no matter how good it may sound or how many friends have already committed funds to it. Without exception, every investment has pros and cons. Know what they are.
Know what you are buying. Peter Lynch, the legendary mutual fund advisor, once said that he never put money in a company producing a product or service that he didn’t understand. He learned that from Warren Buffet. Both men have done quite well for themselves and investors.
This doesn’t mean that, like Buffet, you should avoid anything that is "technology" oriented. It does mean that you should attempt to learn as much as you can about software, hardware, the Internet and related issues.
And don’t accept somebody’s 30-second explanation of a fancy piece of software that took years to develop. Study everything you can on the company and its products – before you invest.
Don’t be afraid to go against the grain. If all your friends are excited about a particular investment, you might also consider buying it – but do your homework first. If it turns out that each person bought because another recommended it, you might want to consider the motivations of the original source.
Monitor your investments regularly. You don’t need to rush home every evening and punch up your stocks or funds on Yahoo! or America Online. But you should carefully monitor each investment in your portfolio. We have all heard the adage the squeaky wheel gets the oil. Investments that do not perform in line with your expectations should get immediate attention.
Don’t be afraid to admit you made a mistake. If you invest in a stock and it goes the wrong way, don’t be swayed into throwing more money after it. Don’t feel that every investment you make must turn out to be a winner. Cutting your losses early on may save you more in the long run. Consider using stop orders at a predetermined price to limit losses and protect profits. This does wonders to reduce the emotional involvement in the often-difficult decision to sell.
Don’t be afraid to put money into an investment that has experienced a major price decline. But do so only after careful research and only after you have found an investment thesis that makes sense to you. Keep in mind that many investments get beaten up for good reason.
Take all research and chatter about a stock with many grains of salt. That goes for what analysts are saying and for what you may read on a stock chat room. But do read everything you can and learn to synthesize it all. Eventually, you will learn to cut through all the clutter and you will make better decisions more often.
And finally, ask questions – all the time. Never stop pursuing knowledge about the financial markets and investment strategies. When it comes to investing especially, knowledge truly is power.

Michael R. Murray is a certified financial planner, practitioner and a vice president of investments at the Franklin office of Robert W. Baird & Co. He is a member of The Cairns Group, a team of Baird financial professionals and support staff working exclusively on behalf of Baird clients.

April 4, 2003 Small Business Times, Milwaukee

Age: 45
Title: Wisconsin Commissioner of Insurance
Education: 1979 graduate of Pitzer College, Claremont, Calif.; earned law degree in 1986 at the University of Wisconsin-Madison.
work experience: Served as vice president and general counsel of United Government Services, Milwaukee; litigation partner, Michael Best & Friedrich, Milwaukee; assistant district attorney of Milwaukee County; attorney, Legal Action of Wisconsin, Madison.
Family: Lives in Fox Point with wife Loren Leshan, and their son Lorenzo.
hobbies: Wind surfing, sailing and bicycling.
Greatest advice: "My father taught me to be honest in dealing with people and to never sell something you don’t believe in. (Milwaukee County District Attorney) Mike McCann, another mentor of mine, taught me to approach every issue with integrity. And Gordon Baldwin, a constitutional law professor, taught me the importance of being intellectually honest about what the law says and what the law means, and to be fair in its application."

Kenneth Szalli, director of the Port of Milwaukee, readily acknowledges that much of the privately owned land surrounding the port resembles a war zone that time has forgotten.
For centuries, the Port of Milwaukee has served its maritime trading function — ships and cargo come in, and ships and cargo go out.
Indeed, the Port of Milwaukee provides about 2,000 jobs, creating about $94 million in personnel wages and salaries and generating about $80 million in annual revenues, according to a study by the St. Lawrence Seaway Development Corp.
However, other Great Lakes cities have begun to rethink the missions of their ports and the potential uses of the nearby real estate.
Szalli discussed the Port of Milwaukee’s future in a recent interview with Small Business Times executive editor Steve Jagler. The following are excerpts from the interview.

SBT: The Port of Milwaukee continues to function as a viable Great Lakes commercial port. What is the traffic going in and out of the port?
Szalli: A round number – last year, we did 3 million tons of cargo. Over the last 15 years, tonnage in the port has doubled. We are growing, we are healthy and we continue to do our thing here.

SBT: Has the economic slowdown, with Wisconsin manufacturers losing or shifting so many production jobs to China, affected the port? So many manufacturers are shifting production to China, and the Chinese are then pirating that technology and selling it for lower prices, undercutting the American manufacturers.
Szalli: This is the world conundrum. That’s what it is. This is something we’ve been seeing for a number of years. Interestingly enough, the impact of that on the port is not (significant).

SBT: I suppose that if a Wisconsin company outsources some of its production to China, that product ultimately has to come back, and the port would still get the business anyway.
Szalli: Yes, it comes back. Although, I have to admit, that as a citizen, I’m concerned about what I see. I think there is kind of a bargain with the devil that goes on.

SBT: What about the steel tariffs that President Bush imposed on foreign steel to protect American steel? He promised the tariffs when he was campaigning in Ohio and Pennsylvania, and so he threw them that bone. But Wisconsin manufacturers have told me their steel prices have gone up by more than 30% since those tariffs were raised. Has that had an impact on the port?
Szalli: That’s a tragedy. You can quote me on this. That’s one of the dumber things Bush has done. The tariffs have cost more jobs in this country than they saved. At the port, we lost two-thirds of our steel tonnage. We went from 175,000 tons to 47,000 last year.

SBT: I understand that what comes in and out of here changes over time, but the essence of the port, of its function as a Great Lakes port, has remained the same, hasn’t it?
Szalli: Yes. Going back probably to when the first guy came here in a canoe. That’s one of the things that made Milwaukee a great city – to bring things in and out by water. It’s a functioning, thriving port.

SBT: Yes. But have you or the Board of Harbor Commissioners ever given any thought to the notion that the land around the port could be put to a higher, greater use? Today, the land looks like a war zone.
Szalli: First, that’s not port property you were looking at. We only have jurisdiction over our property. On an ongoing basis, we talk to the Department of City Development. Years ago, the port turned over land for public use – the Summerfest grounds.

SBT: Could any more port land be turned over for public use, or has that been cut to the bone?
Szalli: It really is. All the rest is privately owned. For instance, if somebody wanted to go in and buy out Miller Compressing and build an office tower, have at it. They can watch ships come and go on an ongoing basis. That is perfectly acceptable.

SBT: Other cities have developed the land around their ports to become more than just a port. Places like Cleveland, Ohio; Erie, Pa.; and Detroit, Mich.
Szalli: Yes and no. If you look at Cleveland, what they actually did is move their port, to put the Rock ‘n Roll Hall of Fame in, actually. Unfortunately, we don’t have that option here.

SBT: What about the other ports in Wisconsin? Places like Racine, Kenosha and Port Washington are dressing up their ports to be public destinations.
Szalli: Well, they closed their ports for lack of (shipping) business, is what they did. They’re yacht harbors. They were not really functioning ports.

SBT: What about a car ferry? Is it important that Milwaukee be the western destination for a car ferry that goes between Michigan and Wisconsin?
Szalli: Yes. We’ve been heavily involved in the car ferry development and expect to make a positive announcement on that in the next 30 to 60 days. We’ve been working with Sheldon Lubar, and that deal is fundamentally put together. There are a few outstanding issues they need to cover.
This would be a high-speed ferry called Lake Express. It will operate between Milwaukee and Muskegon, and it will carry automobiles and passengers. It would operate from May 1 through Dec. 31, making three roundtrips per day. You’ll get across the lake in about 2-1/2 half hours, dock to dock.
It’ll carry 250 passengers and 46 cars. We’ll build a terminal.

SBT: So, it’s just a matter of working out the details?
Szalli: They are working out the details now. They’ve signed the shipyard contract, and they’re finalizing the long-term financing. The equity is in place.

SBT: From the tourism aspect of it … the ferry will drop people from Michigan off here on the south end of the Port of Milwaukee, at the foot of the Hoan Bridge. There’s a Coast Guard station and a Naval Reserve building. There’s nothing there to make it a tourist destination. Are these poor folks from Michigan just going to be dropped off in the middle of nowhere? Is there any thought of making the area more compatible as the ferry’s landing point?
Szalli: That is Bay View. That is not our jurisdiction. That is the Department of City Development. We will continue to work with the Department of City Development, with the transit people. The plan is not fully developed, but we would request that the county make this a trolley stop.
Some of those things still have to be worked out.

SBT: Would you anticipate discussions about what’s the best use of that surrounding land? Do the Coast Guard station and Naval Reserve building have to be there, or could the land be put to a greater use, to accommodate the car ferry and public lakefront access?
Szalli: In future years? Absolutely. We would think that that would be ripe for discussion.

SBT: The port owns the land on which the Coast Guard sits. What is the lease for that building? What about the lease for the Naval Reserve building?
Szalli: The Naval building, we’re actually redoing that lease right now, but on a more short-term basis. Those leases were 50-year leases. We no longer do those. I think the Coast Guard has 15 more years left on its lease, so that’s not an issue at the moment, which is OK, because it will give the ferry a chance to prove out. We’re hopeful that over time we’ll have two (ferry) ships operating.
Before we get the Coast Guard excited and the Navy excited, we would want to see the direction that (the ferry) moved before we start discomforting them in any respect.
SBT: So there is hope for the south side?
Szalli: I do personally believe that the ferry also could eventually act as a catalyst for Kinnickinnic Avenue.

SBT: You mean Kinnickinnic could eventually be developed with antique shops, cafes, theaters, coffee shops and other businesses to serve the people who would be coming off the ferry?
Szalli: You got it. That’s exactly right. But that’s only going to be if the people in the (Bay View) area want it.

SBT: So, big picture, what about the possibilities? In principle, it seems that you’re saying that there are other types of development around the port that could coexist with the port.
Szalli: I want to be crystal clear on this. I’m not talking about development within the port (property). There are private sites …. I think we can utilize some of these unused places, and I think we’re fully in tune with that and want to see that happen.
(He points to a map of industrial sites around the port) You come down right here, and this is a tragedy. It looks like Berlin after the war, for crying out loud. The Solvay Coke site is a mess.

April 4, 2003 Small Business Times, Milwaukee

Wisconsin Energy Corp. has added some fresh political muscle in a final push for approval of its Power the Future expansion plan.
The Milwaukee company is contracting with Wilhelm & Conlon Public Strategies, a high-powered Chicago firm that has hired Thad Nation to be the director of its new Wisconsin office.
Nation, who was the deputy campaign manager of Jim Doyle’s successful Wisconsin gubernatorial campaign last year and was the director of communications for Doyle’s transition team, is now working on a contract basis to serve Wisconsin Energy’s We Energies public utility subsidiary.
“I’ll be working with We Energies, with the Power the Future team and increasingly taking on a role as the media spokesman for the project,” Nation said. “I anticipate being very busy.”
The role became vacant when Michael John resigned as director of public relations and communications at We Energies to become the director of public relations for Menasha Corp. last November.
The addition of Nation and his ties to the new governor’s office updates Wisconsin Energy’s political stable.
The company already employs James Klauser, who was a member of former Wisconsin Gov. Tommy Thompson’s cabinet and was often referred to as the state’s “vice governor.” Klauser was named senior vice president at Wisconsin Energy in 1998.
Wisconsin Energy also named former Wisconsin Assembly Speaker Walter Kunicki as vice president in 1998.
Wilhelm & Conlon brings national connections to Wisconsin Energy’s arsenal. Co-founder David Wilhelm was the national manager of the Clinton/Gore campaign in 1992 and was then named the chairman of the Democratic National Committee.
Co-founder Kevin Conlon was appointed by former President Bill Clinton to serve on the Presidential Advisory Committee on Expanding Training Opportunities.
From its Chicago office, Wilhelm & Conlon is expanding its service territory to include other states in the Midwest, Nation said.
“This is going to be a growing region for Wilhelm & Conlon, and I anticipate taking on a couple more clients in the next year,” Nation said.
Wisconsin Energy is on the stretch run to gain approval for its Power the Future project, which proposes construction of a natural gas-fired generation plant in Port Washington and expansion of its coal-burning generation plant in Oak Creek.
The Oak Creek proposal has been the most controversial component of the Power the Future plan, as critics have argued that expanded coal-burning would pose increased environmental and health risks and would diminish the value of lakefront land in the city.
However, the critics have been losing that campaign in recent weeks.
On March 20, the Wisconsin Public Service Commission denied a legal brief filed by S.C. Johnson & Son and Wisconsin’s Environmental Decade. The brief contended Wisconsin Energy’s application for its Power the Future plan was incomplete, but the PSC disagreed.
Wisconsin Energy then picked up a conditional public editorial endorsement for its proposal from the Milwaukee Journal Sentinel.
The company gained further momentum when it reached a tentative agreement Tuesday with the City of Oak Creek. Under terms of the agreement, Wisconsin Energy will contribute $20 million to the city’s economic redevelopment efforts and pay $2.5 million for construction impact mitigation compensation.
Wisconsin Energy’s agreement with Oak Creek was reached just days before the citizens of the south-side suburb will be voting to elect a new mayor. Outgoing Mayor Dale Richards had lost in the primary election in February and will soon be stepping aside. Three aldermanic races, including two unopposed races, also will be decided in Tuesday’s election.
SC Johnson chairman emeritus Sam Johnson, who told SBT he can see the smoke stacks of the Oak Creek plant from the back yard of his rural Racine home, has vowed to continue his campaign of opposition to the plan, according to officials of Responsible Energy for Southeastern Wisconsin’s Tomorrow (RESET), an organization of opponents to the plan.
“While it is certainly disappointing that Oak Creek would consider going back on its previous, very strong, statements against the coal plans, it’s not wholly unexpected,” said RESET member Susan Greenfield, town chairwoman of the Town of Caledonia. “We Energies is a very large, very powerful company. It’s spending millions of dollars to push its plan and stands to make billions from it. We Energies has an army of paid lobbyists that have undoubtedly spent a great deal of private time with Oak Creek officials and significant financial resources to make things happen in the company’s favor.”
Wisconsin Energy officials lauded Oak Creek’s decision.
“The proposed expansion in Oak Creek will result in cleaner air through reduced emissions, the creation of good paying jobs, provide lasting economic development for the City, and will help Wisconsin become more energy self reliant,” said Larry Salustro, a vice president with Wisconsin Energy.
Gaining tentative approval from the local municipality is likely a key hurdle for Wisconsin Energy, which expects a final ruling from the Public Service Commission in November.
RESET officials have not given up their mission, but they know they face an uphill task in derailing We Energies’ Oak Creek plan. “It appears David has awakened Goliath,” the organization of nearly two dozen health organizations, environmental groups, businesses and others told its members in a letter this week.
The letter predicted We Energies is poised to turn up the intensity of its campaign for the Oak Creek expansion.
According to RESET, We Energies has hired a California-based media company to devise a “significant” radio and television advertising campaign that will begin Sunday.
We Energies also has hired at least 15 lobbyists and four public relations firms to promote its plan, RESET said.
“We expect this new wave of paid advertisements to be hard-hitting and stress the alleged value of dirty coal over cleaner, healthier natural gas,” RESET stated.
By Steve Jagler, of SBT, March 27, 2003

The Waukesha Area Chamber of Commerce (WACC) is spearheading a coalition of businesses promoting freeway expansion.
Calling themselves the coalition for Safety With Increased Freeway Transportation (SWIFT), they support the original plan put forward by the Southeastern Wisconsin Regional Planning Commission (SEWRPC), which includes the addition of 127 miles of lanes to metropolitan Milwaukee’s freeway system.
"Our number one concern is safety — the safety of employees, clients and customers of area businesses," said Patti Wallner, president of the WACC. "Our freeway system is becoming more and more dangerous to drive on because of the congestion. This congestion will only get worse in the years to come. We have an opportunity now to reconstruct the freeway and add lanes which will ease the congestion and make the freeway safe again."

Wallner went on to say, "business leaders are also concerned about Southeastern Wisconsin’s economy. The congestion hurts the bottom line of every business in the area because of lost employee productivity and customers inhibited from making the trek to the commerce centers."

More than 100 area businesses have already added their names to the growing list of members of SWIFT. Wallner said, "I am not at all surprised by the response we have received. Freeway congestion has been an issue for area businesses for a while now. We put the word out about the coalition on Friday. By Monday, 75 businesses had signed on, and the responses keep pouring in."

A Minnesota man and three investment partners have bought the former Milwaukee Solvay Coke & Gas Co. site on the city’s south side, where they plan to build the largest real estate development in the state’s history and change the city’s skyline.
Thomas Short and his partners, whom he declined to identify, recently purchased the long-abandoned industrial site at 311. E. Greenfield Ave.
The investors intend to develop a gargantuan, $1.5 billion, mixed-use complex of 14 20-story towers suited for residential, office, retail and marina use, Short said.
The 46-acre site is located within the shadows of the Rockwell Automation clock tower, directly south Greenfield Avenue, east of First Street and north of the Kinnickinnic River.
Short and his investment partners formed Golden Marina Causeway LLC to acquire the property from Cleveland Cliffs Inc. of Ohio. Real estate sources said the limited liability corporation paid approximately $400,000 for the site and agreed to put additional funds into an escrow account to help pay for demolition and site remediation. The property had a total assessed valuation of $929,900 in 2002.
Short is the managing partner of the new corporation, which is gathering the financing to develop the project.
He tentatively refers to the office tower redevelopment as Gas Light Park.
The investors already have some office tenants who have given preliminary commitments to occupy space in the towers, Short said.
Short, who still resides in St. Paul, Minn., said the property and others like it near the Port of Milwaukee are ripe for development. Short said he was involved in similar industrial rehabilitation projects in St. Paul when that city essentially reinvented itself by capitalizing on its waterfront properties along the Mississippi River.
"When I came here from St. Paul, I looked at the Port of Milwaukee and said to myself, ‘This is just like St. Paul 20 years ago,’" Short said.
Short said he has reached a verbal agreement with Lyle Balistreri, president of the Milwaukee building and Construction Trades Council, AFL-CIO, for the towers to be built by union labor.
Although the investors have acquired the Solvay property, they will face plenty of obstacles in their path to launch the development.
The first issue to be overcome is the environmental contamination at the site.
The site was first developed as an industrial site in 1902, where metallurgical coke was manufactured for use in the production of steel, foundry coke, coal gas and coal tar, according to historical archives at the University of Wisconsin-Milwaukee.
The US Environmental Protection Agency has not declared the site a Superfund site, but the EPA has documented some contamination at the site, which has been vacant since 1982. Contaminants found in the soil, groundwater and sediment, including arsenic, chromium, cyanide and lead, according to the agency.
The City of Milwaukee has classified the Solvay site as a "mothballed brownfield."
Indeed, the site, which is located between two sets of railroad tracks, is riddled with dilapidated buildings, rubbish, barrels and overgrowth.
"It’s a blighting influence and a nuisance," said William Zaferos, spokesman for the Milwaukee Department of City Development.
"We’ve made a deal with the EPA to clean it up," Short said.
The EPA issued an administrative order by consent for Short to remediate the site. Terms of the agreement were not disclosed, but a cost assessment study conducted by the Milwaukee School of Engineering in 2001 estimated the site remediation costs at $10.4 million.
The environmental remediation will be performed by Eli Cos., an environmental and demolition company, which shares an office with Short’s Water Street Holdings LLC near the Port of Milwaukee.
The investors have contracted Earth Tech Inc., an engineering company based in Long Beach, Calif., to be the project manager for the remediation.
"We expect to start cleanup within 30 days and hope to begin development by the end of the year," Short said.
Compared with other types of seeping contamination, soil that is polluted by coal is relatively easy to remove, he said.
In addition to the contamination, the Solvay project also faces the obstacle of gaining the approval of the City of Milwaukee to proceed with development.
The city has not devised a plan for the development of land surrounding the Port of Milwaukee, and Julie Penman, commissioner of the Department of City Development, said the city does not want the port to be developed in "piece meal" fashion.
The Solvay site is zoned by the city for industrial use and had a 2002 property assessment value of $929,900.
A final obstacle for the redevelopment project may be the market. Some real estate officials in Milwaukee question whether the city’s office and residential markets could support such a large-scale development.
To put the scope of the Solvay project into perspective, its projected $1.5 billion cost would be more than three times the value of the Miller Park project, which exceeded $400 million, and would be five times the value of the proposed $300 million Pabst City project at the former Pabst Brewery site in downtown Milwaukee.
The only other development project to rival the Solvay project would be the proposed $1 billion Pabst Farms mixed-use project in Oconomowoc.

April 4, 2003 Small Business Times, Milwaukee

Milwaukee business owners cite taxes as top issue; Clarke most favorable

Taxes, transportation and infrastructure top the list of concerns for Milwaukee small-business owners as they look ahead to next year’s mayoral race. And they want the person who wins that race to be good at building relationships, a person with vision, integrity and business skills.
Those are the findings of a survey Small Business Times commissioned of business owners whose companies are located in the city of Milwaukee.
Business Development Directives, a research firm in Eagle, conducted the telephone survey. Working from a list of SBT subscribers whose businesses are in Milwaukee, researchers completed 103 telephone interviews.
The survey was not an attempt to measure how business owners would vote in next year’s elections; respondents were not included or excluded by whether or not they live in the city. Rather, it was an effort to gauge what business owners as a constituent group would want and expect from the city’s next mayor to improve the community as a place in which to operate a business.
Nearly half of the respondents indicated that a prospective mayor’s business management experience was very important.
Those surveyed also were surprisingly harsh in their judgment of Mayor John Norquist, who is not expected to run again after he completes his current four-year term next year.
Norquist, who first took office in 1988, has generally had the strong support of high-profile business leaders, but in the SBT survey, fully half of those responding gave him only a "C" grade for his performance. And while 22% gave the incumbent an "A" or "B," 29% graded the current mayor a "D" (21%) or "F" (8%).
While the poll was not limited to city dwellers – the only ones who can vote – among all of those surveyed, the mayoral candidate most preferred was Milwaukee County’s relatively new sheriff, David Clarke. Former Congressman Tom Barrett and current Ald. Tom Nardelli ran second and third in preference behind Clarke, who, like Barrett, is not a declared candidate.
When asked about their familiarity with names of people who say they will run for the mayoral post and those whose names are mentioned as potential candidates, the following responses were given, with 5 being the most familiar with the name and 1 being the least familiar: former Congressman Tom Barrett, 4.2; Alderman Tom Nardelli, 3.6; Alderman and Common Council President Marvin Pratt, 3.6; Milwaukee County Sheriff David Clarke, 3.4; Alderman Michael D’Amato, 2.2; Milwaukee County Clerk Mark Ryan, 2.1; State Rep. Pedro Colon, 1.8; developer Randy Roth, 1.3; Municipal Judge Vince Bobot, 1.2; businesswoman Sandy Folaron, 1.1.
The tough grades for Norquist are especially striking, considering the strong support he has had from business leaders in the community. Norquist has actively courted business support through policies that include downtown development efforts, holding down property taxes and vocal support for private school choice in the Milwaukee Public School system.
Some Norquist partisans believe that the slice of business polled in the survey didn’t fairly represent the sentiments of business owners in the city as a whole. They also suggested that smaller businesses may be out of touch with the mayor’s efforts on their behalf. Critics’ responses, Norquist supporters told SBT, suggested they were unaware of many pro-business accomplishments of the administration.
Some of those polled don’t buy that argument. "I think that he’s ignored the needs of a lot of small to medium- sized businesses," said Frank Sabella of DMX Music.
Still, many business owners responding to the survey spoke highly of Norquist. "He’s done a lot of good things for the city," said Walter Dusold, owner of Artisan Wood Working.
The survey asked respondents to list the three top issues facing Milwaukee’s next mayor. Of those who responded, 48% listed taxes among the three issues, 44% listed infrastructure and 32% named crime.
Fully 50% of them listed good relationship skills among the most important attributes the next mayor should possess. The poll asked respondents to name up to five characteristics.
The four other most commonly selected characteristics were categorized as "Strength/vision" (named by 44% of respondents), "integrity" (32%), "business and financial skills" (31%) and "consensus building" (21%).
Half of those who answered said it would be "very important" for the next mayor to have business experience, and another 25% labeled business experience "important."
Despite that, the candidates most familiar to business owners have no extensive business experience. Respondents showed very little familiarity with Sandy Folaron, a west side business owner who has declared her candidacy, or Randy Roth, a developer who has been considering a run for mayor.
The candidates who scored most strongly on a scale of 1 to 5, with 1 representing "not familiar at all" and 5 "very familiar" were Barrett, Nardelli, Ald. Marvin Pratt, Clarke and Ald. Michael D’Amato.
Poll respondents also were asked their preferences among mayoral candidates or potential candidates.
Sheriff Clarke is at the top of that list, the favorite of 24% of those polled. Barrett is No. 2, with 19%, and Nardelli No. 3, with 16%. Of the three, only Nardelli has declared his candidacy. Through a spokeswoman, Clarke declined to comment on the poll results or the prospect of his running for mayor.
Clarke "seems to be able to confront issues," said Norine Weber of Alpha Source.
Barrett’s experience as a member of Congress would make him "an excellent candidate," said Dusold, who lives in the city. Connections with Washington would be valuable in winning federal help for the city, Dusold said.
Ray Fister of 5th Floor Recording Co. said of Barrett and Clarke, "both of them are four-star."
Business owners in the survey were asked whether they expected to keep their businesses in the city in the near term, and 87% said "yes." Another 7% said "no" and 5% said they were unsure.
For the longer term, however, uncertainty grew. Sixty percent said they intended to keep their businesses in the city "in the long term," while 20% said "no" and another 20% were unsure.
Among issues that owners said "might cause" them to move their businesses out of the city, 40% cited taxes, 35% cited "general location," 20% cited incentives offered by other communities, and 15% cited "quality of life."
Respondents who spoke favorably of the Norquist administration’s contribution to businesses in the city cited several accomplishments: increased downtown development, attracting new businesses to the city, holding the line on taxes and projects such as the new 6th Street bridge.
"I think he had a vision," said Joanne Angelici of Amera-Care Transport, citing Norquist’s downtown development efforts and projects such as the Riverwalk. "He’s done some good things for the city."
Yet those respondents were in the minority in the survey. When asked about Norquist’s positive contributions to the city’s business community, more than half – 52% – were unable to cite anything to surveyors. "There’s not a lot that’s been positive," said one respondent. "Nothing. Only large corporations got any attention," said another.
Respondents who spoke unfavorably of the Norquist administration brought up a variety of issues. Some spoke unhappily of what they perceived as a failure of the city to promote itself. Others criticized the tearing down of the Park East Freeway, now under way.
Some responses indicated that the recent round of criminal charges against city aldermen might have further tainted Norquist himself, whose image already had been affected by a sex scandal.
When asked to single out ways in which the Norquist administration hindered business in their view, 33% of respondents cited transportation and infrastructure, 30% cited business development, 27% cited taxes and 21% cited "lack of leadership."
Elaborating on their responses, some complained the current administration "ignored small business" or that the city was "not attractive" for business.
Norine Carlson Weber said rising service fees were a frustration for her company, Alpha Source Inc., and as a result, "the administration doesn’t seem to have been very business friendly."
Wayne Staats of eMapping Solutions said he finds the city’s transportation sorely lacking. "The highways around here are awful, and I blame John Norquist for not attending to that."
But while some who responded criticized sharply the Norquist-led move to tear down the Park East, Staats said he himself has come around on that issue. "Initially I was against it," said Staats. "But after I’ve been thinking about it, and watching it come down, it frees up a lot of property down there. What we gain by ripping it down exceeds what we gained by leaving it up."
Some of the survey findings surprise pro-Norquist people both inside and outside City Hall.
Craig Peterson, president of the downtown public relations firm Zigman Joseph Stephenson, a Republican and a longtime Norquist supporter, told Small Business Times that the survey responses don’t square with the mayor’s record.
The criticisms suggest that the critics in the survey "don’t understand the office of mayor, nor do they have understanding how the office has functioned," Peterson said. "If they really looked at his record, and how he has reduced the size of city government, they would think, ‘This guy’s one of us.’ He could be a small businessman."
Peterson praised the current downtown revitalization and said Norquist deserves much of the credit for making it happen without heavy subsidies from the city. "Other mayors have gone into cities and thrown dollars downtown. [Norquist] doesn’t do that. The mayor has been very practical on how he has approached development."
"The Norquist Administration has reduced the size of city government by more than 750 positions at a time when the state needlessly ran up the size of its workforce," said Norquist spokesman Steve Filmanowicz. "Our budget growth has been right around the rate of inflation, which is no mean feat given the pressures caused by spiking health insurance and arbitrated salary packages."
Julie Penman, Milwaukee commissioner of city development, cited numerous Norquist administration accomplishments. Norquist spearheaded a program to provide emerging businesses greater access to capital through the Milwaukee Economic Development Corp. Since its founding in 1992, 531 firms have benefited from the program, with loans provided by banks, and the city helping to guarantee the loan.
Penman also singled out the administration’s policies to streamline permitting and regulatory processes for developers. Overall, since 1987, the year before Norquist took office, the total number of business operating in Milwaukee has grown by nearly 2,000, to 13,529 today, she said.
At the same time, the city has held tax levy increases below the inflation rate, encouraged policies that have brought more than 3,400 units of new housing downtown, promoted the development of the Riverwalk and promoted redevelopment in areas as varied as Wisconsin Avenue, Martin Luther King Drive and Capitol Drive.
"Either the individuals interviewed are completely oblivious to what’s going on around them," Penman said, "or we have not done a very good job of getting the word out about our success."
Why hasn’t the message resonated? "I think the mayor’s been misunderstood," said Peterson, a public relations professional. Norquist’s cerebral style may work against him from a public relations point of view, Peterson said. "He’s not a Rudy Giuliani, who’s a cheerleader.
"My gut tells me that history is going to look very favorably upon his image."

The 2004 Milwaukee Mayoral Race
Small Business Times asked owners of businesses within the city of Milwaukee to comment on potential candidates to succeed Mayor John Norquist. The list of names includes people who have stated they will run for the position or whose names are being discussed in the community.
— Most familiar names: Tom Barrett, Tom Nardelli, Marvin Pratt, David Clarke, Michael D’Amato
— Most favored potential candidates: David Clarke, Tom Barrett, Tom Nardelli
— Top three issues for the new mayor: Taxes, transportation/infrastucture, crime
— Characteristics the new mayor should possess: relationship skills, strength/vision, integrity, business/financial skills, consensus-building

What poll respondents said about the Norquist administration’s actions for business
"Not a lot that’s been positive."
"Nothing. Only large corporations got any attention."
"Nothing."
"River development.
Water Street. Lakefront."
"More downtown development; 6th Street Bridge."
"Attracted things to Milwaukee; Good mayor."
"Kept taxes down."
"Held taxes at a realistic level."

April 4, 2003 Small Business Times, Milwaukee