Size Matters 

Just how big is the nation’s premier small-business lobby, really?

It’s considered the largest and most influential small-business lobbying group in the country, touting 600,000 members nationwide.
It’s considered the largest and most influential small-business lobbying group in the country, touting 600,000 members nationwide. And while the National Federation of Independent Business is undoubtedly a powerful political machine in Washington, D.C., some say the Nashville-based advocacy group has exaggerated its size for years. Claiming 600,000 members is misleading, according to several former NFIB leaders, if not an outright lie. They say a true count of dues-paying members would reveal membership has plunged in recent years to about half of what the group boasts. “I cannot recall when they really ever had 600,000,” says one former senior manager who worked with NFIB for five years. “There were a number of times when I asked questions about it, and there were always many different answers to that question.” The primary reason for inflating membership numbers, according to erstwhile NFIB insiders, is to maintain the clout it’s gained with Congress over the past decade. During that time, NFIB evolved from a mild-mannered trade association into an aggressive campaign outfit adept at getting candidates—predominately Republicans—elected to office. In turn, NFIB grew increasingly successful at lobbying legislators to support pro-business measures. But if politicians knew the truth about the numbers, critics suggest they’d be less likely to carry water on NFIB-backed legislation, which would jeopardize the group’s position as the country’s most powerful small-business lobby. “If you count those who are members at any one time, it would be a different number,” says Nashville businessman Nelson Andrews, a longtime NFIB member with ties to its leadership. Andrews, owner of the commercial real estate firm Brookside Properties, says he’s happy with NFIB’s dedication to small business but disappointed with the group’s extreme GOP partisanship these days. Which is saying something. Asked how many members are on NFIB’s rolls, the group’s national media director, Mike Diegel, suggests checking the website. After a brief and abrupt dialogue, he repeats the 600,000 membership figure, saying it includes “people actively involved in the organization one way or another” and “members that we communicate with and stay in touch with over the years.” Even NFIB’s newly appointed CEO Todd Stottlemeyer acknowledges there’s been a downturn in membership during the past few years that must be reversed. In a message issued to members last month, he listed growing membership as one of his major goals. Longtime CEO Jack Faris, who stepped down in March, was—and is—a controversial figure almost singularly blamed for plunging membership. “Ever since Jack took over, the membership has died and it’s been shriveling. It continued to die on the vine the longer he stayed there,” says another former NFIB employee who quit after six years because he was frustrated with the “tremendous bureaucracy” he says Faris created. But the list of grievances against Faris doesn’t end with complaints about membership going south. His critics accuse him of internal mismanagement and gross misspending, problems they say plagued NFIB during his 14-year tenure. They tell stories of lavish out-of-town meetings at deluxe resorts, and of Faris’ occasional use of a private jet. In contrast, Faris has a contingent of loyal supporters who paint a much different picture of his work as CEO. Some go so far as to give him full credit for catapulting NFIB to national prominence. “I really don’t think it’s an issue,” says Lu Ann Walker Maddox, a longtime board member, when asked about shrinking numbers under Faris’ leadership. “I think he was a very good CEO for NFIB. He took us to a very strong national recognition.” It’s true that NFIB became a major player on Capitol Hill during Faris’ reign, especially after the defeat of President Bill Clinton’s proposal to require small-business owners to fund 80 percent of health care benefits for full-time employees. NFIB staunchly opposed the plan and came out on top when the idea died in 1993. After that, NFIB exploded as a lobbying powerhouse that clearly favored GOP candidates and issues, such as elimination of the estate tax, tort reform and an overhaul of Social Security. Faris often articulated his belief in the importance of political involvement this way: “If you run a business, you’d better get involved in politics, or politics will run your business.” Contacted by telephone at his Brentwood home, Faris refutes accusations of wasteful spending, insisting he ran a lean operation. As for the claim that he rented private jets, he denies that too, explaining how he “used a prop plane twice to go to funerals in remote places.” But when it comes to management, he concedes—with some hesitation—that he made some mistakes. He confirms that membership dropped under his leadership, but he’s quick to explain that’s a result of circumstances out of his control. Then, almost casually, he says there were never really 600,000 members of NFIB “on any given day.” In a memo to the NFIB board of directors in October 2001, former board member Sue Andrews (wife of Nelson Andrews) predicted dark days for the organization as a result of Faris’ leadership. “During the current CEO’s tenure, the membership has dropped dramatically and drastically. No other single indicator of NFIB’s health is more important,” she wrote. She noted that Tom Musser, then board chairman, had previously rated Faris—on a scale of one to 10 for truthfulness—between a four and an eight. “That’s a sad commentary on Jack’s integrity,” she wrote. “We either need to work to change the performance of the current CEO, or if we do not believe that is possible or desirable, then we need to move to change the person who is our CEO.” Musser didn’t return several calls from the Scene, and other past and present board members either praise Faris for his work or decline to talk, saying that internal NFIB issues should remain confidential. Even Andrews, who sharply criticized Faris in her memo, won’t discuss board business and defends the NFIB as a bastion for small business. “Basically, no one really wanted to rock the boat,” says a senior manager who left after five years in a departure he admits was not amicable. The source says he left NFIB because of disagreements with Faris, particularly regarding the CEO’s unwillingness to follow through hires and programs he started. He says numerous programs were launched to build membership, but that Faris never gave them a chance. “Every 18 months there was a new initiative, and we had to turn the ship around.” It’s a sentiment that surfaced in Andrews’ scathing memo: “It’s as if NFIB has the attention span of a 2-year-old.... This is a direct reflection of the CEO.” Such shortsightedness, particularly about membership initiatives, is in part why Rich Ford quit as NFIB’s chief operating officer after only two years. He agrees that Faris never gave programs intended to attract and retain members time to fully develop. But Faris insists that’s an unfair assessment, and that he was trying to advance an organization that he says for years went without change. “A number of things were put in place to test the marketplace and to see what would motivate our members and our sales,” he says. “How I failed as a CEO is that I didn’t communicate well enough that you have to go out there and try these things to see what’s going to stick.” Some say that mentality led to a revolving door of employees—Ford says he was the fourth COO to serve under Faris, and that turnover was heavy in upper-level positions. “During my tenure, he went through four executive vice presidents, seven or eight members of senior management,” says a former NFIB employee, who claims that the board of directors eventually prohibited Faris from firing any senior-level employees without approval. “I’m sure there are folks who used to work for us who say my leadership is the reason for problems,” he says. “When you lead an organization from being in the crowd to being in the front row, some people get knocked and bruised and they don’t like that.” For years the board was passive when it came to Faris, one of the former NFIB employees says, probably because of the perks members and other employees enjoyed, such as out-of-town meetings at vacation destinations. Such trips would entail about half a day of work, he says, but would last for three days. And almost always, the meetings were held at luxurious golf resorts. (Faris is an avid golfer.) That type of spending, in addition to Faris’ salary, became too much for the board to ignore, according to the former senior-level employee. Tax forms indicate that in 2004 Faris took home more than $1.5 million in compensation. “Meanwhile, the small-business owners the organization represents are struggling to make it,” he says. “Eventually the walls came crumbling down on him.” In March 2005, Faris announced his plans to retire in one year, but the source says, “I’m fairly confident retirement was not his idea.” Faris is eager to discuss his stint as CEO, which ended four months ago, and he launches into a lengthy sermon on NFIB’s successes. He acknowledges a decline in membership, but quickly adds, “We found a lot of younger people not wanting to join organizations. They don’t see a great need to join anything. That’s especially true with technology companies.” He then recounts a personal —and somewhat irrelevant—conversation with Microsoft founder Bill Gates, who, according to Faris, regrets not joining NFIB. Pressed further about membership, Faris says it’s one of those things that will “ebb and flow,” and that although “we have fewer members today than we did 14 years ago…we are ranked the most powerful business group in Washington.” Faris describes how, soon after he took over, NFIB surpassed the U.S. Chamber of Commerce to take that title. After briefly digressing to another topic involving his friend, the governor of Indiana, Faris revisits the question about membership. He admits NFIB used to keep members on the books two or three years after their memberships lapsed, a practice discontinued several years ago. And although there aren’t really 600,000 dues-paying members, “we had just never seen the need to change the 600,000 figure.” Meanwhile, Faris says the number of “activist members” in the organization has risen. Those are the members who write letters to lawmakers, get involved in political campaigns and respond to polls that dictate the group’s stance on issues. “I’ve made mistakes, and I’ve hopefully learned from a lot of those mistakes.... I can Monday-morning quarterback myself and say I wish I had done things differently, but I can’t change any of that. All I can say is I feel very good about it.” It’s indisputable that NFIB has come a long way in the political arena since its inception in 1943. And while Faris’ supporters credit the longtime CEO with this transformation, his critics attribute it to Republicans winning back Congress. But Faris, a 64-year-old grandfather, wants to put that behind him. He’s now chairman of the Faith Family Medical Clinic, which provides care for low-income Nashville residents without health insurance, and a board member with Operation Andrew, a nonprofit Christian ministry. And, a little ironically, he is also managing director with Harpeth Consulting, working with CEOs and their boards to improve operations.

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