eM Th ar o k n I f y t i r teg The Better Business Bureau® of Chicago and Northern Illinois 2006 Annual Report 2006 EXECUTIVE COMMITTEE CHAIR DORIS K. CHRISTOPHER THE PAMPERED CHEF PRESDENT & CEO STEVE J. BERNAS Dear Member: This past calendar year has been a rollercoaster ride while we have had terrific growth in all areas especially our new memberships and programs; the organization and its members suffered the loss of our President James E. Baumhart who had spent over four decades with our BBB and the last 17 years leading the organization. I am honored to have been elected president and CEO and will use my 20 years of experience in operations to expand the reach and programs of the BBB to continue as the apotheosis of associations supporting and practicing ethical business methods every day. This entire report provides you with an overview of our accomplishments on your behalf there are several highlights that should be brought to your attention. • Our instances of service have topped 3,000,000 for the first time. A significant milestone as it is an increase from just under 500,000 six years ago. • New memberships have continued to be most impressive and only slightly behind the all time record of the previous year. IMMEDIATE PAST CHAIR MICHAEL E. STANCZAK HANSON MATERIAL SERVICE VICE CHAIR GERALD M. COLE WASTE GASIFICATON SYSTEMS, INC. • With more contacts from the public we have seen complaints rise about 13% with a settlement rate of nearly 80% and a commensurate rise in the use of our Alternative Dispute Resolution Program. • A record number of nominations for the Torch Award For Marketplace Ethics Awards on the 10th year of this program that recognizes businesses in northern Illinois. • The Resource Guide published both in the Spring and Fall continues its success as a premier vehicle for describing our services and as a current directory of member businesses. VICE CHAIR ROY SPENCER PERMA-SEAL BASEMENT SYSTEMS, INC. VICE CHAIR DAN B. STONE ALBERTO -CULVER COMPANY • Navy Line is a new program which we present information on our services in conjunction with financial seminars at Great Lakes. • Nationwide media interest continues to expand at an increasing rate with our alerts, press releases and investigations to the point where we average one media contact per business day. • Getting the BBB message out at a variety of venues from the Chicago Auto Show and home shows to the Expo Fiesta Chicago. • Development of a new integrated marketing plan for promoting our copyrighted Ethics for Business Success program is near completion. • Presentations at the University of Illinois graduate school of education. SECRETARY CARL G. JACOBSON GE NORTH A MERICA LENDING TREASURER CHARLES GAVZER CATALDO ENTERPRISES • Reinvigoration of the Charities Evaluation program has been accomplished utilizing new software to support the process. • Our Board Committees especially the Executive Committee, Marketing Committee, Ethics and Standards Committee and Strategic Planning have been extremely active in this transition period. • On the social side our Integrity Classic Golf Outing continues to have a capacity crowd. All of these services and accomplishments are strictly due to the support of our members and the dedicated Board of Directors and staff. With our same staff team working every day for our members we expect 2007 to be another banner year! GENERAL COUNSEL JOHN A. JANICIK, PARTNER MAYER, BROWN, ROWE & MAW LLP 2 Better Business Bureau President Chair BBB YEAR IN HIGHLIGHTS Discussing the value of the BBB at the December networking reception were veteran Board Member Cecil Treadway (left) of Treadway Enterprises; Dave Kelly of RH Donnelley (center) and David Gutman, PhD of Momentum Advantage Partners. Board of Director Members Billy Abt (left) of Abt Electronics, Jerry Stock (center) of U. S. Waterproofing and Rick Walters of ADP discuss the December meeting agenda. Expanding our ethics programs were part of the discussion for Michael Bruening (left) of The George S. May International Company and BBB Vice Chair Gerry Cole prior to the start of the December Board of Directors Meeting. Two winners of the 2005 Torch Award For Marketplace Ethics awards were present to discuss best practices at their companies at the annual DePaul University seminar. Dr. Pat Werhane (left) hosted the program which included Blue Cross Blue Shield’s Ellen M. Hunt, JD, CHC who is Vice President-Compliance Operations and Carolyne S. Turner, President of Information Development Corporation. OUR MISSION is to promote and foster the highest ethical relationship between businesses and the public through voluntary self-regulation, consumer and business education, and service excellence. OUR VISION The BBB Display Table attracted plenty of attention during the reception prior to the Annual Dinner Meeting on March 21st at the Hilton Chicago. is to be the preeminent source of information relating to ethical business and advertising practices and to be a major provider of marketplace dispute resolution services. 2006 Annual Report 3 79TH ANNUAL MEETING Arbitrator of the Year Arbitrator of the Year Award was presented to Richard W. Robinson by Steve Bernas, (left) Vice President of Operations and President/CEO James E. Baumhart of the BBB at the Annual Meeting. Mr. Robinson has been doing a number of volunteer arbitrations in both the Chicago and Rockford offices. The list of nominees for officers and directors of the BBB in the coming year was presented by Nominating Committee Chair A.F.(Duff y) Gaynor at the Annual Dinner Meeting on March 21. Mr. Gaynor is a member of the BBB Board of Directors and Vice President-Global Services for IBM. Discussing the “Ethics for Business Success” training program at the annual meeting are Dr. Sandra Williams (left) who developed the content for this copyrighted program and Tom Joyce of the BBB; Tom Foglietta, State Farm Zone Compliance Coordinator and BBB Board of Director Peter Grande, Agency Field Executive of State Farm Insurance. 4 Better Business Bureau BBB Torchbearer Award Recognized as the Torchbearer of the Year for 2006 is Jerry Cizek III (left) President/CEO of the Chicago Automobile Trade Association. Presenting the award on behalf of the BBB is Chair Doris K. Christopher. The award recognizes the ongoing efforts of Mr. Cizek in directly working with the BBB on issues of advertising review and in being active in promoting alternative dispute resolution for auto dealers and their customers. Doris Christopher is Founder and Chair of The Pampered Chef. BBB Chair Doris K. Christopher thanks featured speaker Francisco Codina, Group Vice President of Ford Motor Company for his excellent presentation at the BBB Annual Dinner Meeting. Getting acquainted during the BBB’s 79th Annual Dinner Meeting were new Board Member Steve Dezara, (left) President of Luna Carpet & Blinds; Paul Fisher, (right) President of Danley’s Garage World; and BBB Board Member John Idler ABC7. 2006 BBB STAFF Tom Joyce, Director of Marketing & Communications SENIOR STAFF (Left to right) Marcy Wilk, Assistant to the President and Eric Pinto, Director, Membership Division OPERATIONS AND INVESTIGATIONS (Standing left to right) Brad Rhodes, Lucy Jodlowska, Management Trainee Investigations; Courtney Bobinsky, Membership Services; (sitting left to right) Carmen Nunez, Administrative Assistant; Maria De Courtenay, Director of Operations INQUIRY SERVICES-CUSTOMER SERVICE REPRESENTATIVES (Standing left to right) Jose Torres, Mail Room Clerk; Rhonda Drew, Dorienne Fulks, Frances Pryor, Lillian Allen, Barbara Williamson CONSULTANTS Carleton Bergere (left), Edwynne Perkins and Eddie Johnson ADR DIVISION (Left to right) Irving S. Capitel, J.D., Senior Counselor, Alternative Dispute Resolutions Divisions; Roxanne Calibraro, J.D., Director, Alternative Dispute Resolutions Division COMPLAINT HANDLING SERVICES (Left to right) Nicole Tooks (Financial Services Dispute Resolution Specialist); Nita Virghes, Assistant Manager Direct Retail Services; Robin Badgett (Manager-Advertising Review; Kimberly Mullen, Personal Services Dispute Resolutions Specialist; Diana Mendez, Assistant Manager Home/ Transportation Services; Denise Hines, Assistant Manager Intake Services COLLEGE INTERNS (Standing left to right) David Berrios, Rolando Reyes, Daniel Zabrowski, Renata Duque; Nina Castle, Manager of the Charitable Solicitation Program (Sitting) OPERATIONS (Left to right) Charlie Baumhart, Operations Services; Brad Rhodes, Administrative Asst.; Courtney Bobinsky, Lucy Jodlowska, Manager of Investigations; Carmen Nunez, Administrative Assistant; Maria de Courtenay, Director of Operations MEMBERSHIP SERVICES (Standing left to right) Bert Adams, Membership Rep; Eric Pinto, Director, Membership Services; Ann Murtha, Membership Services; (Sitting left to right) Barbara Lucas, Manager Membership Services; Dale Drenthe, Assistant Membership Director ROCKFORD STAFF Standing (left to right) Jennifer Daughtry, Retention Specialist; Marge Wier, Membership Representative; Dennis Horton, Director, Rockford Office; Teresa Glass, Operations Assistant,; Tim Sofran, Membership Representative; (Sitting left to right) Lee Rucks, Membership Representative; Ranona Quevedo, Membership Representative; Mary Ann Wixom, Operations Division 2006 Annual Report 5 PROGRAMS & EVENTS Presenting the mission and value proposition of the BBB as the focus of the meeting Facilitator David Sparks gets things off to a lively start. Dennis DiVitto (left), Jack Gray, Marty Norville and Immediate Past Chair of the BBB Mike Stanczak prepare on the challenging White Eagles course during the July 31 outing. Reporting on one of the Strategic Planning meeting’s breakout sessions, BBB Director John Smith highlights several interesting issues. BBB Board Member Larry Perdue (left) golfed with Vicky Condell, BBB Board Member Jim Wicklander and BBB Board Member Jo Jackson at the annual outing on July 31st. DEPAUL UNIVERSITY HOSTS BBB TORCH AWARD WINNERS Winners of the 2006 Torch Award For Marketplace Ethics awards were present to discuss best practices at their companies at the annual DePaul University seminar. Barry Schilling (left) and Matthew Stock are shown representing U.S. Waterproofing & Construction Co; Bridget Moscatello representing Empire Today and Tom Joyce, Director of Public Affairs for the BBB. 6 Better Business Bureau DePaul University hosted a seminar featuring the 2006 Torch Award winners. BBB members and their guests were also invited to attend these presentations along with 100 students and professors from DePaul on January 24th. The presentations by the Torch Award winners focused on their best practices and how these companies continue to do business in an ethical manner. The seminar format featured presentations by the participants followed by a question and answer period that gave the audience an opportunity to focus on how ethical organizations of various sizes implement their plans and why they were recognized with the Torch Award For Marketplace Ethics. Winners that presented were: Empire Today and U.S. Waterproofing & Construction Co., two of the winners of the 2006 BBB Torch Awards for Marketplace Ethics Awards. PROGRAMS & EVENTS Presenting critical information on consumer issues and the extensive BBB services available to Navy personnel and their families as a part of the Fleet and Family Support Center at Great Lakes Naval Station were Financial Counselor Fred Davis (2nd left), Tom Joyce from the BBB, and Financial Educator Bill Braun from the Fleet and Family Support Center. Also shown is Leading Chief Petty Officer (BEQ 831) Robert Kuiper. Supporting the efforts of the Wise Giving Alliance in hosting the first national Charity Summit on July 20th in Chicago were: Tom Joyce (left), Chicago and Northern Illinois BBB President/ CEO James E. Baumhart flanked by Art Taylor, President/CEO of the WGA and Bennett Weiner, COO of the WGA. Delivering a heartfelt and stirring opening statement at the Torch Awards For Marketplace Ethics was immediate past BBB Chairman Michael E. Stanczak. He spoke about the distinguished career of the BBB’s recently deceased President and CEO James E. Baumhart who passed away on November 12th. Presiding at the September Board of Directors meeting was the BBB’s Immediate Past Chair Michael E. Stanczak is President/ CEO of Hanson Material Service. Presenting information on development and implementation of Ethics for Business Success to University of Illinois graduate school students was Tom Joyce (center) from the BBB and Dr. Sandra Williams who developed the program’s content. The students mostly Human Resource Development or Accounting majors had many questions with several remaining after class to continue the discussion. Students shown are Sara Boghosian, (left) Sarah MacDonald, Abbey Mills and Chris Comer. Your BBB regularly has a booth at The Home Shows throughout the northern Illinois area. At this recent show held at Harper College in Palatine Wally Kleinfeldt debuts our new BBB banner which was delivered at the show began. 2006 Annual Report 7 2006 TORCH AWARDS FOR MARKETPLACE ETHICS BBB Chair Doris K. Christopher welcomes the crowd of 350 members and supporters to the 10th annual Torch Awards For Marketplace Ethics presentation luncheon on November 30th. Category I, 7,500+ employees Torch Award Judges review entries from a record setting year of nominations for the 10th annual program. The independent panel of judges are shown reviewing the numerous entries by category to make their determinations. They are: Dr. Patricia Werhane, Dr. William O’Hara, Dr. John Boatright and Ms. Vickie White. Category II 1,000-7,499 employees Wm. Wrigley Jr. Company Alan Krashesky, News Anchor for ABC7 Chicago Torch Award Presenter (left) with BBB Chair Doris Christopher is shown with Howard Malovany, Vice President, Secretary & General Counsel of the Wm. Wrigley Jr. Company is shown with the Torch Award and Steve J. Bernas, Vice President/COO of the BBB at the November 30th event. Category III 100-999 employees Empire Today Accepting the trophy Torch Award For Marketplace Ethics are Empire Today Senior Vice Presidents Joel Glantz and Steve Silvers from presenter Alan Krashesky (left), BBB Chair Doris Christopher and Steve J. Bernas, Vice President/COO (right) of the BBB. Category II 10-999 employees Leopardo Construction Presenting the Torch Award For Marketplace Ethics to Leopardo Construction’s President Richard S. Mattioda (second from right) are presenter Alan Krashesky (left), BBB Chair Doris Christopher and Steve J. Bernas, Vice President/COO (right) of the BBB at the November 30th luncheon at the Holiday Inn Mart Plaza. 8 Better Business Bureau U.S. Waterproofing Receiving the prestigious Torch Award For Marketplace Ethics on November 30th are U.S. Waterproofing President Jerry Stock (third from left)and Vice President Howard Shachter from presenter Alan Krashesky (left), BBB Chair Doris Christopher and Steve J. Bernas, Vice President/COO (right) of the BBB. FINANCIAL HIGHLIGHTS—years ending August 31 2006 $1,234,816 327,019 3,289,432 2,896,938 907,797 Assets Liabilities Revenue Expenses TOTAL NET ASSETS STATEMENT OF 2005 $837,330 322,030 2,921,908 2,711,734 515,303 2004 $583,174 203,051 2,425,131 2,417,583 380,129 2003 $632,467 160,386 2,045,042 2,040,567 472,081 2002 $465,743 172,637 1,872,951 1,863,773 293,106 ACTIVITIES (FISCAL YEARS ENDING AUGUST 31, 2006 AND 2005) 2006 2005 $1,938,011 1,030,911 32,439 34,995 85,070 140,850 27,156 3,289,432 $1,660,642 858,727 58,332 25,090 99,025 126,663 18,429 75,000 2,921,908 EXPENSES PERSONNEL Salaries Retirement plan contribution Payroll taxes Life and health insurance TOTAL PERSONNEL EXPENSE 969,198 45,959 108,710 127,301 1,251,168 850,542 36,947 114,099 116,966 1,118,554 OFFICE AND SUPPLIES Office leases Telephone Depreciation Professional services Printing and stationery Postage General supplies Taxes, insurance and interest TOTAL OFFICE AND SUPPLIES EXPENSE 168,080 36,075 25,676 50,250 13,689 37,686 88,943 16,212 436,610 147,064 31,667 29,437 51,602 18,207 40,369 73,391 18,131 409,868 693,917 55,684 29,459 18,893 19,510 116,085 6,282 939,830 269,329 2,896,938 674,509 50,150 20,653 15,257 14,193 123,265 2,148 900,175 283,137 2,711,734 392,494 210,174 REVENUE Membership dues Membership programs Telephone program Industry programs Processing fees Annual dinner meeting Other income Net assets released from restrictions TOTAL REVENUE Operations and Development: Commission expense Annual dinner expense Dues and subscriptions Meetings, conferences and travel Publicity and promotions expense Computer processing Miscellaneous expenses TOTAL OPERATIONS AND DEVELOPMENT TOTAL MEMBERSHIP PROGRAM EXPENSE Total Expenses Increase in unrestricted net assets 2006 Annual Report 9 YEAR IN HIGHLIGHTS 2006 675 47,623 79% 135 2,952,616 3,001,049 Advertisements Revised Complaints Closed Complaints Settled % Arbitrations Internet Visits Total Instances of Service TOTAL INSTANCES OF 2005 511 41,375 76% 109 2,473,444 2,683,618 2004 622 40,994 79% 102 2,044,896 2,450,091 SERVICE 2002 509 28,037 82% 179 915,127 1,891,153 2003 431 30,015 92% 96 1,685,008 2,137,617 TOTAL COMPLAINTS CLOSED 47,623 41,375 3,001,049 3,000,000 40,994 50,000 2,683,618 2,450,091 2,500,000 30,015 40,000 2,137,617 1,891,153 2,000,000 28,037 30,000 1,500,00 20,000 1,000,000 10,000 500,000 0 0 2006 2005 2004 2003 2006 2002 2005 TOP INDUSTRIES INQUIRY ACTIVITY (JANUARY 1 –DECEMBER 31,2006) Industry Movers Construction & Remodeling Services Roofing Contractors Contractors-General Mortgages Financial Services Auto Dealers–New Cars Heating & Air Conditioning Windows–Installation/Service # of Inquiries 56,860 33,467 31,071 28,980 28,026 27,031 25,975 25,305 20,485 TOP INDUSTRIES COMPLAINT ACTIVITY (JANUARY 1 –DECEMBER 31, 2006 ) Industry Department Stores Financial Services Collection Agencies Mail Order & Catalog Shopping Auto Dealers–New Cars Credit Cards & Plans Furniture–Retail Insurance Companies Telephone Companies* Movers # of Complaints 4,186 2,464 1,907 1,463 1,389 1,077 934 894 818 808 *Telephone companies providing actual telephone service 10 Better Business Bureau % of Settled Complaints 99.92 97.04 87.00 93.60 84.92 97.79 60.00 82.70 92.11 85.13 2004 2003 2002 2006 BOARD OF DIRECTORS Irv Abrams Walgreen Company Steve Dezara Luna Carpet & Blinds, Inc. Joan Koebernick Dakota-K Auto Repair & Tire Center John R. Plunkett Plunkett Home Furnishings Billy Abt ABT Electronics Bernie DiMeo DiMeo Company John J. Kozakis American Airlines, Inc. Taras R. Proczko Hartmarx Corporation Ronald G. Agypt Combined Insurance Company of America Rick Dow Midas International Corporation Israel Kushnir George S. May International Company Allen Rodriguez Charter One Bank Mark T. Doyle All My Sons Moving & Storage, Inc. Gary Lang Gary Lang Auto Group Robert Ryan Plumbing Council of Chicagoland Leon Dreimann Salton, Inc. Edith Leonian Concession Services, Inc. Lauri M. Sanders Jewel-Osco Boni Fine Chicago Sun-Times Marvin Lieberman Archway Construction Company Mark Scarpelli Raymond Chevrolet/Olds, Inc. Paul Fisher Danley Garage World Mark A. Lies II, Esq. Seyfarth Shaw LLP David J. Schroer Hallberg Commercial Insurors, Inc. Russell T. (Wicker) Freeman Coyne American Institute Thomas J. Loughlin Hilton Chicago Michael G. Schwartz Airoom Architects & Builders A. F. (Duff y) Gaynor IBM Corporation David W. Maher Public Interest Registry Thomas J. Seeberg Marsh USA Inc. Dayle Gillett The Inland Real Estate Group, Inc. Irl H. Marshall Franchise Consulting Services John Smith Tower Travel Management Corporation James Gnoffo AAA Chicago Howard Medley Medley’s Moving & Self Storage Patricia Golden NBC5 Chicago Harold (Sandy) Menger Pave Man, Inc. Edward E. Gordon Imperial Consulting Corporation Matthew Messinger Bally Total Fitness Corporation Peter Grande State Farm Insurance Raymond D. Minkus Minkus & Pearlman Public Relations David P. Gutman Momentum Advantage Partners LLC Kevin Mize O’Hare Honda, Pontiac, Hyundai Mark D. Herrmann ComEd – Division of Exelon) John Moran KPMG LLP John H. Idler ABC 7 Chicago Dale Mueller Aamco Transmission Dealers Association James W. Wicklander Lake County Press, Inc. Michael T. Nelligan Staubach Jerry Zienty Jerome A. Zienty & Associates, P.C. James W. Aldrich Delaware Place Bank Jack Arslanian MiniMoves, Inc. Ed Bachler Nombach Home Exteriors Brian K. Barkley Access One, Inc. John Belli Tru-Link Fence Shirley Bicknell Sears Roebuck & Company Jerry N. Boudreau TransUnion LLC Joseph J. Bredemann Bredemann Family of Dealerships Patricia Davis Brooks Apple Vacations Cathy Bushman Tiffany & Company Jack Calabro DeVry, Inc. Lawrence J. Carney American Home Heating Company Eli Carrillo Protecta Home Loans, Inc. Charles S. Childs, Jr. A. A. Rayner & Sons Jerry H. Cizek III Chicago Automobile Trade Association Herbert F. (Corky) Imhoff, Jr. General Employment Enterprises, Inc. Ilene Collins The Apartment People Joann Jackson Integrated Project Management Co., Inc. Susan Oleari Harris Trust and Savings Bank Douglas Cook Feldco Victor Jacobellis Rose Productions George Olsen Grant’s Appliance TV & Audio Nicholas Dacanay Discover Financial Services Robert F. Kastenholz LaSalle National Bank Bruce O’Neal Matthews Roofing Company Richard Dent First Communications David Kelly R.H. Donnelley Larry Perdue BFS Retail & Commercial Operations, LLC Kenneth DePaola Chicago Tribune Christopher E. Kentra Meckler Bulger & Tilson David Sparks Sparks Consulting, LLC Jerry S. Stock U.S. Waterproofing Kimberly A. Svoboda CDW, Inc. Cecil Treadway Treadway Enterprises D. Richard Walters Automatic Data Processing (ADP) David M. Westerman Lincoln Mercury Chicago Region Seymour Persky Parliament Enterprises, Ltd. 2006 Annual Report 11 REACHING OUT TO THE PUBLIC Opening the 7th annual Stragetic Planning meeting on May 1st BBB Chair Doris Christopher welcomes the large group of directors for this key effort in support of the Bureau. The winners of the 12th annual Integrity Classic were: Jerry Blaseing (left), Christian Agypt, BBB Board Member Ron Agypt, and Bill Ahillen all from Combined Insurance.Permanent trophy donated by the George S. May International Company has the names of all previous winners. The individual crystal trophies were presented to the winning Combined Insurance team at the 12th Annual Integrity Classic on July 31. BBB REGIONAL OFFICE SERVICE NORTHWEST ILLINOIS INTERNET ACTIVITY The logos you see pictured are to individually identify the programs available only to BBB members. The Reliability Program enables participating members to identify their membership with the Better Business Bureau on their web site. The Privacy Program seal, for use on a company website, is a sign to consumers that the site adheres to high standards of ethical conduct in the collection and use of personally identifiable information. The Membership Identification Program can be used by participating members in marketing materials off-line in northern Illinois. SERVING 8,000,000 PEOPLE IN 19 NORTHERN ILLINOIS COUNTIES. www.chicago.bbb.org Better Business Bureau of The Bureau’s Regional Office in Rockford opened 20 years ago in 1987. Located in downtown Rockford at 810 East State Street is at the top of the state and nearly geographically center of the Bureaus service area. The office serves a cross section of consumers and businesses both urban and rural. Dennis Horton, Director of our Regional Office says “whether they are located in a large urban area like Rockford/ Winnebago County with a population over 350,000 or Galena, on the most western edge of the service area, with approx. 3,500 citizens the BBB is available to serve them”. He says “having a regional office also makes it convenient for almost everyone, if the need arises, to come into the Bureau for assistance”. Additionally, he says “as awareness and visibility of the Bureau continues to grow in Rockford we are working toward that same goal for the areas south and west in our service area”. Rockford Regional Office Chicago and Northern Illinois, Inc. 810 East State Street Boone Kane Ogle 330 North Wabash Avenue Rockford, Illinois 61104 Carroll Kankakee Stephenson Suite 2006 815.963.BBB2(2222) Cook Kendall Whiteside 8:00 am–5:00 pm DeKalb Lake Will (Monday - Friday) DuPage LaSalle Winnebago Grundy Lee JoDavies McHenry Chicago, Illinois 60611-7621 312.832.0500 24 hours, 7 days a week