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June 14, 2011

U.S. News

40 Years at the DSA

by Katherine Ponder

Neil Offen’s Lasting Legacy

Neil Offen

“For those of us who live far outside of the Beltway, the dinners before the board meetings are very interesting. Neil does a little political banter about what’s going on in Washington. Neil is someone I respect, and I have always enjoyed hearing his perspectives in the framework of how it impacts our industry.”
—Doris Christopher, CEO, The Pampered Chef

“Neil is the godfather/ambassador of the industry!”
—Nathan Moore, Chief Legal Officer, Mary Kay Inc.

“Most of the companies I’ve built have been based on things that I learned at the DSA. The guy behind that was Neil, that spirit of cooperativeness. The industry has a way of sharing that no other industry does, and I attribute that to Neil and his high ethical standards.”
—J. Stanley Fredrick, Chairman, Mannatech

“Neil has given the industry credibility on the hill and around the globe.”
—Michael Lunceford, Senior Vice President of Government Relations, Mary Kay Inc.

“I have seen firsthand what Neil has meant to so many people in direct selling. And I have seen how he has touched the hearts and lives of so many—from the greatest of industry legends to the newest of unsure salespeople. He has reached out to each one of them with the same level of heartfelt compassion, interest and caring. We work in an industry filled with great, charismatic people and true business legends. Neil has counseled those legends, befriended them, guided them, encouraged and even chided them. He has always remained true to himself and his ideals of ethics, honor and loyalty, and has embodied the best direct selling has to offer.”
—Joseph Mariano, Executive Vice President and COO, Direct Selling Association

“Neil has been a strong advocate for direct selling companies throughout his career. His expertise inside the Beltway has been a tremendous asset for our industry.”
—Orville Thompson, Owner, Scentsy

“In my 39 years in direct selling, I don’t remember the DSA without Neil. He brought to life all of the industry’s best aspirations and attributes for our country’s legislators, both at the state and federal levels. He used his quick wit and charm to influence others to help him build and protect the way we sell product and opportunity. And, importantly, Neil has had a most powerful impact on the lives of women in this industry. We will miss him and are grateful for all his contributions.”
—Anne Butler, President, PartyLite Worldwide

Neil Offen has been a fixture at the Direct Selling Association for 40 years. He has surmounted legislative hurdles, educated the public on direct selling and improved the industry’s reputation. He retires at the end of June, but his legacy will endure.

Neil Offen came to DSA straight from Washington, D.C., on “the Hill,” where he served as a congressional assistant. He began his career at DSA, working to build and improve government relations. From there, he became president and CEO of the association in 1978. He has worked with all of the industry greats, including Mary Kay Ash of her namesake cosmetics firm, Richard DeVos and Jay Van Andel of Amway, Doris Christopher of The Pampered Chef, J. Stanley Fredrick of Cameo Coutures and now Mannatech, and many more.

Throughout his tenure, Offen has been credited with treating everyone equally—whether they were cultivating an idea for a startup or had set the standard for years. He also managed to unite companies and competitors for the sake of the industry. These unique talents have led to many accomplishments over the years—the biggest of which was official, legislative protection of independent representative status.

“Some people say I’ve made a career out of the independent contractor issue,” Offen said. “This had been an issue when I started in the ’70s, in the ’80s, in the 2000s, and it still continues today.”

During the 1980s, direct selling was under serious threat from the U.S. government’s efforts to minimize the status and protection of direct sellers as independent business owners. Through near herculean efforts and courteous stubbornness, Offen was able to avert the crisis. He and fellow leaders had language added to the bill that legally recognized direct sellers (and real estate agents, who are similarly classified) as independent business owners. This saved the direct selling industry from onerous laws that would have threatened to shut down many companies and discouraged millions of individuals from coming into the business. The ultimate result was Internal Revenue Code Section 3508, which gave legal standing to direct sellers as independent salespeople rather than as corporate employees. It was one of Offen’s most significant industry achievements and made him a shoo-in for the DSA Hall of Fame in 1983.

Nathan Moore, Chief Legal Officer for Mary Kay Inc., has worked with Offen for many years. He said, “The passage of section 3508 TEFRA (Tax Equity and Fiscal Responsibility Act of 1982) settled a decade-long dispute with the IRS as to the status of distributors in the industry. Through Offen’s leadership we were able to get language in the Internal Revenue code that says they are independent contractors for federal tax purposes. That unto itself was a significant victory, but then we’ve been able to take that same language and place it in state statutes around the country and in some of the workers’ comp statutes. They do this internationally, too. Through that one crowning moment, an even greater victory has been built.”

Governments looking for increased withholding revenue, however, repeatedly bring up the issue. The California state legislature is again focusing on the tax classification of direct sellers, and Offen has led the DSA’s efforts to point out the fallacy of trying to withhold tax from direct sellers’ income. With the work that Offen and the DSA have already done, there are precedents and standards that can be followed.

Offen noted that he is proud that, while the DSA has a very small political action fund, its success is on par with organizations that have much deeper pockets. “The amount of money we spend is miniscule,” he explained. Offen is also quick to dispel the notion that he is successful as a lobbyist. Instead, he gives all the credit to the DSA and salesforce members. “The Realtors’ Political Action Committee is a million bucks a year. Ours is $35,000, but our strength is always in the grassroots power that we have. We have an average of 40,000 salespeople in every congressional district.”

On Main Street

Beyond the success with taxation, however, industry leaders agree that Offen’s lasting contribution is providing legitimacy to the industry. He has consistently pushed for rules, ethics agreements and codes of conduct that benefit the public. Offen also has worked to provide education for the general public, business leaders and government leaders on the true value of the industry. “He has elevated the industry to a position of respect and authority,” said The Pampered Chef CEO Doris Christopher.

Surveys completed in the 1970s showed that people generally had a negative view of the direct selling industry, but very positive individual experiences with specific companies or salesforce members. Offen said that this disparity between reputation and reality still exists today. His work, however, has made an impact on changing that.

Through the Direct Selling Education Foundation and Direct Selling 411, the DSA is being proactive about the industry’s strengths and celebrating its successes. “Three years ago, we adopted a public perception campaign,” Offen said. “There are 75 million people around the world in direct selling. You’re going to have some saints, some bad guys, and mostly just good, hard-working, plain folks. We need to give attention to the good ones. The perceptions aren’t going to change overnight, but we owe it to the field to show the overwhelmingly positive stories.”

The source of Offen’s loyalty to direct selling comes from the fact that he believes fervently in the opportunity. “What I’ve always loved about the direct selling business model is the opportunity it gives people to earn supplemental income and to pursue a career track as a micro-entrepreneur,” he said. “It helps empower people and train them in business skills and increase their self-esteem.”

Through the Years

There have been understandably many changes to the industry in the last 40 years. Offen emphasized that the fundamentals are exactly the same: having a strong product set, training and empowering individuals, and rewarding efforts. What has changed, however, is the way that these basics are executed.

“The makeup of the companies in the industry has changed in terms of their products and their style,” explained Offen. “The biggest change is the switch from one-to-one, door-to-door selling to party or group selling; and the switch from a single-level compensation plan to multi-level compensation plans.”

He noted that when he started, approximately 20 percent of members were using multi-level compensation plans. Today it’s around 95–98 percent. The product set, too, was different. It was dominated by high-ticket, durable items like vacuum cleaners and encyclopedias. Those days are gone. The highest-selling products in the channel today are cosmetics, health and wellness products, skin care items, household products and other consumables.

In the Direct Selling Community

Offen is credited with aligning industry players with each other to the betterment of all. He addressed everyone equally, with respect and attentiveness. J. Stanley Fredrick, who has built several successful direct selling companies over decades and currently serves as Chairman of Mannatech, first met Offen in 1974. “The thing that really impressed me about Neil is that, all the way through those years, whether I had been representing a small startup company or a big company, no matter where I was, he always treated me with grace and respect and charm.”

This ability to engage people at all levels has made both Offen and the DSA successful. He has always found the right people for the right situations and given them the best possible atmosphere in which to work. Christopher points to this as one of the reasons that the DSA is small but mighty. “Most other associations find our spirit of cooperation, even among competitors, hard to believe,” she said. “It doesn’t exist in most places, but it does exist in DSA.”

The mutual support among members is remarkable, even to Offen. He points to a sad time—the death of the second in command at DSA—as a testimonial to the care and compassion that is so common in the industry. Jay Hescock was only 49 years old, and he left behind a widow, two sons and a disabled daughter. DSA provided a $1 million life insurance policy, but the industry was not content to leave it at that. Through corporate gifts as well as nondeductible personal donations from the field and company executives, the family was given the equivalent of 18 months of Hescock’s pay. They also purchased a van with a lift to assist in moving the family’s daughter—since that duty had previously belonged to Jay. It didn’t stop there. The industry poured forth with sympathy in the form of meals, cards, payment for funeral expenses, three years of financial support for the daughter, and a fund that had enough to pay for both sons to go through college. “It totaled more than $400,000,” Offen said. “It was amazing. That said to me, ‘I have made the right decision for the past 20 years.’ I knew it, but that spelled it out in spades.”

Even this story is typical Offen: putting the spotlight on others and marveling at the good that comes out of their combined efforts. Yet, as the head of the organization, he has taken no credit. That is Offen, all the way through his career, and even during his final days at the DSA.

Neil Offen’s influence and legacy will be felt for years to come. However, he has worked with the incoming president and CEO, Joe Mariano, for decades. The transition has been in place and under way for many months, and executives said they are looking forward to the Mariano years.

“Neil is a great teacher and mentor,” said Michael Lunceford, Senior Vice President of Government Relations at Mary Kay Inc. “He left things in place, and Joe Mariano is well prepared to take on the mantle of leadership.”