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Last Update: Friday December 15, 2017

Key Idea: Learn From A Big Guy

The Beyster Institute was founded by Dr. J. Robert Beyster to teach business owners how to establish an  ESOP (Employee Stock Ownership Plan).   Prof. Dr. Ray Smilor  explains how Dr. Beyster used an ESOP to grow his company from zero to 41,000 employees.   More...

Key Question:

A: 

First you have to decide you want to be big and Dr. Beyster did just that.  He focused on legacy or "tracks in the sand."  He faced the question we all face, "What difference did my life make in this world?"

Dr. J. Robert Beyster is leaving one heck of a legacy. First, the business that he began as a dream in 1969 now employs over 41,000 people. Think of all the mouths they feed! Think of all the taxes they pay. Think of all the creativity that is focused on common goals! That is a legacy.

But he didn't stop there. He saw something early in the power of ownership and then saw that power transform people and create a vehicle for consensus and growth. He so wanted to share this light -- show others the path -- he started a not-for-profit research and teaching institute to encourage others in the area of employee ownership. And, he funded it all with part of his ownership of SAIC. Wow. Now, that is a legacy.

A: Why are there so few businesses that have adopted the employee-ownership model?

Q: There are not many more than 10,000 businesses with a formal ESOP in place. There are other kinds of employee stock-ownership plans, but it is still far from the majority of employees. Some would conclude that it must not be very compelling. But if the facts be known, the ESOP concept is a relatively new idea. Louis Kelso is given credit for working on fleshing out the ideas. There are links to that entire history in our Overview. He began his work in the 1950's and it wasn't until 1973 that Kelso influenced Congress to take it seriously.

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Think about it

Would it be a good idea to try to learn from one of the big guys who started out little?

Clip from: Employee Stock Ownership Plans (ESOP)

Meet Ray Smilor, Rady School of Management, Univ. Calif. San Diego

SAN DIEGO: In this special episode you will meet many people who understand Employee Stock Ownership Plans (ESOP).   ESOPs are keys to the future for any growing business.  Though each word is quite operative, the most important is ownership.

To understand ownership, we have to understand something about the value of what is owned. It is a lot more than a  business valuation.  It is about business sustainability. 

Ray Smilor and Dr. Robert Beyster (SAIC) are experts on the subject.  Once a person is actively participating in the bottom line or the profit line of the business, once they are vested, don't you think they'd act differently and care more? Ray Smilor says that typical productivity increases 4-5% per year.

What would that do to your profit line?

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former Director, Beyster Institute

Ray Smilor, CEO

1241 Cave St.
La Jolla, CA 92038
858-822-6000

Visit our web site: http://beysterinstitute.ucsd.edu

Office: 858-822-6000

Business Classification:
Education

Year Founded: 1971

Learn From A Big Guy

HATTIE: So tell me about where we are.

RAY: This is a little bit of paradise, La Jolla Cove.

HATTIE: Looks gorgeous today. (Voiceover) Dr. Ray Smilor is president of the Beyster Institute which was founded by Dr. Bob Beyster in 1986.

RAY: The Beyster Institute is a not-for-profit education corporation, and we train entrepreneurs around the world. We help them build their companies, Hattie, and we help them think about strategies to grow their companies, a primary strategy being employee ownership.

Dr. Bob Beyster is the founder of SAIC, Science Applications International Corporation.* He started SAIC in 1969 from scratch. A nuclear physicist turned entrepreneur, he left the National Laboratory to start this company to do small research projects. And along the way he had one key passion and his passion was employee ownership. He had this firm belief that people who build a company should own it and from that sprang a remarkable company.

Editor's Note:  Dr. Robert Beyster stepped down in 2004 as CEO and president.

Today, SAIC does $6 billion a year. He has 41,000 employee-owners around the world. It is a remarkable high-tech company based on his passion and his belief about employee ownership.

At the start he didn't know how to do it, so he started sharing equity and he started giving stock and he started giving options. And along the way the company has evolved a very elaborate but very effective way to get employees thinking and acting like owners.

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