How REALTOR associations can better serve their members. ..

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Best Practices forREALTOR Associations

• Louisiana Association of REALTORS
• Baton Rouge, Louisiana
• January 21, 2005

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AEC Best Practices Work Group

• Christine Todd, Chair
• Cindy Butts
• John Fridlington
• Nancy Gilmore
• Carol Hawk
• Keith Holm
• Carol Hyman
• Lee Kurtz

• Bett McCarthy
• Sandy Naragon
• Jerry Panz
• Diane Ruggiero
• Ty Strout
• Kay Wertzberger
• Malcolm Young

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Consultants Interviewed

• Henry Ernstthal
• Philip Lesser
• Dadie Perlov
• Susan Sarfati
• Jim Sherry

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Report Addresses the Following Critical
Association Issues

• How REALTOR associations can better serve their
  members.
• How AEs can achieve desired outcomes for their
  leadership, staff and themselves.
• How REALTOR associations can remain viable and
  relevant to their members in a climate of
  relentless change.

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Explores Five Key Aspects of Association
Management

• Member Services
• Public Policies
• Leadership and Staff Relations
• Human Resources Management
• Financial Management

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Part One MEMBER SERVICES

• The best associations are those that know how to
  custom tailor the services they provide to meet
  the ever-changing needs of the member.

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In Member ServicesOne Size Doesnt Fit All

• One association may have the resources to offer
  many services another may need to focus on
  providing just one or two essential programs to
  members.
• Shared Services may be used among associations
  to enhance existing services or offer additional
  services.

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If You Want to Provide and Maintainthe Best
Possible Member Services, You Must

• Know what the important issues are now and in the
  immediate future and be able to discuss them
  intelligently with members
• Talk to members about what is happening in their
  business and be able to explain the bigger
  picture
• Continually seek input on member wants, dont
  just sell current associations services
• Ask non-members why they arent involved in the
  association

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Watch the Member

• Observe members in their work environment-- you
  will see patterns that you wont get from polls
  or surveys
• Respond positively to the style of younger
  members.
• Focus on the needs of your high-achieving
  members, avoid always responding to the lowest
  common denominator

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Utilize Member Service Programs

• Hold an annual priority oriented business
  planning session and avoid writing open-ended
  goals
• Make sure your members know the real cost of
  every program you offer
• Use your plan to drive the associations programs
  and services and its budget
• If you fail now and then make it a positive
  learning experience
• Stay away from offering services that do not
  provide value to the member
• Always deliver more than you promise

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Member Services --

• Recognize geographic diversity and be careful
  about adopting another associations program.
  What works in one area, may not work for your
  association.
• Use technology both to network and to deliver
  programs
• Continually remind members about the value of the
  services you offer
• Be able to react quickly to challenges.

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Part Two PUBLIC POLICY

• You have to Educate Both Members and Consumers

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The Stakes are High and Getting Higher

• REALTOR associations determined to remain
  effective are now allocating a significant
  portion of their resources to advocacy efforts.
• Influencing the legislative and regulatory
  process requires continual development of
  personal relationships, a commanding knowledge of
  the issues and strong member backing.

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The Advocacy Goal

• Move beyond RPAC fundraising and press releases
  to become the Voice for Real Estate in your
  community.

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Key Components of an Advocacy Program

• 1. Provide public policy orientation to incoming
  leaders so they understand the nature of
  legislative relationships
• 2. Put volunteer leaders in situations visible to
  legislators, regulators and public officials
• 3. Prepare a Public Policy Statement that
  documents the associations position on issues

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• 4. Have a dedicated advocate
• 5. If resources are limited, share a GAD
• 6. Allow your advocate to receive input, provide
  testimony and offer regular reports to the
  members on all issues
• 7. Form partnership and coalitions with other
  associations

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• 8. Use electronic contact systems to generate
  customized email/fax/mail messages to
  legislators, regulators and public officials
• 9. Use surveys, polling, etc. to provide elected
  officials with useful data
• 10. Regularly set aside funds for issues
  mobilization
• 11. Educate homeowners to become advocates on key
  real estate issues. Keep the focus on ordinary
  people

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Keys to Involving Members in Advocacy

• 1. In all issues, focus on the bottom-line impact
  to the members businesses
• 2. Obtain relevant data (including input from
  members) before making decisions on political
  positions
• 3. Supply members with regulatory and legal
  information in a summarized and understandable
  format

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• 4. Use websites and email to speed grassroots
  communications and contact
• 5. Promote the benefits of legislative success to
  the membership
• 6. Dont let the lack of resources ever be a
  reason to avoid involvement in political issues
• 7. Outcomes (passage or defeat of particular
  bills) are what matter

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8. Manage members expectations -- a favorable
outcome at the municipal, regional or state
government level may not always be possible
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Media Tips

• 1. The media needs valuable information it can
  sell to the public
• 2. REALTOR Associations have access to important
  data that no one else has
• 3. Once you capture the data, wrapping a media
  program around it is easy
• 4. Become a knowledgeable source of information
  on housing and quality of life issues

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• 5. Have a single media spokesperson for the
  association (usually the President)
• 6. Create an issue expert list to have
  available when journalists call
• 7. Host press conferences at the REALTOR building
  and provide the media with introductions to
  leadership and key staff

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• 8. Be factual and do not exaggerate when
  presenting arguments to the media or the
  legislature
• 9. Use positive words like advocate instead of
  lobbyist, housing opportunities instead of
  affordable housing
• 10. If you find it difficult to develop the
  message and obtain effective placements consider
  outsourcing your media program

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Part FourHUMAN RESOURCES MANAGEMENT

• Everything Starts with the People

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Successful REALTOR Associations Attract, Train
and Retain Great People

• Top real estate associations are distinguished by
  their talented, dedicated and motivated staff.
• What does it take to recruit, train and retain
  the best and the brightest in association
  management?

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Everything Starts with People

• Regardless of non-profit status, REALTOR
  associations must still compete with the private
  sector for top people.
• To be competitive, associations must offer equal
  salary and benefits, an attractive work
  environment, the opportunity to learn and develop
  professional skills and the potential for
  advancement.

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Recruiting the Best and Brightest

• 1. Take adequate time to prepare and conduct
  staff interviews
• 2. Be clear about the position
• 3. Look for traits like leadership, motivation,
  and conflict management skills

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• 4. Interview candidates from inside and outside
  the real estate industry
• 5. Look for professional credentials such as RCE
  and CAE
• 6. Hire people with positive, can-do attitudes
  and personalities -- you can teach skills, but
  you cant teach attitude

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The Interview

• Ask questions related to leadership situations
• Have a weeding-out question, such as, What do
  you know about our board of REALTORS?
• Ask the candidate if they have any questions.
  What they ask is often an indicator of the
  persons priorities

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Look For Candidates Who

• Ask for expectations in writing
• Interview Board Members
• Check association financial records
• Ask questions such as, What would success look
  like?
• Spend some time in the area

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Avoid Sources of Conflict

• Lack of clarity in job roles
• Undefined expectations
• Hidden agendas

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When You Hire

• Provide new employees with an Entry Plan
• Teach them about the organizations culture
• Insist that they meet with members
• Have them get to know other staffers
• Cross-train and cross-team staff members from
  different disciplines
• Improve the work environment

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Retention and Career Development

• Give staffers autonomy and decision-making power
  to address problems while being guided by the CEO
• Build a team and recognize team members
• Keep staff challenged and provide growth
  opportunities
• Use meaningful tools to evaluate performance

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Consider Outsourcing or Shared Service
Alternatives

• Explore outsourcing options when appropriate,
  including professional recruiters
• Share services with other REALTOR associations

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Part FiveFINANCIAL MANAGEMENT

• If You Cant Measure It,
• You Cant Manage It!

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The Issue

• Top AEs know
• How to add up the numbers
• How to report them to the members
• How to analyze figures, maximize profits and
• increase income
• Top AEs use these talents to assist leadership in
  making timely financial decisions based on
  strategies and not emotions.
• How do they do it?

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If You Cant Measure It, You Cant Manage It

• Successful associations link financial
• management with their strategic plans. They
• identify priorities and allocate funds based on
• stated plan objectives.
• Sound financial controls ensure the fiscal
• integrity of an association and show the members
  the association is acting responsibly.

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Financial ManagementFundamentals

• Either the AE or the number two must have
  strong financial skills
• Board members need to be educated in several
  areas
• Fiduciary responsibilities
• Conflict of interest policies and procedures
• Roles of the treasurer, finance committee and
  audit committee
• How financial goals and budgets in a non-profit
  association differ from those in the private
  sector

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Financial ManagementFundamentals

• Select the volunteer treasurer based on his or
  her financial skills
• Eliminate automatic progression to the Presidency
• Put the financial reserve policy in writing
• Be aware of federal and state legislation related
  to financial mismanagement

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Financial Management Budgeting

• Adopt program-based budgeting procedures and add
  a powerful tool to justify the addition of new
  programs and get rid of sacred cows
• Be effective when you present the annual budget
  to the Board of Directors
• Pay more attention to next months financial
  needs than to last months financial reports
• Always try to reduce operational costs

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Suggestion

• Consider adopting an association policy that no
  resolution be sent to the Board of Directors
  unless it includes a statement on direct costs,
  physical resources and staff and volunteer time
  required.

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Financial Management Generating Revenue

• Separate the associations income stream into
  dues, fee-for-service, and non-dues revenue
• AEs and consultants have varying opinions on the
  three income sources common opinions are
• Dues are ridiculously low in most associations
• Board should focus on core services
• Some affinity programs drain the association --
  stick to the business of the association

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Financial ManagementInternal Controls and Audits

• Create a system of financial checks and balances
• Be sure the audit and finance committees are
  composed of different members to avoid potential
  conflicts
• Provide the financial committee with clear,
  consistent and easy-to-digest information and
  remind them that their role is to ask questions

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Financial ManagementInternal Controls and Audits

• Provide the audit committee with the ability to
  both hire and fire auditors and to review the
  associations financial records
• Hold a closed-door executive session with the
  associations auditor, allowing board members to
  ask candid questions in a confidential setting
• Bid out the audit process every few years

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Financial Management Reporting to Members

• Provide members with regular summary reports of
  the associations financial performance
• Present financial data graphically when possible
• At dues billing time, use financial data to show
  members the benefits of their dues dollars

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Duties of a Local Board Officer

• Louisiana Association of REALTORS
• Leadership Conference
• January 21, 2005

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Know Your Governing Documents

• Association Bylaws, MLS Bylaws/Policies, Policies
  and Procedures Manual, Employee Policy Guide and
  Strategic Plan
• Why?
• They define the organization
• Purpose, Structure, goals
• They provide protection from liability

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• Officers, directors and committee members are
  covered by NARs umbrella EO policy provided the
  Board is operating with documents that have been
  approved by NAR Member Policy within the past
  year
• Fiduciary Duties
• Care, Loyalty, Obedience, Confidentiality
  Avoiding Conflicts of Interest
• Leadership Orientation Should Cover Bylaws,
  policies, strategic/business plan, budget,
  financial statements, most recent financial
  audit, minutes from previous years meetings,
  roster, job descriptions, duties
  responsibilities

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Legal Risk Management

• Incorporate
• Follow your governing documents.
• Allow action items Only in meeting minutes
• Have an ant-trust policy and provide training
• Practice due process
• Provide oversight for committees
• Oversee the Association Executive but do not
  micromanage Association staff
• Consult with Board counsel regarding legal matters

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NAR Organizational Standards

• In 1992 NAR created ten Minimum Services
  Criteria
• To assure that each Local Board is a viable
  entity, provides essential services to its
  members and avoids liability
• Local Boards must be certified every 3 years by
  the State Association
• Currently, a much simplified process establishes
  seven broad standards

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1. Governing Documents

• Local Board Bylaws
• must be reviewed and updated every year. The most
  recent NAR approval letter should appear in the
  Board office files
• MLS Policies Procedures
• Board Policies Procedures Manual
• Personnel Policy Guide

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Governing Documents

• Additional documents to consider
• Financial Policies
• Spokesperson Policies
• Prioritized Strategic Plan
• Crisis Plan
• Task Force Charges

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2. Legal Status

• Must have access to legal counsel
• Incorporation
• Recognized legal entity
• Corporate liability rather than individual
• Not-for-profit status
• A tax status, not a business philosophy
• No profits, but surpluses are fine
• 501.c.6 Business Assn. under IRS Code

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Legal Status

• Tax-exempt status
• Need letter from IRS saying so
• United in common interest
• No profits inure to any individual member
• Keep a copy of your letter on file
• Doesnt mean you wont have to pay taxes
• Two tests
• Organizational were you formed under section
  501.c.6?
• Operational are activities consistent with
  section 501.c.6?

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Legal Status

• Benefits of being tax-exempt
• You can receive dues without paying taxes
• You can accumulate income tax-free
• May help exempt your organization from local
  property, sales and other taxes
• UBIT Unrelated Business Income Tax
• Tax due on income from operations that are not
  related to your tax-exempt purpose
• Advertising / mailing lists / facility income
• MLS revenues?
• You can write off expenses against the UBIT
  revenue.

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Legal Status

• Tax Returns
• Must file in informational Form 990 if your gross
  receipts exceed 25,000
• Most recent three years Form 990s must be
  available at your office for public inspection
  during normal business hours
• Must also file 990T if UBIT exceeds 1000

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Legal Status

• Taxable Subsidiaries
• Appropriate if the income source and volume of
  income might taint your tax exempt status
• Trigger is substantial revenue from source
  unrelated to your tax-exempt purpose
• Lobbying Tax
• Federal law requires that membership dues bills
  indicate portion of dues allocated to lobbying
  purposes
• That portion is not tax deductible by members

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3. Dues Collection / Member Policy

• Enforce dues formula
• Enforce member policy
• Administer the Code of Ethics
• Enforce Quadrennial Ethics Requirement
• Maintain member records in NRDS

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4. Administrative Support

• Board must employ or have access to staff support
• Hire full-time
• Hire part-time
• Outsource
• Partner with sister Board to employ a person
• Purchase services from sister Board or MAR

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5. Communications System

• Board must provide some form of regular
  communication
• Newsletter (paper or electronic)
• Computer-based info service
• Periodic notices about education offerings

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6. New Member Orientation

• Board maintains an orientation process to inform
  new members of privileges and obligations of
  membership

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7. Code of Ethics Enforcement

• Board must maintain a viable professional
  standards process to enforce the Code of Ethics
  and provide arbitration and mediation as a
  service
• All Boards must sign cooperative enforcement
  agreement with another Board/Assn

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Being an Effective Leader

• Pronounce REALTOR correctly
• Wear your pin
• Use your designations
• Know the Association
• Plan Plan ... Plan
• Start meetings on time and end on time
• Communicate
• Implement the goals of the Board
• Engage other members in the process

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Your AE

• Responsible to the Board
• Implements Board policy
• Implements NAR member policy
• Implements MLS policy
• Hundreds of tasksmost with deadlines
• Dont abandon them.
• An arranged marriage.

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Staff/Volunteer Relationships

• Expectations
• Partnerships
• Association goals
• Communications
• Respect
• Confidentiality
• Micro-Management
• No surprises

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Local/State Assn Relationship

• Communication
• No surprises
• Serve common members
• Serve the profession
• Local Boards responsible for record keeping and
  dues collection
• State Association responsible for Legislative
  Advocacy (contacts, local policy issues)
• Both provide professional development
  opportunities and training

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NRDS and E-Mail Addresses

• Online address changes
• Change happens immediately at all three levels
• Our e-mail pledge
• We wont sell or give out our e-mail list
• We wont send you spam
• Your Board plays a vital role in collecting and
  maintaining e-mail addresses

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LEADERSHIP AND STAFF RELATIONS

• Trust is Built on Common Expectations

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Building Trust

• Our best associations have healthy and respectful
  relationships between the elected leaders, the
  Board of Directors and the AE.
• Achieving and maintaining this relationship
  year-to-year can be challenging.

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Common Expectations

• Effective associations have a strong AE who
  accomplishes the prioritized goals set forth by
  the elected leadership with the funds the
  association provides
• The AE reports to the board and all other staff
  work for the AE.

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Building Healthy Staff and Leadership Relations

• 1. Clearly define staff and volunteer leadership
  roles and make certain everyone understands what
  they are
• 2. Put policies in writing (Policy Manuals are
  shared on our AE website)
• 3. Provide training and orientation for new
  officers and staff covering policies, roles, and
  association goals

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• 4. Create a profile for each leadership position
  (examples available on-line)
• 5. Develop an ongoing plan to recruit the right
  people for the right positions
• 6. AEs should be involved in identifying and
  recruiting future volunteer leaders
• 7. Maintain ongoing relationships with past
  presidents and volunteer leaders

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• 8. Leaders should remain focused on whats best
  for the member
• 9. Help to build positive staff attitudes and
  keep staff informed so they are able to respond
  to member requests
• 10. Become a model of honesty, trust and respect
  set a high moral standard
• 11. Understand and employ both political and
  spiritual power

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• 12. Stay in constant touch with the members you
  represent
• 13. Become a highly-visible leader by visiting
  agency offices, and talking regularly with
  brokers and agents
• 14. Understand the real estate business and
  current practices and be able to discuss current
  issues
• 15. Have a good sense of humor be flexible
  dont take things personally
• 16. Have fun with your members

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LAR NAR Meetings

• Send your AE.
• The more your Board staff knows, the better
  theyre able to serve you.

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Financial Fundamentals

• Board officers need to be educated in several
  areas
• Fiduciary responsibilities
• Conflict of interest policies and procedures
• Roles of the treasurer, finance committee and
  audit committee
• How financial goals and budgets in a non-profit
  association differ from those in the private
  sector

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Final Thoughts

• One of the best jobs for Local Board Officers is
  preparing for tomorrow while managing today
• This means
• Prioritizing programs and services, so potential
  cutbacks will have minimal impact on association
  priorities
• Maintaining financial reserves to smooth out
  revenue fluctuations
• Keeping up with federal, state, and local
  legislation and regulatory initiatives that could
  affect the real estate industry

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• 4. Tracking changes in consumer actions and
  behaviors that affect home buying (and selling)
  decisions
• 5. Using technology to communicate quickly and
  cost-effectively with members, policy makers, and
  business leaders

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Be Innovative

• For REALTOR associations, change is not an easy
  process, but change is occurring every day. You
  cant sit back and just keep on doing the same
  things.