Sep. 29, 2008 - Certificate of Realestate Association Professionalism

 

Recently, I completed a course outline for the International Real Property Foundation on the topic of what professional associations are, and how they can serve specialists effectively. Many of the countries served by the Foundation are those with emerging economies, countries where real property transfers have not been common in the past and as a result there is no real infrastructure to support that activity.

The fun part of this for me is that going into these countries (and I’ve been to lots of them) gives me a chance to re-invent real estate associations. Here in the US we have a long history of real estate associations, much of it weighted down and groaning under the ‘we’ve always done it this way…’ theory of organization. That makes it pretty much a creative act to go into a country where there is no cumbersome ethics enforcement procedure, no independent contractors, no MLS antitrust litigation baggage, and such.   Yes, we Americans have experience, but the lessons to be learned works both ways: one can always ask “Why” about the way we do some things in the US, and if our answer is, “ummmm, because….”—a lesson may be lurking in the shadows of analytic thought.

But I digress. One of the issues which many of our IRPF client countries face is the issue of credentialing, or certification of real estate practitioners. Often, countries we visit have no licensing laws or, like Russia, there were such laws and the government decided that credentialing real estate salespersons and brokers was not the business of government.

Whether or not you agree with that decision is not the issue: the issue is one of opportunity for the real estate association to step into the void. The Russian Guild of Realtors, by the way, did just that after their government’s decision. Certification is a significant contribution which the Guild makes to the Russian real estate sector, and it’s an important activity in many other foreign countries as well. It raises the level of competence in the practitioners, it encourages public confidence in the skill level of the designees, and it provides a steady and ongoing income for the association.

In the time I’ve been active in real estate association work, I’ve seen several certification movements happen: some have succeeded, many have failed.

A successful credentialing program is the RCE designation program (Realtor Certified Association Executive). As a member of the founding team (caveat: never second a motion to do something. You’ll get caught up in it!), I gained a great education with that effort. Not only did we hire a wise consultant to help us answer the questions I am going to share with you in this blog, but also the team got to devise and answer questions, complete the application process, and beta-test all the exams. 

And the RCE program went from a bump of new RCE’s (the bleeding edge few) through a period of lethargy (“I am perfectly happy the way I am”) to what appears to be a very healthy interest in this basic Realtor Association measure of experience and competence. And when the ‘new’ CEOs like Dale Stinton and Bill Martin went after their designation in the first year or so of their new positions—well, RCE had arrived!

However, along these lines, I’ve also been involved in some failed credentialing programs. Flops. And every time some well-meaning leader says, “Let’s REQUIRE this knowledge” or “Why don’t we create a designation for this?”, or “Let’s get these new people and part-timers up to speed,”  I cringe—not because the intention is wrong, but because credentialing is not a solution for the faint of heart, the unskilled manager, or the idealistic volunteer.

1.       Is there a target market for the certification or credential, and is that target market clearly defined? In the paragraph above, I imitated a couple of commonly-heard statements from association leadership…and I point out that in no instance was there a concern with the target market. Rather, the concern was the speaker’s! That’s often the case in professional associations: specifically, some Realtors grumble at the lack of professionalism from organization members, due primarily to the low entrance requirements. Somebody ought to raise the bar, they mutter. The pure fact of the matter is, the very people at whom the dirty looks are directed are probably not going to stand up and shell out cash and time to get a designation. Neither will their brokers.

2.       Those last two sentences answer the next question: “Does the target market or the industry need and want the certification?” In an organization of independent contractors, such as Realtors, the target market had better need and want the certification (and be willing to personally invest in it), because that’s the only way the audience is going to be there. The issue is a little different in my client countries through the IRPF: brokers have employees, and employees can be required to do things and to maintain an operational quality standard.

3.       Is the association ready to invest in the staff and resources to maintain the program over time. One of the difficult lessons we learned with the RCE was that record keeping, resume reading, test preparation and grading, and re-certifying are labor-intensive programs that will not pay for themselves until much time has elapsed. Certainly there are opportunities for fundraising to support the program in ways other than certification fees: speaker luncheons, sales of pins and t-shirts, and gifts and grants to name a few. But as in all association programs, a careful written business plan is in order before you embark on the project. Anticipate a 3-5 (+) year timeline for the program to break even.

4.       Who is your competition? As in any business plan, under-estimating your competition is fatal. If your certification is not an early entry into the marketplace, other programs will have gotten the attention AND the dollars you may need to be successful. Not long ago a Realtor state association considered developing a ‘green’ certification program for their members and asked me to develop a tentative outline for the study part. A few weeks after the initial investigation, NAR announced its ‘green’ certification program.   Wisely, I think, we abandoned our idea—we were just a little too slow on the uptake and the national association had a corner on the market.

5.       And speaking of markets, how will you market your designation? And to whom? Because with professional designations, there are always at least two distinct marketing efforts needed (and probably more). One is to the public. In a trade association, the members INVEST in a designation—and investments always have a return. If the Realtor’s public doesn’t appreciate the designation, and if it doesn’t bring her more income, the program will not survive. It’s often heard about NAR designations programs that the public ‘doesn’t know what a GRI is, so why should I get one?’ (Substitute CRS, CRB, ABR, CIPS, etc.) It’s expensive and time-consuming to educate the public to use a designation. 

     And then there’s the marketing to the member and the broker. Most Realtors belong to a franchise, pay franchise fees, and put their loyalty in those directions. They attend franchise training programs and attend franchise conventions and meetings. Clearly, the franchises are a major competition for real estate associations when it comes to time and dollars from our members. As you construct your designation business plan, consider your competition.

One designation program in the Realtor family that’s done pretty well is the e-Pro designation. There are some reasons for this:

o   It meets a knowledge need not addressed by any other group: technology skills for the real estate salesperson

o   It’s convenient: it’s an on-line course offering.

o   It’s fairly priced, within the range of most of the target market.

o   It’s well-marketed with the use of a whole army of e-Pro introductory course instructors who receive incentives for everyone they sign up.

o   It offers community through the online mailing lists, e-Pro designee meetings, and other networking programs.

o   It’s been endorsed by NAR, even though it was the invention of a private company.

One thing I didn’t mention: as you develop the credential, be aware that you need to re-certify the designee or the credential becomes worthless. The two credentials I hold that I use the most often are the RCE and the Certified Association Executive designation from the American Society of Association Executives. Both require ongoing education and professional involvement to keep active, and a re-certification every three years. More fees, yes. Do they cover the cost of the program? Probably not.

There’s no easy solution to raising the industry bar, is there? Developing a certification program certainly isn’t it, unless you are willing to make a real commitment to an ongoing effort. If you’re thinking about such a program, here are a couple of good resources:

The Business of Certification: A Comprehensive Guide to Developing a Successful Program by Lenora G. Knapp and Joan E. Knapp (2002, ASAE). This in-depth resource covers key topics such as strategic planning and marketing your certification program. It also features chapters on global certification and transitioning to computer-based testing. This offering includes a supplementary tool kit of 21 worksheets that you can use right away to apply the authors' concepts to your unique needs.

Certification and Accreditation Law Handbook by Jerald A. Jacobs (1992, ASAE). This book is a comprehensive and user-friendly review of legal principles and rules that apply to private, nonprofit voluntary organizations that issue credentials, operate certification or accreditation programs, or that are considering doing so. Contents include liability to third parties, confidentiality of records, use of credentialing marks, tax exemption, and the Americans With Disabilities Act. Appendices include sample documents and excerpts from the Federal Register.

These books, and the description of them, are provided by ASAE, the American Society of Association Executives.

Also, if you're considering a credentialling program, you might want to invest in ASAEs online credentialling conference on October 27.  Go to

http://www.asaecenter.org/ProgramsEvents/EventDetail.cfm?ItemNumber=36496

Sep. 28, 2008 - Decapitation: the Anatomy of a Coup

Follow-up! Yesterday I drove down to Smack Dab, to the annual meeting of the Saw and Bow Belles and Boys, just as I said I would in my last post.   It was a beautiful Michigan Indian summer day, a lovely drive, and a bloodless coup (complete with a good lunch and tasty desserts). But the day was instructive—even though I suspect in the minds of several attendees it was just an overthrow of the good old values (GOV) by the evil doers of the Super Organized Wimminfolk (SOW). 

Prior to the meeting, SOW’s had spent a month or so doing homework. They had researched the SBBB bylaws, and discovered that the bylaws contained several articles which had never been formally adopted and voted on by the membership. They had learned which documents had to be filed with the state in order to incorporate as a non-profit organization, and they had reviewed the documents of the IRS and the new 990 mandates. They became experts in Robert’s Rules of Order, and they reviewed whatever minutes were discoverable from the meetings of recent years.

In short, the SOWs became well-educated leadership, intent on understanding their due diligence requirements.

Unfortunately, the GOV folks hadn’t done the same. There was no printed agenda, and the only printed item that was handed out were copies of the already-suspect bylaws and a copy of the proposed bylaw changes. The meeting began 15 minutes late, and the chairman announced that there was little on the agenda, so we could ‘get through everything’ in 45 minutes and then have a nice lunch.

Here’s the first lesson. Imagine you are the chairman of the board, and you walk into the meeting and find a room filled with 400% more people at a meeting than you have ever had before, and many of those people had driven hours to get to the meeting. Aha! It’s a clue! Something is up!

1.       Respect the value of your members. Start on time.

2.       Have a printed packet of materials ready: Agenda (preferably timed), printed background materials, reports and minutes.

3.       Begin the meeting by setting the scene as appropriate. Make introductions. Thank people for their interest. Be welcoming and polite. Don’t dis the contents of the meeting—people are there because they feel the meeting is important, and their time is important too. Don’t assume the spectators just came for the food.

And away we went. The secretary’s report and the treasurer’s report were both verbal (see rule #2 above). Written reports are especially necessary from the treasurer, but in this case, the treasurer merely read off a list of checks that were written, some income figures from the Saw Fest in July, and the stated conclusion that there was $33,000 in the checking account, after all expenses were paid. The end of the fiscal year is September 31, and there weren’t anymore bills, so ‘we were in good shape.’

1.       Always present a written report.

2.       Make sure your reports (and your tax reports) are available to the membership.

3.       If you are an elected/volunteer treasurer, check with an accountant and get a recommendation for a checks and balances system so that a second party reviews your work.

4.       Get a financial review or audit annually.

5.       Work with the leadership to develop an investment policy for excess funds (don’t keep $33,000 in the checking account for a year).

6.       Insist that a motion be made that the Board accept the financial report into the minutes. Make sure everyone has a chance to ask questions before the report is accepted.

There wasn’t much squabbling over the Treasurer’s report at the SBBB annual meeting, though there should have been. The Chairman then said, “Let’s move on to approval of the bylaws. “ No, said the SOWs, you can’t do that. You have to have committee reports. The structure of your meeting is mandated in the bylaws.

Sure enough, on page 2 of the bylaws, there’s a paragraph which says” that the agenda for each meeting will occur in the following order: (omitted).

Know the BYLAWS! They are the association’s rules of conduct, upon which all members agree. Even if the issue is small, the answer is still the same: Is it in the bylaws?

Of course, there is an additional question: should the information BE in the bylaws at all? As I observed in the last post, there are lots of things that can be changed more quickly than you can gather a group of folks together to vote, and many of these are management issues daily concerns. The SBBB had a whole section of bylaws which related to running the annual Saw Fest: things like the admission charge for spectators, and who sharpened the saws, and what side one should stand on when putting gas in the golf cart. The SOWs solved THAT problem: they just moved to eliminate all of the management section and put it in an operations manual, which needs only a vote of the board of directors to change.

The conclusion of the meeting came when the slate of officers was proposed from the nominating committee. Well, actually there was no report of the nominating committee, there was only a scrap of paper with the names of the current SBBB officers printed on it and a place to vote ‘yes’ by each of the names. When asked if he would accept nominations from the floor, the Chairman said, “No. We’ve never done it that way.” The parliamentary SOWs’ hands shot up like sharpened arrows, and the voice of Robert resounded through the room. A new slate of officers was proposed, accepted, and elected.

Well, frankly, I was sorry to see the GOVs go. They represent a real and valuable part of the SBBB history, and they made the best contributions they knew how to do. But like many good, old values, it isn’t enough anymore. Members are younger, busier, and have better information at their fingertips about how things are done in today’s world. They are no less committed, I think; they just don’t show their commitment in the old ways many of us are used to. Many associations still measure their success on the number of people who serve on committees, attend meetings, vote in person, and get educated in the headquarters classroom. It’s time for a change, for the association to measure its success in terms of performance successes and action plan results.  Further, if the association is managing a business-- like an annual festival of musical saws or a Multiple Listing Service (or even a Wall Street financial firm)--today's rules (see Sarbanes-Oxley and the new IRS regs) and protocols demand scrupulous attention and a serious and business-like approach to management.

                Tips for Creating Effective Agendas

                Financial Operations checklist

                Self Assessment Guide for Associations

Sep. 4, 2008 - The Story of a Non-Profit Organization

Well, THIS interesting story begins some 40 years ago, when a group of enthusiasts who played a certain musical instrument (let’s say the Musical Saw—a contradiction in terms, of course, but a popular instrument in many rural areas) got together and formed an organization to encourage and preserve the heritage of this instrument and its music in the state of Michigan. I think in the beginning these folks were a few mid-state farm families who really enjoyed the annual music reunion and campout which happened in July in a rural community smack-dab in the center of the state.

Our friends encouraged THEIR friends to come to this celebration and before long the festival got larger and larger, and a club was formed with the sole purpose of holding the festival and preserving the musical saw and its heritage. The festival continued to grow, and the overnight campout for 30 people eventually exploded into a 4-day festival with 200 workshops, 50 vendors, 750 camping units, back-to-back stage shows, and the mournful sound of several hundred musical saws wafting over Michigan.

The festival moved to a large fairground in the town of Smack-Dab, and workers were hired to clean the barns, mow the grass, plant porta-potties, and empty garbage. The festival grew still more, and embraced food vendors and kids’ activities as well—so, more garbage and porta-potties.  

The Festival Committee worked hard to keep the fees low—all 4 days of the Saw And Bow Gathering cost only $3 per person, and little kids and real old folks usually got in free. Dues for the Club were $5 a year—that was it. Everything else was pretty much done by volunteers, who – among other things – sold the tickets to the 5 -7 thousand people who came through the gates each year.

Sounds like a success story—the little engine that could, or the shiny saw that sang, or something like that. Even broke a world record for the number of musical saws on the stage at one time playing the same tune.

But what of the organization—the “Saw and Bow Belles and Boys”? And of the Festival Business, which now had income, employees, insurance, and assets and liabilities? Well, remember that the members of the SBBB Club were volunteers, motivated by a deep love of their instrument, its music, and the history of their state. The very organization was built on tradition and the preservation of values, and the organizational structure of the organization reflected their desire.

1.       A key organization leader resigned with a very public statement about how the ‘rules’ contained in the bylaws prevented her from effectively doing her job;

2.       The vendors of musical saws and related products said the same thing—the rules were preventing them from doing business effectively in the trade show buildings; and

3.       The performers on the stage shows (often also vendors of products) said that they weren’t satisfied with the stage shows (which drew several thousand people each night) and threatened to not return and perform or sell saws and bows and CDs.

Having acquired the dubious honor of being a member of the club (that makes me a ‘Saw Belle’?)  AND a professional association manager, I was asked to visit the bylaws of the SBBB Club and see what was up.

The first thing I found that was troublesome was that there was just a lot of ‘stuff’ in the bylaws that shouldn’t be there—the number of teeth you had to have in your saw in order for it to be musical, the fact that the saw can only be made of metal, and not any of the new substitute compounds, the fact that no member could play a saw that had a plastic handle in a stage show.    There were several pages of rules about the festival management itself—who could ride the golf carts, what committees and subcommittees the group should have, how long the festival should last and what days of the month and week it should be on.

SAW FESTIVAL BYLAWS RULE NUMBER ONE: Get the management stuff out of the bylaws.  By definition, the bylaws are the formal rules for regulation of the entity's (ie corporation) actions, such as rights and duties of officers, directors, share holders, and members. Bylaws are adopted by an entity usually at the first shareholders' meeting. Day-to-day management decisions cannot wait for bylaws changes to be made, and in 2008, organizations running business operations (such as a music festival or an MLS) doesn’t have the luxury of a year, or even 90 days, to make necessary changes.

The second thing that was troubling about the bylaws as I saw (!) them was the decision-making structure. Any changes to the SBBB bylaws had to be made by personal vote at a meeting which was held only once a year, right there in the Smack-Dab Fairgrounds. As a Saw Belle for several years, I’d never been to the annual meeting and barbeque: 200 miles is a pretty long way to drive for a fight and a sandwich.

SAW FESTIVAL BYLAWS RULE NUMBER TWO: Allow for mail, electronic, or faxed ballots. It’s difficult enough to get members to care about things enough to take a couple of days’ time to go vote on whether kids under 18 can ride in a golf cart or carbon-fiber saw handles will be allowed in stage performances. This is the modern age, and electronic systems are secure and efficient. Some states, however, have suggested language to include in bylaws, so check with your state government about absentee voting and other legal requirements.

The next problem was how to answer the question of SBBB membership. First, the bylaws weren’t clear as to who was the member—the individual, or the family. And if the family group was a member, how many votes did the group get? Pretty much the same problem appeared in the description of the Board of Directors: in an effort to preserve tradition and honor the past, the SBBB bylaws made every past officer and past major committee chairman a lifetime member of the Board of Directors AND, by the way, their spouses were automatically voting Board members as well. A rule like that can result in a whole group of very old people on the Board, as you might imagine.  And in the SBBB's case, there were more honorary and appointed members of the Board of Directors than there were elected ones.

SAW FESTIVAL BYLAWS RULE NUMBER THREE: Be clear on who your members are and what powers they have. Past presidents and organizational ‘heroes’ are always a problem—we want to recognize and thank them. But often, they begin their sentences with “When I was president, we used to…” Try to avoid putting together a strategic planning committee or a board of directors filled with the past. The goal is to make your Board of Directors truly representative of the membership, as well—the voice from every segment of stakeholders needs to be heard. Include affiliates, vendors, and various levels of membership and point their faces forward, not looking back over their collective shoulders.

So there you have it. Michigan musical saw players are sharpening their teeth and preparing for their annual meeting. I think I’ll go this time, even though I may get a little cut up, bringing whatever voice of reason and experience I’ve gained after 30 years as a Realtor association manager. But the truth of the matter is, no matter how well intentioned an organization is at its inception, the world and the members change, and no preservation effort will keep things the same. 

It’s a part of the job of a Board of Directors and of the association staff to keep the organization legal and IRS-Compliant through annual operating document reviews and governance changes. That’s a part of what’s known as ‘due diligence’, and it’s our obligation in our roles as volunteer and staff leaders.