No more 'business as usual': Here's what NAR needs to change next
Inman News column by Pam O’Connor published September 23, 2023
Leadership changes are occurring at the National Association of Realtors against a backdrop of negative publicity and class action lawsuits.
The 2023 president, Kenny Parcell, whose position represents NAR’s members, was recently forced to resign following charges of sexual misconduct and workplace harassment. He was replaced by the next-in-line successor, Tracy Kasper, a few months before her scheduled term.
Meanwhile, CEO Bob Goldberg, the ongoing head of staff, has announced his retirement effective at the end of 2024 and has been re-endorsed by NAR leadership until then, although efforts are underway in advance to identify his successor. Rumors indicate that an announcement could come as early as November.
Simply replacing these positions and expecting the successors to make sweeping changes is unrealistic at best and deceptive at worst. NAR, the largest trade association in the country with 1.56 million members, has issues that go much deeper than the recent harassment scandal, distasteful as it may be.
The fact that it took a New York Times exposé for NAR to acknowledge those claims and eliminate the principal offender reflects a culture of entitlement, intimidation and denial flowing from an outdated structure that breeds mediocrity and results in wasteful spending.
The members of NAR should expect their dues dollars, which account for 80 percent of NAR’s revenue, to be used wisely. Multiple six and seven-figure salaries for present and past executives, generous travel and fringe benefits, legal expenses and settlements, and lavish, under-utilized facilities don’t always sit well with members, especially in today’s environment.
In fairness, NAR’s top executive compensation is in line with other major trade associations, though not with that of its real estate constituents.
NAR is a powerful organization that does good things for the real estate industry. And there are, of course, thousands of talented, hard-working NAR members and employees whose contributions produce many effective programs and outcomes. For those stakeholders, and to avoid tarnishing its positive contributions, NAR must address its decaying underbelly.
But before any single Realtor member or staff leader can effect meaningful change, the powers that be within NAR must concede that serious problems exist, commit to solving them, and support the hired and elected leaders charged with implementation. Otherwise, the status quo will continue, and the efforts of new, well-meaning leaders will be futile.
The association’s future relevance depends on providing a meaningful value proposition that engenders appreciation, pride, and loyalty among its members. Currently, NAR’s members represent roughly 50 percent of all active real estate licensees, but the true percentage is probably as high as 70 percent of practicing full-time residential brokers and agents.
In contrast, only 14 percent of all lawyers are members of the American Bar Association, and 15 percent to 18 percent of physicians belong to the American Medical Association. NAR’s advantage is that job-critical MLS access is contingent on membership, but that could change, as it has in California, and should not be taken for granted.
Perhaps the three areas most ripe for improvement are:
improperly administered roles, responsibilities and authority of NAR leadership
a bloated organizational structure
questionable standards, criteria and accountability for association leaders and programs.
Change must come from within, not from the lip-service engagement of cultural consultants voicing platitudes.
Roles and responsibilities
Former NAR staffer Todd Carpenter provided an excellent description of the respective association roles of paid staff versus volunteer leaders in an earlier post. Each category’s authority — and the consequences for not staying in their lanes — should be clarified and ingrained in training for both groups to avoid some of the missteps that have occurred.
In the corporate world, the board of directors represents the shareholders and has the authority to hire and fire the CEO, with the CEO accountable for all staff and the execution of the board’s vision.
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At NAR, there are different groups representing member stakeholders:
1,000-person board of directors
75-person executive committee
eight-person leadership team, half of whom are future, present and past presidents who are paid six-figure salaries by NAR, plus other stipends.
The first two groups — which are clearly too large — seem to be symbolic without much decision-making authority. The leadership team has the true power over key decisions, but if that very insular group, typically controlled by the current president, can fire the CEO, is the CEO likely to address member leader misbehavior without fear of retribution?
Consideration should be given to re-organizing the entire governance structure to eliminate redundancies, conflicts of interest and an imbalance of power.
Meanwhile, the CEO’s oversight of and responsibility for hiring, firing, managing and protecting the rights of all NAR staff should be safeguarded. Volunteer member leaders should not be directing, bullying or harassing staff, and the CEO should have the support to stop that. Staff supervision should come from staff management.
A corporate board typically has responsibility for providing counsel on, initiating and/or approving vision and strategy decisions. In the association world, member leaders often have a stronger role in program decisions, but unilateral decisions should not be made by the annually elected president without support by other member leaders and senior staff. That leads to inconsistent priorities, inefficiency and political conflict.
Organizational structure
These important decision-making distinctions and dynamics beg the question of whether the current organizational structure of NAR is, perhaps, outdated and swollen, with too many figurehead bodies and not enough qualified decision-makers for an appropriate balance of power. Compare the thousand-plus national leaders in the 1.5 million-member NAR, while there are only 535 in Congress for 340 million American citizens.
Another problem is a concerning lack of qualifications for leadership positions. Many of the 1,000 NAR directors, other than the local board and state presidents, are retired or in mortgage, title, commercial or other roles that do not reflect the overwhelming member concentration of residential brokers and agents.
How can they prioritize the needs of members in the field if not sharing their experiences?
How many of them would be committed enough to serve if they were paying their own expenses for two-plus conference trips per year?
Should there be business experience criteria for these positions and time limits for serving?
Should there be a required ratio of managing brokers to agents consistent with whether the issues addressed require broker management or agent sales background?
There is also an abundance of divisions and committees and sub-groups within NAR, as Brad Inman noted here. There likely was a role for these in the past, but with the emergence of many specialty real estate educational, networking and online opportunities, have they become redundant?
Given the high cost of supporting these entities with staff salaries, travel, conferences and other administration, along with NAR’s $14 million budget deficit despite annual revenues of $350 million, an economic argument can be made for a leaner NAR that focuses on national initiatives with a litmus test of “will this help our members?”
Standards and accountability
NAR’s revenue model is bodies (dues), with membership requiring only a low-entry-bar real estate license. The more agents — a majority of whom produce very few transactions — the more income for NAR. Also, the more citizens a trade association represents, the more effective its lobbying efforts can be on behalf of those constituents.
This membership focus on quantity over quality, legitimate though it may be, underscores the need for leadership selection standards, to make sure that candidates are not simply career association politicians who need NAR more than NAR needs them. Unfortunately, NAR’s current system does not always encourage the best-qualified people to run for office.
The most successful and serious brokers and agents are the busiest and often don’t have the time or need for the limelight of an NAR leadership position. If higher performance criteria were established for leader selection and the roles were more about substantive contributions based on industry knowledge instead of ribbons and free trips, more qualified candidates might raise their hands.
Their motivation could be working with other respected leaders to improve industry practices, enhance the consumer real estate experience, increase housing affordability, and other important objectives.
Such successful, entrepreneurial, knowledgeable practitioners would elevate the quality of NAR’s top membership representatives and bring a healthy independence leading to better decision-making, rather than being influenced to toe a certain line for fear of losing the prestige and financial perks of their positions.
Speaking from my own experience in a large real estate membership organization, our very accomplished, high-profile board members produced outstanding ideas, valuable perspectives, and high expectations of our staff, but because they were busy running their own companies, they stayed out of the weeds and allowed us to do our jobs and be judged on the results, making the respective roles of staff and member representatives very clear.
NAR has certainly benefited from many accomplished, qualified NAR presidents making important contributions. Others, though, are good people with minimal leadership experience from companies with little local name recognition. Yet they have somehow risen to become national leaders for the largest trade association in America.
NAR is large enough and significant enough to be run like a major corporation, with leader job descriptions, clear goals and expectations, high selection standards, performance accountability and evaluation metrics.
The role of the CEO
The continuity and stability of the chief executive officer position at NAR is critical. An association that is already operating smoothly and only requires a seasoned association “caretaker” can make a relatively routine hire. But these are not routine times for NAR. An association generalist is not the solution, nor is an NAR insider who may be perceived as lacking an appetite for change. Optics matter.
NAR needs an energetic, innovative leader with deep industry knowledge and demonstrated capabilities running a sizable real estate organization.
The ideal candidate has earned respect and credibility, has established a wide network of trusted broker and agent relationships, and is seen as an influencer with charisma, diplomacy and empathy who listens before acting.
He or she is someone who feels a strong sense of accountability to NAR’s members, who has the character and will to make well-conceived and possibly tough decisions, and who truly has a passion for making NAR a model of association governance and the best possible advocate for its members.
Rather than hiring the next CEO quickly to satisfy some who are clamoring for that, isn’t it better to first create a foundation for success? Ideally, those in today’s NAR leadership must first acknowledge the need for constructive change, and then come together to create a mandate for the new CEO to develop solutions to NAR’s challenges, based on member input and senior leader collaboration.
If the mission is clear, identifying the best candidate to achieve it will also become clear.
And if today’s NAR leaders do not share the opinion that change is needed, they owe it to members to be authentic and transparent in communicating and defending that position. Members can then make their own judgments about the association’s value. After all, members are the reason for NAR’s existence.