Real Estate

NAR Governance Overhaul Shifts Power Dynamic Among Top Leaders

The National Association of Realtors revamped its board of directors on Monday following a three-year review of the enormous machinery that determines how the trade group makes decisions that affect its 1.5 million members and the real estate industry overall.

The change transfers some power from the NAR board overall to the board’s smaller Executive Committee, adds more director seats for small- and medium-sized local associations and requires that directors, regional vice presidents and committee leaders satisfy certain qualification criteria.

A proposal to eliminate NAR’s delegate body — which only meets once a year — and transfer its authority to the board of directors, failed after the delegate body declined to eliminate itself.

The trade group’s board and its delegate body met at NAR’s annual conference, the Realtors Conference & Expo, in San Diego.

At just under 1,000 members, the NAR board is bigger than Congress. For the trade group to adopt a policy, that policy must run the gauntlet of NAR’s governance structure, which includes more than 90 committees, advisory boards, councils and forums comprised of thousands of Realtor volunteers. Then, the policy would go to NAR’s board of directors, which typically only meets twice a year, in person. Before the changes announced Monday, some Realtors complained NAR’s decision-making process is too slow, too opaque and appears exclusive.

NAR made the changes with the aim of making the trade group more nimble, efficient, and transparent. In a press release, NAR deemed the changes “historic” and “transformative” and said they would go into effect immediately.

The changes were based on the work of the Governance Game Changer Presidential Advisory Group, formed in 2018 by then-NAR President Elizabeth Mendenhall. The Presidential Advisory Group was made up of 49 appointed members and association executives who served on the body for three years, conducting research and gathering member feedback.

“The real estate industry, our members, and how they do business, are dramatically different than they were just 10 years ago,” the group said in its final report. “The old governance structures and processes that have served NAR well just weren’t designed to operate in today’s business world. And they don’t satisfy the needs of our members who aren’t living and working the way their parents and grandparents did.”

The delegate body didn’t undo itself

On Monday, NAR’s delegate body approved nine out of 10 of the PAG’s recommendations, all of which were endorsed by NAR’s leadership team. By far the most contentious was the proposal to eliminate the delegate body, which is made up of local board presidents who attend one delegate body meeting in their one year of service and who only meet when changes to the NAR Constitution or the Code of Ethics are being considered. Their votes are weighted according to the size of their local association.

“Many Delegates cede their vote to their state president as they don’t normally attend NAR meetings,” the PAG report said. “In interviews, some indicated that they didn’t know they were members of the Delegate Body.”

“We currently have a 1,092-member Delegate Body and a 997-member Board of Directors; two large governing bodies which are arguably redundant and unnecessary,” the report added.

In materials provided to directors and delegates, NAR’s leadership team said that, because of the delegate body’s weighting system, 4 percent of all local associations can defeat any motion at the delegate body (34 out of more than 1,000) while 15 percent of all local associations (156), can pass any motion.

“That’s a concentration of power that diminishes the voices of other local members that was never intended when the Delegate Body composition and authority was established back in the 1920s,” they said.

The proposal would have transferred the delegate body’s power to the NAR board of directors. It prompted a somewhat chaotic discussion Monday, which lasted about an hour and 20 minutes and during which delegates argued extensively over the particulars of parliamentary procedure. The delegates who spoke in opposition to the measure said they considered the delegate body important to having “checks and balances” in NAR’s governance system and stressed that Zoom had solved the problem of delegates not participating and assigning their proxy votes to others.

Ultimately, the proposal needed a two-thirds majority vote to pass and it did not achieve that, though a majority did vote in favor of elimination with delegates representing 714,792 Realtor members in favor and delegates representing 534,736 members opposed.

The new board of directors and new Executive Committee

NAR’s board and the delegate body did vote to revamp the board of directors, changing its composition to add 13 immediate past regional vice presidents and to allocate 100 seats for small and medium local associations with fewer than 2,000 members and 425 seats for small and medium local associations with more than 2,000 members. Also, instead of having 75 representatives from large firms, the board will have 50.

The new board will grow to more than 1,000 directors, rather than being reduced in size, in part because the PAG anticipated the elimination of the delegate body.

“When debating the optimal size of the Board of Directors, the PAG recognized the need for the Board to represent the diverse interests and practices of the NAR membership in a way that is inclusive, fair, and manageable,” the PAG report said.

“The PAG also considered that while eliminating the Delegate Body creates greater efficiency and productivity for NAR governance, there could be a perceived lack of representation by some of the local associations. Keeping the Board of Directors at its current size ensures comprehensive representation of associations from all areas and of all sizes with the addition of 100 new seats for small- and medium-sized local association representatives.”

The NAR board will continue to meet twice a year, but the scope of its responsibilities has now changed. The NAR board will no longer have the responsibility of approving most committee recommendations as that duty will now belong to the new Executive Committee, with some exceptions.

The board of directors will still have the authority to approve the NAR annual budget, set dues and assessment levels, and approve committee recommendations that the NAR leadership team or the Executive Committee refer to the board “because of their import and impact on the industry” or that have been referred to the board by a petition signed by at least 20 percent of the directors. Anything previously decided by the EC can be reviewed afterwards by the NAR board and the board’s vote will be final, according to NAR.

The composition of the Executive Committee, which is a subset of the board of directors, will grow from 52 members to 71 members, largely due to the addition of 12 “competency-based members” appointed by the NAR leadership team based on their skills and expertise.

Sharon Millett

Although the PAG had recommended that members who had achieved Realtor Lifetime Emeritus status — only two of which are still living — no longer be on the EC, the directors and delegates amended the proposal to add them back in as well as to add two recipients of NAR’s Distinguished Service Award, to be appointed by the NAR leadership team, to the committee. Realtors who achieve Lifetime Emeritus Status are members who have served as president of the national association and as a member of the Executive Committee for 20 years. The two living members are Sharon Millett and Cathy Whatley. Millett chaired the governance PAG, which means she proposed to eliminate her own position from the EC.

The new EC will also be made up of: the NAR president, president-elect, first vice president, treasurer, immediate past president, past president twice removed, vice president of association affairs, vice president of advocacy, Realtor Party director, 13 regional vice presidents, 13 immediate past RVPs, four past presidents, five representatives from large residential firms, one association executive representative, eight representatives from NAR’s institutes, societies and councils, one MLS executive representative, and NAR’s CEO (who is non-voting).

The new EC will meet a minimum of four times per year — either in person or virtually — and more at the request of NAR’s president, the board of directors, or any 11 EC members. The EC has to give at least 15 days notice to the NAR board in advance of each meeting. Contrary to current practice, the EC meetings would be open to any interested NAR members. The NAR board approved a policy that allows NAR to reimburse EC members for travel expenses related to attending EC meetings.

In addition to approving most committee recommendations, the new EC will have the authority to approve the NAR Strategic Plan and monitor its progress; review and make recommendations to the NAR board on the annual budget, dues and assessments and changes to NAR’s bylaws and code of ethics; and approve changes to the NAR committee structure.

“The new Board of Directors will be NAR’s strategic governing body, a diverse body that engages in discussion, debate, and decision-making that’s representative, impactful, and fair,” the PAG report said.

“The new board will continue to be charged with oversight of NAR’s big picture goals and strategy while not being bogged down with tactical or perfunctory governance tasks. By keeping the new Board of Directors informed and engaged on NAR activities and industry trends throughout the year, the Directors will be better prepared for tackling important issues at their meetings.

“In the end, the new Board authority, qualifications, composition, and directive to create a culture of open discussion and knowledge-based decision making will provide a meaningful engagement and leadership development opportunity and will expose a large group of members to the business of the association.”

The appointment process for the new Executive Committee will start in 2023, but the new EC will not start until 2024, Millett told directors Monday.

Leadership qualifications

The NAR directors and delegates also approved four proposals regarding qualification criteria for NAR directors, committee liasons, EC members, committee chairs and vice chairs and regional vice presidents:

  • That NAR directors be required to satisfy specific qualifications and performance expectations, including having served in some capacity within NAR governance, a state or local association, or NAR institute, society, or council; being a Realtor member in good standing, “actively engaged in the business of real estate;” serving on at least one committee, forum, or advisory group; and demonstrating “leadership and communication skills as well as proficient use of technology and social media,” among other criteria.
  • That committee liasons and Executive Committee members be required to satisfy the same qualifications and performance expectations as those for the board of directors in addition to: having served within NAR’s governance structure within the past five years and having earned and maintained active status for NAR’s Commitment to Excellence (C2EX) program or another NAR designation and have completed NAR’s fair housing-focused At Home with Diversity, Fairhaven and implicit bias training.
  • That committee chairs and vice chairs be required to satisfy the same qualifications and performance expectations as the board of directors in addition to: having served within NAR’s governance structure, completing all committee leadership training, being “well prepared to lead engaging committee meetings and create an environment that encourages meaningful discussion of the issues,” and helping NAR leadership identify “future committee leaders,” among other criteria.
  • That Regional Vice Presidents be required to satisfy the same requirements as the Executive Committee members in addition to: completing an application for NAR elected office and submitting to financial, legal and social media audits; having other Realtor, civic or government experience; having served in NAR governance on a national committee and in at least one of several specified state or national positions; being “well versed and conversant in NAR policies, program, and initiatives, as well as the goals and priorities of the NAR Strategic Plan;” meeting virtually a minimum of four times a year with NAR directors and state leaders in the RVP’s region; and attending “NAR-approved meeting management and facilitation training, including engaging diverse participants, strategic issue deliberation, consensus building, and managing different personalities and points of view,” among other criteria.

In its rationale for presenting the recommendations, the PAG report said, “[C]lear expectations and accountability are key to successful governance.”

The role of regional vice presidents

The board of directors and delegate body also voted in a change to the NAR Constitution that changed the role of an RVP. Previously, the constitution said, “The Regional Vice Presidents shall oversee the work of the National Association in their respective Regions and act as the representative of the President in such matters as may be assigned to them.”

Because the role was created in 1935, an RVP served as something of an emissary of the NAR president, but nowadays the trade group successfully communications directly with members, according to NAR’s leadership team.

So the NAR Constitution now reads: “The role of a Regional Vice President is to focus on the issues and specific duties that support NAR initiatives and effective decision making at the national level, as directed by NAR.”

As part of their change in role, RVPs would be focused on leading and coordinating activities “to ensure all significant NAR initiatives or proposals that require Board of Directors approval are thoroughly discussed and vetted by the Region’s NAR Directors and state leadership” and on sharing “the needs and perspectives of Realtor members of the Region, while demonstrating fiduciary responsibility to NAR and the best interests of the entire membership,” among other duties.

The NAR board also approved a policy directing the Campaign Credentials & Rules Committee to devise an electronic election process which allows NAR directors from each region to elect, from all qualified candidates in their region, one candidate from that region to put forward to the NAR board election for the position of RVP.

Email Andrea V. Brambila.

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