Beyond Semantics: A Response to Clint Skutchan

Over the weekend, Inman published an op/ed by Clint Skutchan, an experienced former Association/MLS executive and strategy consultant, who took issue with my Remember Who You Are post. I happen to love it when people take issue with my posts, because it means we’re engaging in debate and discussion.

Plus, Clint is a great guy, one of the crop of younger leaders in the industry, who is intelligent, thoughtful and experienced. Accordingly, I extended and he accepted an invite to guest post on Notorious. So he cross-posted his Inman op/ed here. There are some small editing differences, but they’re the same column. I’m going to use his version here on Notorious for a response.

Basically, while I appreciate what Clint is trying to say, he makes a few bad assumptions which are not backed up by evidence, and ignores the giant hole in his logic in trying to say it. Let’s get into it.

The Situation According to Clint

Right at the top, Clint says that my interpretation of the FOR vs OF is inside-out. This is because Clint thinks that the difference is one of “focus, not profit.” Accordingly, he thinks that a shift from the National Association OF Realtors to the National Association FOR Realtors “wouldn’t be an organizational doctrine, as much as it is an organizational orientation towards utilization of associations’ greatest assets: their members.”

Clint then argues that “it’s become abundantly clear that associations who first seek to establish value for their members are the ones also having the greatest impact in the industry” while the “OF mindset associations” are characterized by “a group of individuals less intent on engaging and serving their members than maintaining their own pseudo position of power, and the association.” Such self-serving associations are incapable of serving with nobility or higher purpose, he says.

He then says that my position argues that the “FOR Realtors” mindset means focusing on the profit motive of members, and writes:

Member centric isn’t the equivalent of profitability, its more about the long-term success of members, which is ultimately part and parcel with upholding the core aspects of the REALTOR® Code of Ethics. Sure, there are members who skirt or ignore them all together yet find success. However, I’ve seen that success be short lived in many, if not most cases.

In fact, most community and industry minded associations around the country already have strategic plans that start with a statement about members’ excellence, success, or growth. The important thing to note is they don’t say benefit or profit, because that’s primarily dependent on the member’s ability to represent their clients’ interests.

Clint does acknowledge that we agree on the whole question of “Who is your member?” since there are “a significant number of members who are being held hostage by underperforming associations.” But he thinks that means the association should “focus on being member centric organizations that places significance on how members’ long-term success depends upon ethical practices and public betterment.”

He concludes by arguing that:

Before N.A.R. can become an organization OF members it must start to become an organization FOR its members. There is no collective without first earning the individuals.

Or in other words… N.A.R., and REALTOR® associations, must establish an organizational culture that ensures associations around the country spend less time seeing themselves as an ORGANIZATION OF SOME members and more as an organization FOR ALL MEMBERS.

It’s a reasonable take, and definitely one that is rooted in the right moral instinct. Hell, it’s a lot better of a take than the dismissive, “It’s just semantics” handwaving that some do.

I’d love to be persuaded by Clint’s vision, which happens to dovetail so nicely with the dominant mindset in the association world today. I just can’t, because it’s based on some bad assumptions and a deep flaw in logic — both coming from the need to try and preserve the status quo combined with the recognition that the industry is really bad at doing the hard things until they are absolutely unavoidably necessary.

Bad Assumptions

To begin with, many of the assertions and assumptions that Clint make are simply unsupported.

For example, these associations having the greatest impact on the industry that he mentions… because they first seek to establish value for their members… who are they? Who is he pointing to as an example of an association having the greatest impact on the industry? After having named a few names, Clint would then have to provide some evidence to back up the assertion. A few suggestions:

• Calls For Action Response Rate: National average is 15%; what is the CFA response rate for these “greatest impact” associations?
• Voluntary RPAC Investment Rate: That is, not “above-the-line dues billing” workaround, but one where the actual member writes out an actual check to RPAC.
• Voting Percentage: What percentage of the members voted in the last Board of Directors election?
• Association Email Open Rate: Straight up, what percentage of emails sent by the Association get opened by the recipient?
• Event Participation Rate: What percentage of the members come out for big and small events? Big events would be things like “visit the statehouse” or “housing market update” (which would help the member serve the client better); small events would be networking receptions and such.

Those are hard numbers that Clint should be able to get from the greatest impact associations out there. If the “member first” associations are in fact having the greatest impact, then those numbers should all be significantly above the national average.

Less quantifiable is Code of Ethics enforcement. Let’s agree, for the sake of debate, that Clint’s Member First Association has greater impact on the industry and on the public. The first and foremost responsibility of such an Association would be to enforce the Code of Ethics — it is, after all, the document that distinguishes a Realtor from a licensee, and the foundation of the Association itself.

In what concrete way is a Member First Association better than others in enforcing the Code of Ethics? Does it have a better/easier reporting mechanism? Do its members feel more comfortable reporting violators, unlike the members of virtually every single Association I have ever seen/worked with/heard of who do not frequently report because they fear blacklisting? Does such a Member First Association publish the names of violators for the public? Does it take real firm steps towards discipline, unlike the other Associations who hand out slaps on the wrist for major violations? (In one case I know of, one person was arrested by the FBI for mortgage fraud and ended up paying a six figure fine to avoid jail time; do you think he lost his Realtor status?)

To claim that a Member First Association has the greatest impact might sound nice and would make AE’s and volunteer leadership feel warm and fuzzy inside, but it has to be true. Is it?

A bit of an aside, but when Clint writes that members who “skirt or ignore” the Code might find success, but that success is short-lived…. In just about every single Association/MLS I have worked with, the leadership mentions that some of the worst offenders in their associations are the most successful. And long-term successful, because they go right up to the edge, and often over the edge, to gain a competitive advantage.

Two Masters, You Cannot Have

The fundamental flaw in Clint’s logic is that he believes the association serves the public by serving its members:

Because they understand to be an effective organization your priorities must be to serve and leverage members, even those who feel compelled to join, in order to maximize the association’s reach and impact.

That’s a union. Compulsory membership, but it maximizes the union’s reach and impact. And many a union today talks the talk about how they work for the public interest:

When union organizing helps wages go up, purchasing power increases, driving growth in the economy. When workers have better income and benefits, they are healthier, happier, and freer to contribute to economic growth in a number of ways.

So the AFL-CIO is really working for the public interest, see?

As the Good Book says, if read by Yoda, “Two masters, you cannot have.” It’s a principle that Realtors understand very well, given that they recognize the problems of dual agency.

You can serve the public as a side-benefit of providing value to your customers:  businesses do it every single day. My local pizzeria employs dozens of young people and gives them their first job experience. That serves the public, but they’re not trying to do that: they’re trying to provide value to me the customer so I’ll pay them.

Or you can provide value to your members by serving the public: charitable organizations do this every single day. My wife Sunny participates in Rotary International to help those in need, but she ended up making valuable connections because of it.

But you cannot serve both: one must take priority.

To me, given the history of the National Association OF Realtors (as I went into depth in my last post), the Realtor movement has always served the public. Public service, public interest, public weal are the touchstones of the movement. The Code of Ethics practically sings with that concern for the public: patriotic duty, civic responsibility, interests of the nation and its citizens… obligations beyond those of ordinary commerce.

To serve the public interest, the National Association OF Realtors gathered like-minded individuals together to establish standards of ethics. Those standards would then draw a clear separation between these ethical Realtors and unethical sharks and curbstone brokers.

Has NAR and the Associations strayed from these foundations? Of course they have! It’s been over a hundred years. Our nation has strayed from its foundations over the last hundred years as well. There’s no blame here. Do associations and leaders sometimes act hypocritically? Of course. We’re all human beings; being hypocritical is part of human nature. But hypocrisy is the compliment vice pays to virtue, and it makes clear to us all what the ideal is, even as we fail to live up to it.

To change that ideal from one centered around the interests of the nation and its citizens to one centered around providing value to the members… that goes beyond semantics. And then to dress up that change as a “Well, this is how we serve the public after all” is to adopt the rhetorical stance and the logic of the AFL-CIO.

You can do that. Nothing stops you from doing that. It represents a 180 degree reversal from the past, and is in fact a slap in the face of tradition and history and ideals of NAR. But hey, maybe the ideals of the 19th century no longer work for the 21st century. Maybe high minded rhetoric is just empty words. So sure, NAR and local and state associations can repudiate the past and change into a “member-centric” organization.

Just don’t pretend you’re not doing that, and pretend that you’re still all about the public interest if that is the move you want to make. Make the decision with your eyes wide open about the choice you’re making.

Profound Confusion

Something that is profoundly confusing is Clint’s conclusion, and jarring in its disconnect to what we had been discussing: the difference between an inwardly-focused association for its members, or an outwardly-focused association of its members.

He writes:

Ultimately, I would answer Hahn this way. Before NAR can become an organization of members, it must start to become an organization for its members. There is no collective without first earning the individuals.

Or in other words, NAR and Realtor associations, must establish an organizational culture that ensures associations around the country spend less time seeing themselves as an organization of some members and more as an organization for all members.

The problem is that there is no logic to the first idea — that before NAR can become an organization of members, it must start to become an organization for its members. Furthermore, the two concepts are entirely unrelated.

Before and After

NAR is not a new entity; in fact, it’s over a hundred years old, with a rich history and background and traditions out of which the current incarnation has built itself. In fact, my entire post was inspired by the fact that Bob Goldberg specifically said that NAR must change:

First and foremost, it’s imperative that we are not just the National Association OF REALTORS®, we are also the National Association FOR REALTORS®. Every action we take is geared to making sure our members come first.

It is abundantly clear, to borrow Clint’s phraseology, that there already is an organization named the National Association OF REALTORS. NAR doesn’t need to become such an organization; it already exists.

And as an organization OF members, it does not need to “earn” the individuals. In fact, the individuals need to “earn” the privilege and right to belong. That’s what the whole “REALTOR Pledge” is all about.

So what the hell are we talking about, really?

The clue comes in that second, seemingly unrelated paragraph, about all members instead of some members.

I think what Clint wants to do here is to maintain the status quo, while acknowledging that which is as plain as can be. He agrees with me (and Inman’s Special Report) that most of the so-called members are not members at all, but hostages who are forced to join the Association.

But he wants to hold up the fig leaf of convenient fiction to say that they are held hostage only by “underperforming associations.” There is no basis for that fiction. Neither he nor I have any idea whether the people Inman interviewed belong to “underperforming associations” or not. Maybe they belong to top notch associations that win awards every year — not that they would know, since they pay precisely zero attention to anything happening at the Realtor association.

When Clint talks about becoming an association for all members, not just some members, I think he’s referring to those locals who are, for all intents and purposes, social clubs with crappy clubhouses. You know the type, that spends more on its annual officer installation dinner party than it does on government affairs for the year. Or talks the talk about training, education, and professionalism… but at the end of the day, the same twenty people plan the same luncheons and parties and golf outings for the same sixty people.

Those truly can be said to be underperforming.

An association that does give a crap about “members’ excellence, success or growth” is an improvement over the social clubs masquerading as a trade organization. So to the extent that Clint wants associations to “empower the majority of its members to serve their clients’ needs” and place “significance on how members’ long-term success depends upon ethical practices and public betterment,” I’m with him 110%.

But that requires a story about how NAR, and by extension the state and local associations, became that way. Because NAR and the Realtor Movement began with this:

How did that organization become one, as Clint worries about, run by individuals “less intent on engaging and serving their members than maintaining their own pseudo position of power?”

At the very least, telling local Associations to give a damn about ethical practices and public betterment requires acknowledging just how far they have fallen from the ideals set forth in the Code of Ethics. It requires telling the story of that decline, and understanding the cause of the decline, so that courageous leaders can do something about it.

Just preaching more of the same — provide better benefits, provide more value (whatever that is), provide more goodies and more stuff — and hoping that those who were forced to join will somehow convert into true believers who have internalized the public interest and the obligations beyond those of ordinary commerce is… well….

The Inconvenient Truth

So we arrive at the inconvenient truth about the Realtor association, as it stands today.

The vast majority of local Realtor associations today are nothing more than retail storefronts for the MLS. As a side benefit, they also happen to provide resources for some activities that the small minority of members value, such as advocacy.

The continual search for something of value to all members is a quixotic quest, when 70% of them never had a choice to join in the first place.

There is an easy, easy way to find out if I’m right or wrong: divorce the MLS and let anybody with a license join. See how many members you have left.

This is a step that the industry is not likely to take… until it is absolutely necessary. Real estate is very good at preserving the status quo, and coming up with all sorts of reasons why. It’s also very, very bad at change no matter how many leaders give lip service to Innovation! Change! Gamechanger! and so on. One hopes that by the time the associations do make the change, it isn’t too late.

Remember Who You Are

Everything that Clint wants to pursue — standards of excellence, success and growth of members, public betterment — can be pursued for those members who have voluntarily chosen to join because they want to. But then, you won’t actually have to do anything for such individuals, because none of them will have joined in order to get some sort of benefit or value out of the association. They will have joined because they believe in grave social responsibility and patriotic duty and see the association as the vehicle through which they can improve the real estate industry for the benefit of the nation and its peoples.

That is an Association OF Realtors, of true Realtors. And they don’t need the Association to do anything FOR them.

Just like the men who gathered in Chicago in 1908. Just like the hundreds, thousands, tens of thousands of men and women who came before them and gave of their time, energy, and treasure for the ideals of the Realtor Movement.

So like I said in my first post, remember where you came from. Remember who came before you. Remember who you are.

-rsh