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Recovery or Transformation: What Will Your Post-Recession REALTOR® Association Look Like?

January 1, 2012

Signs of recovery may be emerging after an economic downturn that was both longer and more severe than most association leaders expected. But don’t exhale just yet. It’s time to get ready for life after the recession, which, experts say, may look starkly different than life before.

According to John Graham, president and CEO of the American Society of Association Executives, associations as a group lost about 15 percent of members during the recession. The NATIONAL ASSOCIATION OF REALTORS® has lost more than 25 percent from its 2006 high, while losses at local and state associations have varied widely.

Even if a rising economy reverses some of these -losses, association leaders may find themselves in a world very different from that of the mid-2000s. Graham and other observers believe the real estate boom of the 2000s obscured the need for structural changes in REALTOR® associations that can no longer be ignored, for example, shifting from a traditional one-size-fits-all bundled service model to an à la carte model.

The real estate industry, technology, and social behavior have all changed radically over the past decade. These changes won’t easily be reversed—and they challenge the traditional roles and business models of associations. Today’s associations seek new ways to provide value to members and remain financially viable themselves because the old mechanisms are either obsolete or facing new competition.

Take, for example, traditional association revenue sources, such as print advertising and trade show sponsorships, which experts say have been weakened by digital media and marketing.

According to industry analyst Stefan Swanepoel of RealSure Inc., fewer members than ever believe association-sponsored designation courses will set them apart. “If you look at what agents say in open forums,” he says, “a growing number say a designation doesn’t help their success rate.”

Private competitors, such as Zillow and Trulia, provide data that once was available only from REALTOR® associations. Other organizations compete to offer publications, training, and conferences. The ethic of volunteerism is also declining as online interaction replaces face-to-face contact for information-sharing and camaraderie. In fact, our experts say, the whole idea of showing up anywhere in person is becoming rather obsolete. What’s more, online interaction doesn’t always need to be facilitated—Swanepoel notes that social media discussions among real estate professionals are often more lively, and attract more participants, when they are held outside traditional association auspices.

Although the experts interviewed for this article all agree associations will not thrive by hewing to traditional models, they are optimistic about the possibility of associations’ reinventing themselves.

Although other businesses, such as MLSs or homebuilders, are also struggling through the real estate low, Seth Kahan of Visionary Leadership, a consultant who specializes in change leadership, says “associations’ greatest assets are communities of people, which are more stable, resilient, and open to new developments than any physical assets.”

Radical change is just what many experts are advising. “Tough economic conditions give you permission to make changes you wouldn’t make in kinder and gentler times,” says Harrison Coerver, president of the association management consulting firm Harrison Coerver & Associates. In any industry, he says, “the average performer is trying to keep body and soul together in tough times, but the high performers are making technology investments and positioning themselves for growth when it comes.”

Experts advise associations to plan now for post-recession changes rather than waiting out the recession in hopes that conditions will revert to earlier norms. Why? Because when the economy does return, associations’ recovery will be ahead of that of the average company in the industry, explains Coerver.

To position your organization for after the recession, you’ll have to make some changes that won’t be easy. Instead of across-the-board cutbacks—which are politically palatable but not transformative—experts advise jettisoning less-productive and low-skill staff and board members, dropping obsolete products and services (which may still be loved by those who developed them), and even abandoning segments of the membership that aren’t moving in the same direction as the rest of the industry.

Ruthless but well-targeted cuts give leaders opportunities to move forward in new directions. They can recruit new volunteers and staff who possess the specific skills and expertise their association lacks, groom younger members for leadership positions, and invest in new technology. “There’s no question that the percentage of the association budget allocated to technology will have to double or triple [from the current average of 4.1 percent] in the next five years,” Coerver says. “The typical association spends more on meals at events than on technology.”

Finally, and most important, associations can develop new -product and service offerings that their members need and that aren’t being provided elsewhere, such as specialized data services, insurance products, or training courses. “Ask yourself, ‘What do we need to do to become indispensable?’” Kahan suggests, noting that an association he belongs to made itself indispensable for him during the downturn by facilitating the sharing of members’ success stories.

It’s time to ask yourself what your association will be post--recession. If your hope is to be the same as before the recession, you may be missing out on the recession-induced imperative for change.

What traits will AEs need to help associations thrive in this new world?

Our experts all agree that social skills and “niceness” are far less important than they once were and that hard-headed business sense has become more important. Other valuable qualities include the ability to live with ambiguity and to develop multiple contingency plans; the ability to inspire others to work as a team; insight into industry and technology trends; and a willingness to empower others and reward innovation.

Swanepoel emphasizes that a leader needs commitment, drive, enthusiasm, vision, and—above all—the ability to think strategically and develop plans to achieve the vision. “If you have that person, you can do anything,” he says. “You can fly to the moon and back.”