Leadership in Challenging Times

By Masha Zager

The economic downturn presents challenges that many REALTOR® association executives have never faced before: declining membership, budget shortfalls, and members who may need more help just when some associations are least able to provide it.

What skills do leaders need to navigate these shoals successfully? Consultant and author Ram Charan, in his new book Leadership in the Era of Economic Uncertainty, describes a business executive he admires in these terms: “He stared into the face of uncertainty and accepted the change he saw coming. Neither fear nor uncertainty paralyzed him. He took charge, pulled people together, and took decisive action.”

These same qualities—realism, decisiveness, and the ability to hold the team together—were cited by the association executives we spoke to about their own recent experiences. They spoke of other qualities, too, including flexibility, empathy, and diplomacy.

Assess “Haves,” “Needs,” and “Can Do Withouts”

Association executives everywhere are looking for ways to balance their budgets with minimal impact on member services. Often this requires a more detailed understanding of their financial situation than they have had in the past. According to Malcolm Young, CEO, Louisiana Association of REALTORS®, executives should make sure they’re realistic and informed about all the potential consequences of paring the budget. With that in mind, Young’s organization has developed a 12-month projected cash flow—something it had never done before—that it reviews and adjusts every month.

Executives must also take time to find out what needs are most pressing for members today. Ginger Downs, CEO at the Chicago Association of REALTORS®, suggests surveying members either online or in focus groups. “It helps you determine what you can divest yourself of and what you should bring on board,” she says. “We had a flyer service and other things that members said ‘not right now’ to. And we’ve moved away from education and toward networking events—people just want to connect.” Other executives have found that members still want education but are requesting different classes than they were a year or two ago.

With a realistic assessment of their fiscal situation and members’ needs, association executives can begin determining what to cut. According to Benny McMahan, chief executive of the Texas Association of REALTORS®, this exercise requires a lot of courage and humility, which is why it is so often deferred. McMahan also points out that sometimes it takes a slowdown to make you examine your programming, “When you have plenty of income coming in, sometimes you just continue to do things because you’ve always done them.” Like some other association executives, McMahan has targeted travel and entertainment for budget cuts. Conference calls have replaced many in-person meetings, delegations to regional meetings are smaller, and the hospitality suite is a thing of the past.

Be Bold, Transparent, and Communicative

In difficult times, McMahan warns, the worst thing for an executive would be to “hunker down and do nothing.” Quick and decisive action is imperative. Ultimately it’s better to risk overreacting than to fail to act at all. If the situation turns out to be less dire than predicted, you can always pull back. At the same time, executives should avoid drastic “solutions” to today’s temporary problems that may be damaging in the long run.

Association executives don’t just need to be realistic—they need to communicate realistically with members. There should never be any surprises, according to Young. To that end, the Louisiana association has brought its CPA and investment counselor to speak with the organization’s leadership and general membership about its finances. “All levels of the organization needed a greater understanding of where we were financially,” Young says.

Although Young believes that financial information should be made accessible to members, he cautions, “If you’re proposing cuts and showing losses to members, [the financial data] needs to be simplified and understandable so they can help make decisions.”

In addition to providing financial information, Young also recommends making sure members understand the value the association provides for them. He presented such a “demonstration of value” at a recent board of directors meeting, and “everybody absolutely loved it,” he says.

Replace Firmness with Flexibility

Flexibility is another important quality for uncertain times. Although strict rules about advance registration for programs or volunteer responsibilities made sense a few years ago, today flexibility is key. When members need to jump at any opportunities coming their way, rules that may cause hardship are simply outdated. David Phillips, RCE, CEO of the Charlottesville Area Association of REALTORS®, Va., explains, “We don’t kick people off committees now if they miss half of the meetings, the way we did in previous years.”

Flexibility in terms of time and commitments isn’t the only key; now is also the time to show some financial flexibility. “If members are asking for a payment plan, do everything you can to make it happen now. This is the time when you should be as flexible as you can. You can let members pay bills over time, you can consider discounts, you can consider extending deadlines for payment,” says Downs. While the Chicago association is rescheduling educational programs to make them more convenient for members who have taken second jobs, other associations are changing the due date for membership fees from winter (the slowest time of year) to fall, when members are more likely to have cash in hand from summertime closings.

A Little Empathy Goes a Long Way

Leaders also need to show more empathy today, when many members are worried about losing their businesses. Downs explains, “Just hearing from a staff person or a volunteer that they’re with us makes all the difference in the world.” Downs and other association executives have used “rainy-day fund” monies to subsidize educational programming for members who can no longer afford the CE they need.

Executives may need to summon up reserves of empathy to accept increased criticism of association policies and programs. Phillips says, “We as association executives need to understand that it’s not personal, it’s not that they’re angry at us, they’re just under a lot of stress and looking for whatever help and whatever advantage they can find to compete in a very tough marketplace.”

Showing empathy, however, doesn’t mean feeding members’ worst fears. “If I’m pessimistic, I can make my members pessimistic,” McMahan points out. “Don’t tell them the world’s going to hell in a handbasket. Just let members know you’re trying to do things to help them.”

Empathy also needs to be tempered with realism. Phillips warns that if there isn’t enough business for everyone, trying to help the weakest REALTORS® stay afloat may not be a good idea. “We’ve only had a 20 percent drop in membership, but the pie has shrunk by 60 percent to 70 percent, so there’s still plenty of people eating at it,” he says. “The ones who are paying their dues are competing with the ones you’re trying to help.”

Through it all, though, be sure to maintain staff morale—not just for its own sake, but for the sake of the members on whose behalf they are working, says Phillips. After all, if you overlook staff members because of the bigger crisis, they just might not be there for the association when the market turns around.

Balancing these divergent interests may require great diplomatic skills. And balancing the needs of the staff with the needs of the membership may be even trickier. McMahan speaks with admiration of an assistant at another association whose worst-case “Plan B” eliminated his own job. “That’s gutsy,” he says approvingly.

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