Jim Peters - Strategist
Articles:
1. Structural Audits
2. The How To of Strategic Planning
Articles:
1. Structural Audits
2. The How To of Strategic Planning
Strategic Planning – Keeping Ahead of the Game
In the 60s we talked about “Managing by Objectives - Peter Drucker style”. Then came “Long Range Planning” which was
followed by “Strategic Planning” and more recently “Scenario Planning” and “Visioning”.
All of these management tools have merit, but in today’s world of rapid change there is no substitute for sound planning tied to a
clear vision of the future. Strategic Planning used to be based on looking out five years and developing a plan to take the
organization to where you believed it should be in three to five years. The plan was designed to be flexible and revised every two
to three years. Today the forces of “CHANGE” are so powerful that we develop strategic plans looking out three years, but
focusing on what must be accomplished in the next twelve months. Strategic Plans must be updated yearly and be flexible so
that they take into account emerging “Hot” issues. At no time in recent history has there been a greater imperative for strategic
planning. The real estate industry is at a turning point and Realtors and association leadership need to be proactive in
addressing the challenges.
Many people have asked me about the process of getting involved in strategic planning. They have heard about the need, but
really don’t know where to start. Let’s try and lay a foundation for what needs to be accomplished, both prior to, and following a
strategic planning retreat. We are looking at a process that is rather like that used by a developer who is opening up a new
subdivision in an area of raw land with no infrastructure. A developer has a vision of what the new development will look like and
possibly an architectural rendering. Ariel photographs are needed, plat maps, topographical maps, surveys, countless meetings
with planning and zoning commissions, city and county councils, environmental studies in the hopes that a plat will be approved
and permits issued. Then comes all the planning associated with the development itself. Clearing and grading, protection of
trees, retention ponds or dams, roads, drainage, water, sewer, electric, gas lines, cable, phone and high speed access lines. All
the planning and processes need to be in place before any contracts are bid and any work started. Proper planning is absolutely
critical to the successful development of the project.
Some years ago I wrote an article, “Dinosaurs and Dodos – Will Your Board Survive”. The issues dealt with the forces of change
and how we need to properly respond. In so many organizations there is a philosophy of doing the same old thing, which
includes a culture of “Resistance to Change” also known as the "RC" factor. This article suggested that one of the better ways to
truly serve the members of any organization would be to start from scratch and wipe the slate clean. Imagine that there was no
organization or association in place to serve your members. Now imagine what it would take to create an organization or
association that would best serve those in the profession who needed specific services to enable them to compete successfully
and prosper in a rapidly evolving society that was being driven by the forces of “consumerism”,"alternative business models" and
“technology”. You would be looking at market boundaries, the type of organization that would be needed, facilities, staffing,
governance, volunteer leadership, internal infrastructure including technology and communications capabilities, plus much,
much more.
If we are truly cognizant of the forces of “change” we can avoid the process of starting over as long as we are resilient and adapt
both our services and our governance to best serving our members or constituents in an environment that requires new
practices and new methodology every day.
If you are seriously interested in staying ahead of the game I ask that you consider following these steps, usually begun six to
eight months before the actual strategic planning retreat:
1. Survey your members. Find out how they rate your existing services and what services they feel need to be expanded or
dropped. Use of an outside consultant is desirable or use a “Zoomerang.com” or "Surveymonkey.com" survey with questions
taken from surveys that are available from the NATIONAL ASSOCIATION OF REALTORS® (NAR) Research Division or other
associations. For large associations send a survey to 25% of your members. For associations under 1,000 members, survey
every member. For electronic surveys, survey your entire e-membership list. (2– 4 months out)
2. Conduct Focus Groups. Focus groups of target member groups are essential to find out what the members really think
about your services and the direction of the association. Conduct three or four Focus Groups targeting different categories of
members, including "rookies" (active members with 2 years experience) or the under 30s. Contrary to general principles, I
recommend that the leadership of the association and the CEO/AE be present to answer questions and that an outside facilitator
actually conduct the Focus Groups. Focus Groups are best conducted as breakfast or lunch meetings lasting no more than two
hours. The ideal number of participants (excluding leadership) is between ten and fifteen members. For the REALTOR®
organization I suggest the following Focus Groups: Large Brokers/Managers, Medium Brokers, Top Producers and New Agents
or under 30s.
3. Timelines. Develop a Timeline for the entire process (3 – 6 months out)
4. Best Practices. Go to the NAR Website and print out the document “Best Practices for Associations”
http://www.realtor.org/aesubs.nsf/pages/bestpractices (30 – 60 days out)
5. Association Models Survey. In conjunction with your president and president-elect, sit down together at the computer and
complete the association models online survey that is found on the NAR Website at http://www.realtor.org/aecmodel.
nsf/pages/introduction. (30 – 60 days out)
6. Dates and Venue. Determine Date and Place of Strategic Planning Retreat. Look for a location that will allow for
participants to be undisturbed. A country club or conference center with one room for all participants to meet and space for at
least two to four break-out groups.
7. Qualified Facilitator. Hire a qualified facilitator to guide you through the entire process. Use a facilitator who has proven
experience in the real estate industry and Realtor association management. Today this is critical if you are to come away with an
effective plan that recognizes the unique challenges we face in a market that is in transition.
A good facilitator is worth his/her weight in gold and can save you literally thousands of dollars in wasted time, resources and
misspent effort.
8. Length of Retreat. Allow one and a half days for the Planning Retreat. Begin around
noon on the first day and end early afternoon of the second day.
9. Involve President-Elect & Leadership. Meet with your president-elect at least six months prior to the strategic planning
retreat to determine who the participants will be. Please consider that to have effective “buy-in” to the Plan all those involved in
determining the strategies or action plans to implement the Plan, must be part of the planning process. This includes the
president-elect, all incoming leadership/directors and committee chairs, the movers and shakers of the organization and key
staff. Ask the president-elect to personally call every invited participant and obtain their commitment to both the time and the
process needed.
10. Budget. Develop a budget for the Strategic Planning Retreat. If you have never done this before you will have to rely on
your best efforts to guide you and will need to involve your president, president-elect and treasurer in the process. Determine the
cost of the meeting facilities and all meals/breaks, the cost of your facilitator and the cost of any materials you are printing for the
participants plus flip charts, markers, screen rental, etc.
11. Written Invitations. Send out a written invitation to all participants referencing their verbal commitment to the president-
elect. (30 - 60 days out)
12. Reminders & Documents. Send reminders to all participants enclosing an agenda for the conference and copies of
documents they will need to review ahead of time, including, but not limited to: (30 days out)
a. Agenda for the Planning Retreat
b. List of Breakout Groups and participants
c. The Association Models Document you prepared from the online planning tool
d. Summary of your Survey
e. Summary of any Focus Group comments/suggestions
f. Copy of the Association Budget
13. Agendas. Develop the agendas for the Planning Retreat taking into account the following:
a. First Day. Begin around noon with an agenda that should include:
i. Welcome by president-elect and purpose of retreat
ii. Self Introductions and introductions of any speaker/facilitator
iii. Overview of Issues and Trends
iv. Strengths and Weaknesses of current organization
v. Opportunities and Threats based on information available
vi. Appropriate breaks
vii. Mixer reception at around 5:30pm or 6:00pm (30 minutes to 1 hour)
viii. President-elect, AE, facilitator and group leaders have dinner together to go over responsibilities for
the next day.
b. Second Day. Begin with continental Breakfast at 8:00am – conference starts at 8:30am:
i. Overview of major issues discussed previous day
ii. Purpose of Breakout Groups – Develop major Goals and Strategies
iii. Breakout Groups ( 2 – 4 broken down by program/service areas) Meet for 1.5 to 2.5 hours.
iv. Report back from leaders of Breakout Groups
v. Refine the Goals and Strategies which form the basis of the Strategic Plan and which must include
for each strategy:
vii. What Next by facilitator and president-elect, including development of action plans or tactics for
implementing each strategy. Must focus on results that are measurable and accountability.
viii. Adjournment no later than 3:00pm
14. Materials. Materials Needed for Retreat and format:
a. 2 – 4 Flip Charts with Thick colored markers (Use 3M self stick flip charts)
b. LCD projector
c. Screen and table for LCD projector with power cords
d. Notepads and pens for all participants
e. A small gift if your budget can cover this
f. All participants to be seated at tables using hollow square or U format.
15. The Strategic Plan. Staff will use the materials from the Planning Retreat to develop a Strategic Plan (within 5 days). The
Strategic Plan is to be approved by the Board of Directors and published to all members via Website or other means.
16. Implementation. Implementation of the Strategic Plan is critical. Leadership and staff are responsible for monitoring the
implementation process and progress should be included as an agenda item for each Board of Directors meeting. Committees,
Task Forces and Working Groups are responsible for developing tactics or action plans to implement each strategy. The
facilitator will explain this process during the retreat.
17. Strategic Plan Drives the Budget. Changes to the Budget should always follow. Best practices will provide for the
strategic planning process to precede the development of the budget so that the strategic plan sets the priorities for the budget
process, not the other way around.
18. Accountability. The Board of Directors needs to review progress on implementing the strategic plan at least quarterly.
For more information on a strategic planning retreat or conducting focus groups for your association contact:
Jim Peters, RCE, CAE, e-PRO
803-732-2660
Cell. 803-606-0187
jim@jimpetersstrategist.com
http://www.JimPetersStrategist.com
In the 60s we talked about “Managing by Objectives - Peter Drucker style”. Then came “Long Range Planning” which was
followed by “Strategic Planning” and more recently “Scenario Planning” and “Visioning”.
All of these management tools have merit, but in today’s world of rapid change there is no substitute for sound planning tied to a
clear vision of the future. Strategic Planning used to be based on looking out five years and developing a plan to take the
organization to where you believed it should be in three to five years. The plan was designed to be flexible and revised every two
to three years. Today the forces of “CHANGE” are so powerful that we develop strategic plans looking out three years, but
focusing on what must be accomplished in the next twelve months. Strategic Plans must be updated yearly and be flexible so
that they take into account emerging “Hot” issues. At no time in recent history has there been a greater imperative for strategic
planning. The real estate industry is at a turning point and Realtors and association leadership need to be proactive in
addressing the challenges.
Many people have asked me about the process of getting involved in strategic planning. They have heard about the need, but
really don’t know where to start. Let’s try and lay a foundation for what needs to be accomplished, both prior to, and following a
strategic planning retreat. We are looking at a process that is rather like that used by a developer who is opening up a new
subdivision in an area of raw land with no infrastructure. A developer has a vision of what the new development will look like and
possibly an architectural rendering. Ariel photographs are needed, plat maps, topographical maps, surveys, countless meetings
with planning and zoning commissions, city and county councils, environmental studies in the hopes that a plat will be approved
and permits issued. Then comes all the planning associated with the development itself. Clearing and grading, protection of
trees, retention ponds or dams, roads, drainage, water, sewer, electric, gas lines, cable, phone and high speed access lines. All
the planning and processes need to be in place before any contracts are bid and any work started. Proper planning is absolutely
critical to the successful development of the project.
Some years ago I wrote an article, “Dinosaurs and Dodos – Will Your Board Survive”. The issues dealt with the forces of change
and how we need to properly respond. In so many organizations there is a philosophy of doing the same old thing, which
includes a culture of “Resistance to Change” also known as the "RC" factor. This article suggested that one of the better ways to
truly serve the members of any organization would be to start from scratch and wipe the slate clean. Imagine that there was no
organization or association in place to serve your members. Now imagine what it would take to create an organization or
association that would best serve those in the profession who needed specific services to enable them to compete successfully
and prosper in a rapidly evolving society that was being driven by the forces of “consumerism”,"alternative business models" and
“technology”. You would be looking at market boundaries, the type of organization that would be needed, facilities, staffing,
governance, volunteer leadership, internal infrastructure including technology and communications capabilities, plus much,
much more.
If we are truly cognizant of the forces of “change” we can avoid the process of starting over as long as we are resilient and adapt
both our services and our governance to best serving our members or constituents in an environment that requires new
practices and new methodology every day.
If you are seriously interested in staying ahead of the game I ask that you consider following these steps, usually begun six to
eight months before the actual strategic planning retreat:
1. Survey your members. Find out how they rate your existing services and what services they feel need to be expanded or
dropped. Use of an outside consultant is desirable or use a “Zoomerang.com” or "Surveymonkey.com" survey with questions
taken from surveys that are available from the NATIONAL ASSOCIATION OF REALTORS® (NAR) Research Division or other
associations. For large associations send a survey to 25% of your members. For associations under 1,000 members, survey
every member. For electronic surveys, survey your entire e-membership list. (2– 4 months out)
2. Conduct Focus Groups. Focus groups of target member groups are essential to find out what the members really think
about your services and the direction of the association. Conduct three or four Focus Groups targeting different categories of
members, including "rookies" (active members with 2 years experience) or the under 30s. Contrary to general principles, I
recommend that the leadership of the association and the CEO/AE be present to answer questions and that an outside facilitator
actually conduct the Focus Groups. Focus Groups are best conducted as breakfast or lunch meetings lasting no more than two
hours. The ideal number of participants (excluding leadership) is between ten and fifteen members. For the REALTOR®
organization I suggest the following Focus Groups: Large Brokers/Managers, Medium Brokers, Top Producers and New Agents
or under 30s.
3. Timelines. Develop a Timeline for the entire process (3 – 6 months out)
4. Best Practices. Go to the NAR Website and print out the document “Best Practices for Associations”
http://www.realtor.org/aesubs.nsf/pages/bestpractices (30 – 60 days out)
5. Association Models Survey. In conjunction with your president and president-elect, sit down together at the computer and
complete the association models online survey that is found on the NAR Website at http://www.realtor.org/aecmodel.
nsf/pages/introduction. (30 – 60 days out)
6. Dates and Venue. Determine Date and Place of Strategic Planning Retreat. Look for a location that will allow for
participants to be undisturbed. A country club or conference center with one room for all participants to meet and space for at
least two to four break-out groups.
7. Qualified Facilitator. Hire a qualified facilitator to guide you through the entire process. Use a facilitator who has proven
experience in the real estate industry and Realtor association management. Today this is critical if you are to come away with an
effective plan that recognizes the unique challenges we face in a market that is in transition.
A good facilitator is worth his/her weight in gold and can save you literally thousands of dollars in wasted time, resources and
misspent effort.
8. Length of Retreat. Allow one and a half days for the Planning Retreat. Begin around
noon on the first day and end early afternoon of the second day.
9. Involve President-Elect & Leadership. Meet with your president-elect at least six months prior to the strategic planning
retreat to determine who the participants will be. Please consider that to have effective “buy-in” to the Plan all those involved in
determining the strategies or action plans to implement the Plan, must be part of the planning process. This includes the
president-elect, all incoming leadership/directors and committee chairs, the movers and shakers of the organization and key
staff. Ask the president-elect to personally call every invited participant and obtain their commitment to both the time and the
process needed.
10. Budget. Develop a budget for the Strategic Planning Retreat. If you have never done this before you will have to rely on
your best efforts to guide you and will need to involve your president, president-elect and treasurer in the process. Determine the
cost of the meeting facilities and all meals/breaks, the cost of your facilitator and the cost of any materials you are printing for the
participants plus flip charts, markers, screen rental, etc.
11. Written Invitations. Send out a written invitation to all participants referencing their verbal commitment to the president-
elect. (30 - 60 days out)
12. Reminders & Documents. Send reminders to all participants enclosing an agenda for the conference and copies of
documents they will need to review ahead of time, including, but not limited to: (30 days out)
a. Agenda for the Planning Retreat
b. List of Breakout Groups and participants
c. The Association Models Document you prepared from the online planning tool
d. Summary of your Survey
e. Summary of any Focus Group comments/suggestions
f. Copy of the Association Budget
13. Agendas. Develop the agendas for the Planning Retreat taking into account the following:
a. First Day. Begin around noon with an agenda that should include:
i. Welcome by president-elect and purpose of retreat
ii. Self Introductions and introductions of any speaker/facilitator
iii. Overview of Issues and Trends
iv. Strengths and Weaknesses of current organization
v. Opportunities and Threats based on information available
vi. Appropriate breaks
vii. Mixer reception at around 5:30pm or 6:00pm (30 minutes to 1 hour)
viii. President-elect, AE, facilitator and group leaders have dinner together to go over responsibilities for
the next day.
b. Second Day. Begin with continental Breakfast at 8:00am – conference starts at 8:30am:
i. Overview of major issues discussed previous day
ii. Purpose of Breakout Groups – Develop major Goals and Strategies
iii. Breakout Groups ( 2 – 4 broken down by program/service areas) Meet for 1.5 to 2.5 hours.
iv. Report back from leaders of Breakout Groups
v. Refine the Goals and Strategies which form the basis of the Strategic Plan and which must include
for each strategy:
- 1. What Action or Result is needed
2. By When
3. By Whom
4. Budget and Staff resources needed
5. Accountability and Measurable
vii. What Next by facilitator and president-elect, including development of action plans or tactics for
implementing each strategy. Must focus on results that are measurable and accountability.
viii. Adjournment no later than 3:00pm
14. Materials. Materials Needed for Retreat and format:
a. 2 – 4 Flip Charts with Thick colored markers (Use 3M self stick flip charts)
b. LCD projector
c. Screen and table for LCD projector with power cords
d. Notepads and pens for all participants
e. A small gift if your budget can cover this
f. All participants to be seated at tables using hollow square or U format.
15. The Strategic Plan. Staff will use the materials from the Planning Retreat to develop a Strategic Plan (within 5 days). The
Strategic Plan is to be approved by the Board of Directors and published to all members via Website or other means.
16. Implementation. Implementation of the Strategic Plan is critical. Leadership and staff are responsible for monitoring the
implementation process and progress should be included as an agenda item for each Board of Directors meeting. Committees,
Task Forces and Working Groups are responsible for developing tactics or action plans to implement each strategy. The
facilitator will explain this process during the retreat.
17. Strategic Plan Drives the Budget. Changes to the Budget should always follow. Best practices will provide for the
strategic planning process to precede the development of the budget so that the strategic plan sets the priorities for the budget
process, not the other way around.
18. Accountability. The Board of Directors needs to review progress on implementing the strategic plan at least quarterly.
For more information on a strategic planning retreat or conducting focus groups for your association contact:
Jim Peters, RCE, CAE, e-PRO
803-732-2660
Cell. 803-606-0187
jim@jimpetersstrategist.com
http://www.JimPetersStrategist.com
Structural Audits:
Introduction:
We live in a time of rapid change. Five years of an incredible boom in the housing market followed by two plus years of retreat
with massive inventories of unsold properties and the first price declines in sixteen years. The real estate industry has seen
unprecedented forces impacting how REALTORS® do business. The needs of REALTORS® have changed as the demands of
consumers have changed. This is the age of the Internet and technology. Consumers are better informed, more demanding, have
more information than they know what to do with and they are looking for help from a real estate professional who understands
their needs.
New business models have emerged, the US government continues to investigate the industry to ensure that no non-competitive
practices exist. The real estate market has done a dramatic reversal, having moved from a strong ‘sellers market’ to a ‘buyers
market’ with massive discounting taking place in many areas, particularly in the sale of higher priced homes.
As the industry and markets are changing, so must the REALTOR® organization change. Meeting the needs of a diverse
membership, where generally 20% of the members are doing 80% of the business, creates enormous challenges. Processes,
procedures and policies must change to keep up with consumer demands. Education and training are critical, as is the need to
provide the most advanced MLS/Information services and communications tools that recognize that the property is now the center
of the real estate transaction, not the REALTOR®. Is the association catering to those who are truly in the business of real estate,
or catering to the lowest common denominator? Does the MLS recognize the needs and demands of an educated and
discriminating consumer who is going to go where he or she can find the most up-to-date and accurate information on housing
and commercial properties.
REALTOR® Associations saw incredible growth during the first half of the decade. In some instances the membership doubled
and even tripled during this period. Now we are seeing the reverse. In 2009 and 2010 REALTOR® Associations stand to lose
anywhere from 20% - 50% of their members. Budgets are being cut, staff positions eliminated and services being cut back or
stricken from the board. Are right decisions being made for those members truly in the business. Have Focus Groups and
surveys determined exactly what the priorities should be for the association and the MLS. Failure to do this frequently leads to a
disconnect between staff and volunteer leadership and the end result is a loss of confidence in the board/association by its
members.
Q. What is a structural audit?
We all understand the need for a financial audit – a professional CPA who examines the accounting procedures, the controls, the
finances of the board/association and its fiscal strength.
In the same way we need a structural audit to review the organizational strength, the governance, the facilities, technology, the
staffing, the services and the communications with the members.
A structural audit is a top to bottom review of an organization, looking at everything from the governance of the association to its
ability to best serve the member needs in a rapidly changing real estate environment. The structural audit is designed to turn the
organization inside out and measure it against similar sized organizations that are ranked as ‘best’ in their
category.
The review will include an in-depth examination of the following:
• Governance of the association.
• All Policies and Procedures, including those that may need to be developed.
• The Finances of the association, including reserves, cash flow and controls.
• Staffing and staff:member ratios
• Staff organization, position descriptions and professional development.
• Facilities and adequacy
• Membership records and maintenance procedures
• Membership services in general
• Technology and computer services
• Education and training
• Communications
• Public Relations
• Website
• Professional Standards Administration
• MLS/Information Services – all aspects including regionalization and reciprocity
• Lockboxes and procedures
• Governmental Affairs and RPAC
• Relationships with other REALTOR® organizations
• Relationships with non-REALTOR® organizations
• Legal services and an antitrust audit
• Membership Meetings and networking
• Strategic Planning and implementation
Q. What is involved in a structural audit?
A structural audit begins with communications between the auditor and the association to determine the extent of the structural
audit, the timelines, and the nature of the issues that are driving the need for a structural audit. Usually a questionnaire is sent to
the Association Executive for completion and return to the auditor at least a week in advance of the audit. The structural audit itself
will involve spending approximately 1.5 – 3 days on site, meeting with staff and leadership, reviewing policies, procedures and
financial documents and examining the facilities, technology and equipment. Following the audit, a detailed report and
recommendations are prepared that should be sent to the leadership and the Association Executive for their review and action.
The whole exercise takes approximately 5 - 10 days and preparations for the audit should begin at least 30 – 60 days prior to the
audit.
Costs of a Structural Audit:
A structural is very intensive and the cost will vary depending upon the size of the board/association and the amount of time
needed to complete the audit and recommendations. A fair estimate would be $2,000 - $4,000, plus travel expenses.
The Role of Staff in a Structural Audit:
The auditor will work very closely with staff, particularly the AE, prior to, during and following the structural audit. Staff has a major
responsibility in preparing documents for review, including all policy documents, financial statements, audit reports, tax returns,
IRS tax exempt letters, corporate charters, etc. The auditor will meet with the AE and all staff individually to determine their
feelings about the organization and its strengths and weaknesses. At the conclusion of the on-site visit the auditor will meet with
the AE (and sometimes the president) to go over the initial findings and discuss issues that may need immediate attention.
The Role of Volunteer Leadership in a Structural Audit:
The involvement of volunteer leadership in a structural audit is critical. Some auditors will use the NATIONAL ASSOCIATION OF
REALTORS® Association Models online instrument as a tool. This instrument is particularly helpful in determining the division of
responsibilities between volunteer leadership and staff. It can be used to determine not only how the board/association is
currently managed, but how the Directors or Leadership Team would like to see the organization managed.
To this end, the Leadership Team or Executive Committee should be asked to go online to realtor.org and complete the
Associations Model document together, answering the questions as to how they would like to see the board/association
managed, not how it is currently managed. Print out the model and provide the auditor with a copy.
Go to: http://www.realtor.org/aecmodel.nsf/pages/introduction. You will need your 4 digit NRDS number for this exercise.
The auditor will also meet with the Executive Committee or Board of Directors and facilitate frank discussion about the strengths
and weaknesses of the board/association and discuss their responses to the Association Models Survey. Generally this exercise
will last two to four hours. This is one meeting where the Association Executive should not be present so that there is open and
frank discussion of the issues. For the same reason volunteer leadership should not be present when the staff are meeting with
the auditor.
Q. Does my Board/Association need a Structural Audit?
Every Board/Association, regardless of size, should have a structural audit completed at least every ten years, or more frequently if
the following occurs:
• The board/association has experienced a significant drop in membership (20% or more).
• Budget cuts have led to the elimination or watering down of key services.
• A new AE has been hired and there is general consensus that processes, procedures, facilities and staffing are not
adequate to best serve the needs of the membership.
• Surveys or Focus Groups reflect satisfaction levels with board/association services at less than 70%, or declining by 10% or
more since the last survey.
• There has been an incident involving key staff that relates to misappropriation of funds, improprieties by board/association
staff or an apparent or perceived breakdown in the relationship between the AE and staff.
• A general disconnect exists between staff and volunteer leadership.
• The association is in meltdown – all systems have broken down and volunteer leaders are struggling to determine why and
what to do.
Q. How Does the Structural Audit Process Fit with Strategic Planning?
A structural audit is an integral part of strategic planning, however, structural audits are not used as frequently unless the
conditions referred to above exist. Strategic Planning is an organized process whereby a board/association is taking charge of its
strategic direction, business planning and its future. The strategic planning generally does not get involved with issues of
structure, policies and procedures, staffing and the division of responsibilities between volunteer leadership and staff.
When appropriate, the structural audit is a vital and ancillary part to the planning process, helping the board/association maximize
its relevance to its membership. In most instances the structural audit report and recommendations will drive the strategic
planning process and help the board/association overcome any shortfalls in staffing, communications, technology and services.
A structural audit should not be considered a substitute for strategic planning, but an adjunct to strategic planning that will provide
beneficial results for both the board/association and its members.
Q. How do I find a structural auditor?
While NAR does not offer Structural Audit services, it is important to look for a consultant who understands the industry, where it
has been, where it is currently and where it is going. An AE with a strong background in REALTOR® Association management or
a REALTOR® volunteer leader who has been very actively involved in association management as a consultant would probably
be your best fit.
One of the best sources of information on qualified consultants is Gar Anderson, Vice President of AE and Leadership
Development. Gar travels extensively and nobody knows the industry better than Gar who spends much of his time facilitating
strategic planning retreats for local and state associations. You can contact Gar at ganderson@realtors.org.
12/19/2008
For more information on a structural audit for your association contact:
Jim Peters, RCE, CAE, e-PRO
803-732-2660
Cell. 803-606-0187
jim@jimpetersstrategist.com
Introduction:
We live in a time of rapid change. Five years of an incredible boom in the housing market followed by two plus years of retreat
with massive inventories of unsold properties and the first price declines in sixteen years. The real estate industry has seen
unprecedented forces impacting how REALTORS® do business. The needs of REALTORS® have changed as the demands of
consumers have changed. This is the age of the Internet and technology. Consumers are better informed, more demanding, have
more information than they know what to do with and they are looking for help from a real estate professional who understands
their needs.
New business models have emerged, the US government continues to investigate the industry to ensure that no non-competitive
practices exist. The real estate market has done a dramatic reversal, having moved from a strong ‘sellers market’ to a ‘buyers
market’ with massive discounting taking place in many areas, particularly in the sale of higher priced homes.
As the industry and markets are changing, so must the REALTOR® organization change. Meeting the needs of a diverse
membership, where generally 20% of the members are doing 80% of the business, creates enormous challenges. Processes,
procedures and policies must change to keep up with consumer demands. Education and training are critical, as is the need to
provide the most advanced MLS/Information services and communications tools that recognize that the property is now the center
of the real estate transaction, not the REALTOR®. Is the association catering to those who are truly in the business of real estate,
or catering to the lowest common denominator? Does the MLS recognize the needs and demands of an educated and
discriminating consumer who is going to go where he or she can find the most up-to-date and accurate information on housing
and commercial properties.
REALTOR® Associations saw incredible growth during the first half of the decade. In some instances the membership doubled
and even tripled during this period. Now we are seeing the reverse. In 2009 and 2010 REALTOR® Associations stand to lose
anywhere from 20% - 50% of their members. Budgets are being cut, staff positions eliminated and services being cut back or
stricken from the board. Are right decisions being made for those members truly in the business. Have Focus Groups and
surveys determined exactly what the priorities should be for the association and the MLS. Failure to do this frequently leads to a
disconnect between staff and volunteer leadership and the end result is a loss of confidence in the board/association by its
members.
Q. What is a structural audit?
We all understand the need for a financial audit – a professional CPA who examines the accounting procedures, the controls, the
finances of the board/association and its fiscal strength.
In the same way we need a structural audit to review the organizational strength, the governance, the facilities, technology, the
staffing, the services and the communications with the members.
A structural audit is a top to bottom review of an organization, looking at everything from the governance of the association to its
ability to best serve the member needs in a rapidly changing real estate environment. The structural audit is designed to turn the
organization inside out and measure it against similar sized organizations that are ranked as ‘best’ in their
category.
The review will include an in-depth examination of the following:
• Governance of the association.
• All Policies and Procedures, including those that may need to be developed.
• The Finances of the association, including reserves, cash flow and controls.
• Staffing and staff:member ratios
• Staff organization, position descriptions and professional development.
• Facilities and adequacy
• Membership records and maintenance procedures
• Membership services in general
• Technology and computer services
• Education and training
• Communications
• Public Relations
• Website
• Professional Standards Administration
• MLS/Information Services – all aspects including regionalization and reciprocity
• Lockboxes and procedures
• Governmental Affairs and RPAC
• Relationships with other REALTOR® organizations
• Relationships with non-REALTOR® organizations
• Legal services and an antitrust audit
• Membership Meetings and networking
• Strategic Planning and implementation
Q. What is involved in a structural audit?
A structural audit begins with communications between the auditor and the association to determine the extent of the structural
audit, the timelines, and the nature of the issues that are driving the need for a structural audit. Usually a questionnaire is sent to
the Association Executive for completion and return to the auditor at least a week in advance of the audit. The structural audit itself
will involve spending approximately 1.5 – 3 days on site, meeting with staff and leadership, reviewing policies, procedures and
financial documents and examining the facilities, technology and equipment. Following the audit, a detailed report and
recommendations are prepared that should be sent to the leadership and the Association Executive for their review and action.
The whole exercise takes approximately 5 - 10 days and preparations for the audit should begin at least 30 – 60 days prior to the
audit.
Costs of a Structural Audit:
A structural is very intensive and the cost will vary depending upon the size of the board/association and the amount of time
needed to complete the audit and recommendations. A fair estimate would be $2,000 - $4,000, plus travel expenses.
The Role of Staff in a Structural Audit:
The auditor will work very closely with staff, particularly the AE, prior to, during and following the structural audit. Staff has a major
responsibility in preparing documents for review, including all policy documents, financial statements, audit reports, tax returns,
IRS tax exempt letters, corporate charters, etc. The auditor will meet with the AE and all staff individually to determine their
feelings about the organization and its strengths and weaknesses. At the conclusion of the on-site visit the auditor will meet with
the AE (and sometimes the president) to go over the initial findings and discuss issues that may need immediate attention.
The Role of Volunteer Leadership in a Structural Audit:
The involvement of volunteer leadership in a structural audit is critical. Some auditors will use the NATIONAL ASSOCIATION OF
REALTORS® Association Models online instrument as a tool. This instrument is particularly helpful in determining the division of
responsibilities between volunteer leadership and staff. It can be used to determine not only how the board/association is
currently managed, but how the Directors or Leadership Team would like to see the organization managed.
To this end, the Leadership Team or Executive Committee should be asked to go online to realtor.org and complete the
Associations Model document together, answering the questions as to how they would like to see the board/association
managed, not how it is currently managed. Print out the model and provide the auditor with a copy.
Go to: http://www.realtor.org/aecmodel.nsf/pages/introduction. You will need your 4 digit NRDS number for this exercise.
The auditor will also meet with the Executive Committee or Board of Directors and facilitate frank discussion about the strengths
and weaknesses of the board/association and discuss their responses to the Association Models Survey. Generally this exercise
will last two to four hours. This is one meeting where the Association Executive should not be present so that there is open and
frank discussion of the issues. For the same reason volunteer leadership should not be present when the staff are meeting with
the auditor.
Q. Does my Board/Association need a Structural Audit?
Every Board/Association, regardless of size, should have a structural audit completed at least every ten years, or more frequently if
the following occurs:
• The board/association has experienced a significant drop in membership (20% or more).
• Budget cuts have led to the elimination or watering down of key services.
• A new AE has been hired and there is general consensus that processes, procedures, facilities and staffing are not
adequate to best serve the needs of the membership.
• Surveys or Focus Groups reflect satisfaction levels with board/association services at less than 70%, or declining by 10% or
more since the last survey.
• There has been an incident involving key staff that relates to misappropriation of funds, improprieties by board/association
staff or an apparent or perceived breakdown in the relationship between the AE and staff.
• A general disconnect exists between staff and volunteer leadership.
• The association is in meltdown – all systems have broken down and volunteer leaders are struggling to determine why and
what to do.
Q. How Does the Structural Audit Process Fit with Strategic Planning?
A structural audit is an integral part of strategic planning, however, structural audits are not used as frequently unless the
conditions referred to above exist. Strategic Planning is an organized process whereby a board/association is taking charge of its
strategic direction, business planning and its future. The strategic planning generally does not get involved with issues of
structure, policies and procedures, staffing and the division of responsibilities between volunteer leadership and staff.
When appropriate, the structural audit is a vital and ancillary part to the planning process, helping the board/association maximize
its relevance to its membership. In most instances the structural audit report and recommendations will drive the strategic
planning process and help the board/association overcome any shortfalls in staffing, communications, technology and services.
A structural audit should not be considered a substitute for strategic planning, but an adjunct to strategic planning that will provide
beneficial results for both the board/association and its members.
Q. How do I find a structural auditor?
While NAR does not offer Structural Audit services, it is important to look for a consultant who understands the industry, where it
has been, where it is currently and where it is going. An AE with a strong background in REALTOR® Association management or
a REALTOR® volunteer leader who has been very actively involved in association management as a consultant would probably
be your best fit.
One of the best sources of information on qualified consultants is Gar Anderson, Vice President of AE and Leadership
Development. Gar travels extensively and nobody knows the industry better than Gar who spends much of his time facilitating
strategic planning retreats for local and state associations. You can contact Gar at ganderson@realtors.org.
12/19/2008
For more information on a structural audit for your association contact:
Jim Peters, RCE, CAE, e-PRO
803-732-2660
Cell. 803-606-0187
jim@jimpetersstrategist.com
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