Governance Game Changer Presidential Advisory Group (PAG)

The Governance Game Changer PAG is a multi-year effort to examine the components of NAR’s governance system, including structure, process, people, resources, and culture. This 50-member PAG represents all stakeholders with widespread perspectives on NAR governance. With the Leadership Team’s approval and support, at the November 2021 conference, the NAR Board of Directors and Delegate Body will be asked to approve a number of recommendations to support the effective, efficient and transparent operation of NAR, allowing the National Association to act deftly and proactively in its second century.

See the history leading up to these recommendations below.

NAR’s Board of Directors and Delegate Body will be asked to approve recommendations that transition NAR into a modern, mission-driven governance system. As explained in detail in the PAG Report (see above), these recommendations would:

• Eliminate the Delegate Body and transfer its authority to the new Board of Directors.
• Constitute a new Board of Directors that is comprised of approximately 1,000 members whose new authority, role, and focus would be as a strategic body representing the full diversity of the membership, and implement new state and local association Director entitlement formulas.
• Constitute a new Executive Committee that is substantially smaller and more nimble than the Board of Directors, and meets at least four times a year. The new Executive Committee has authority to approve committee recommendations and policy changes, except for those which specifically require approval of the Board (amendments to the new Bylaws and to the Code of Ethics, NAR budget, dues and assessments), and committee recommendations that the Leadership Team or Executive Committee may refer to the Board for vetting and approval.
• Establish an enhanced role for the Regional Vice President position with new qualifications and performance expectations.
• Establish leadership qualifications and performance expectations for all appointed leadership positions at NAR that will be the purview of the new Leadership Identification and Development Committee to oversee and implement.

Each recommendation for the new governance system is intended to further one or more of the 8 ideals of governance:

Focus and Clarity

• For example, creation of a Strategic Planning Committee and adoption of a strategic planning process that engages all governing bodies and focuses the work of the Association on key priorities.

Diversity, Equity and Inclusion

• For example, creation of a Leadership Identification and Development Committee charged with cultivating and developing future leaders for NAR from within the full diversity of the membership.

Knowledge-based decision-making

• For example, requiring all appointed NAR governance leaders and elected RVPs to satisfy defined Leadership Qualifications and Performance Expectations, ensuring a more open flow of information and input to support governing body deliberations, and reconstituting the new Executive Committee to be more representative of different perspectives and experiences.

 Accountability

• For example, requiring NAR governance leaders to meet stated expectations and creating a system of checks and balances to ensure comprehensive input and oversight by a variety of stakeholder perspectives.

Transparency

• For example, implementing a new process for electing Regional Vice Presidents and creating a process for allowing members to participate in governance meetings electronically while ensuring that proper security measures are in place to limit access to NAR members and voting by committee members only.

Nimbleness

• For example, having more frequent meetings of the Executive Committee and using technology to enable and encourage more frequent committee meetings so that the business of the association can be conducted year-round.

Engagement

• For example, implementing more opportunities for all members to participate in governance meetings electronically and encouraging directors to communicate with members directly on NAR decisions, policies, and programs.

Efficiency

• For example, adopting a simplified formula for appointing constituency-based directors on NAR’s Board of Directors such that local and state association allocations are calculated independently of one another.

Having these ideals as the guiding light in NAR’s governance system will ensure that NAR can continue to govern forward and serve members for many years to come.

The governance of the association will be vested in the new Board of Directors – a diverse and strategic body representative of the entire national membership. The new Executive Committee will assume authority of more operational issues, such as approving committee recommendations, and will raise important industry or association issues to the new Board of Directors for their input or approval. The Leadership Team will operate as it currently does, having the authority to act on behalf of the Executive Committee and the Board of Directors between meetings. NAR Directors, Regional Vice Presidents, Committee Liaisons, Chairs and Vice Chairs will each be expected to meet heightened criteria for qualifying and performing in those positions.

This new organization and accountability creates checks and balances throughout the entire governance system.

The new Board of Directors will continue to be charged with oversight of NAR’s big picture goals and strategy while not having responsibility for tactical governance tasks. That means that the tactical work of reviewing and approving committee recommendations and policy positions will transfer to the new Executive Committee, while giving authority to the Leadership Team and the Executive Committee to refer for approval any committee recommendation or action to the Board of Directors when it would benefit the association from having the review and approval of a body that represents the full diversity of the membership. The new Board will also have the authority to approve the NAR budget, dues and assessments and will absorb the current authority of the Delegate Body to approve changes to NAR’s Constitution and Code of Ethics. This will create more nimble decision making while preserving the representation of all member stakeholders.

The composition of the new Board of Directors is enhanced by adding 100 seats specifically for small and medium local REALTOR® associations to ensure that their voices are part of the Board’s decision-making process, and new formulas for allocation of local and state association Director seats are being recommended.

The number of directors each state and local association is entitled to will be based on the association’s percentage of NAR membership. State and local director allocation will be calculated independently, with no connection between the membership growth of a local association and the number of directors the state in which it is located is entitled to.

Following are sample calculations for a state and a local association. See the PAG Report for more details.

Directors appointed by state and local associations will continue to serve up to a 3-year term. This allows the states and locals the flexibility they have now to appoint their seats for 1, 2 or 3 years. The PAG recommends three-year terms whenever possible to provide for continuity on the Board and to ensure informed and effective Directors.

Because state and local association allocations are made on a formula based on the percentage of NAR membership each state or local association represents, the actual number of state and local seats allocated each year may vary due to the rise and fall of the association’s membership, overall NAR membership numbers, and growth of other associations. The number could also be adjusted due to rounding percentages.

The 50 Directors from locals of 500-1,999 members and the 50 Directors from locals with 499 members or less that will be “appointed by the state association” can be “appointed” by any process the state chooses. The PAG recommends an open and transparent process.

Under the new governance system, the authority for approving committee recommendations will move from the Board of Directors to the new Executive Committee. However, the Leadership Team and the Executive Committee may refer any committee recommendations to the full Board of Directors for its review and approval. Such referral to the full Board may be deemed advisable for major industry or business issues with potentially far-reaching import and impact. The new Board of Directors will maintain sole authority for approving the annual budget, including dues and assessments, as well as changes to the new NAR Bylaws and Code of Ethics.

Appointments to the BOD and Executive Committee that are made by the Leadership Team are to be made by the Leadership Team that will be in office at the same time when the appointed terms begin.

All Director appointments are due to NAR by September 15th. Failure to submit by that date will result in forfeiture of seats.

The Executive Committee will refer recommendations that require approval by the Board of Directors, such as approving amendments to the Bylaws and to the Code of Ethics, approving the National Association budget, dues and assessments, those that the Leadership Team or Executive Committee may refer to the Board for vetting and approval, and those that have been referred to the Board of Directors by a petition signed by at least twenty percent of the Directors.

The Directors must receive notice of the Executive Committee meeting and an agenda 15 days prior to the meeting.

“Competency-based” seats refer to those seats held by individuals based on their skills, experience, expertise, or perspectives. Needed competencies are reviewed and recommended to the Leadership Team on a regular basis by the Leadership Identification and Development Committee based on a review of the NAR Strategic Plan, annual priorities, critical ongoing issues, and emerging issues to be addressed. These positions will be appointed from a pool of competency-based applicants by the Leadership Team for two-year staggered terms.

The Presidents of each Institute, Society, and Council will serve a one-year term on the Board of Directors.

One representative from each of the National Association’s Institutes, Societies, and Councils will serve a two-year staggered term on the Executive Committee, appointed by the Leadership Team that will be in office when these terms begin, upon recommendation of each respective Institute, Society, and Council.

There will be 50 Large Firm Representatives serving on the Board of Directors, and five representatives on the Executive Committee.

The Real Estate Services Advisory Board will recommend 50 large firm representatives for LT approval. Any representatives put forward to serve on the Executive Committee and Board of Directors must meet the enhanced Performance Expectations & Qualifications criteria as stated in the report.

One MLS Executive Representative will be appointed by the Leadership Team to the Executive Committee for a one-year term.

The RVP application is now available on the campaign webpage. You’ll also find an informational webinar that explains the vetting process, and you can download the Campaign and Election Rules Manual. 

The RVP application encompasses all of the requirements and qualifications for the RVP position; please ensure that every question is answered, and that an elected home state officer countersigns the application. Candidates will also need to submit a complete “tri-merge” credit report along with the application. (It must be a report that has all three credit bureaus in one report; three separate reports are not accepted. A tri-merge may be obtained from a loan officer or the bureaus and other vendors like MyFico also offer a tri-merge product with their monitoring programs.) 

The application period opens on March 1, through June 1. All Eligible Candidates for 2024 RVP will be placed on the electronic ballot for their respective Regional election.

The position of the RVP will transition from being the “voice of the President in the Region” to a more meaningful role focused on the issues and specific duties that support NAR initiatives and effective decision making at the national level, as directed by NAR. Regional Vice Presidents will have heightened expectations to lead and coordinate activities, such as chairing Regional Caucus meetings prior to NAR Board of Directors meetings, for the purpose of ensuring that 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.

Regional Vice Presidents will still serve a one-year term as RVP. However, they will serve on the NAR Board of Directors and the Executive Committee for two years - during their term as RVP and the following year as the immediate past RVP.

Their extended terms on NAR’s two main governing bodies is important, since the role of the RVP is to focus on the issues and specific duties that support NAR initiatives and effective decision making at the national level. Retaining the knowledge of their region and NAR initiatives and policies on the governing bodies will enhance informed decision making.

NAR is the only entity that can establish required criteria for an NAR elected office. Anyone meeting NAR’s criteria is eligible to apply.

Recommendation #6 in the report states that the Campaign Credentials & Rules Committee will 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 of Directors’ election for the position of RVP. In addition, the RVP election process must:

(a) require candidates to obtain an endorsement from their home state association;
(b) permit state associations to endorse more than one qualified member;
(c) permit but not require each Region to have their own process for interviewing or recommending RVP candidates to the NAR Directors from their Region; and
(d) Prohibit state associations and regions from establishing criteria for RVP eligibility that is different than the criteria set forth by NAR.

The association will establish qualifications for members serving in all positions in the new governance system, ensure diversity and inclusion in the selection process and makeup of the various bodies, and establish clear expectations and accountability measures as well as new education and training for all volunteers.

Qualifications

In a member-driven governance system, the Association must make every effort to ensure positions are filled with members who will bring the right set of skills and experience to satisfy position requirements, support sound decision-making and provide a more satisfying volunteer experience. Each appointed governance leader and elected Regional Vice President will have to meet specific qualifications to be eligible for and maintain their positions.

Diversity & Inclusion

NAR has adopted a commitment to solicit a diverse pool of qualified candidates to serve on committees. A diverse pool of qualified candidates is one that reflects or represents the general membership and industry we serve across differences including – but not limited to – gender, race, ethnicity, sexual orientation, age, geography, professional experience, areas of expertise, and political affiliation.

Performance Expectations

Acknowledging that clear expectations and accountability are key to successful governance, the PAG recommends specific, express performance expectations for each appointed NAR leader and elected RVP which are envisioned to help achieve the Ideals of Governance. In addition to these required qualifications and performance expectations, NAR volunteer leaders will be encouraged, though not required as a condition of volunteering, to contribute to RPAC.

Remaining Relevant

In 2020, the Leadership Team approved the PAG’s recommendation to create a new Leadership Identification and Development Committee with the charge of reviewing and recommending to the Board of Directors qualifications, performance expectations, and accountability mechanisms for NAR leadership positions. The committee will collaborate with the CCRC to create a process supporting the identification, cultivation/development and appointment of qualified volunteers and leaders for NAR as directed by the Board of Directors and Leadership Team.

So, this committee will be ready to adapt the qualifications and expectations of NAR leaders to match the evolving needs of the national association.

Executive Committee members are required to complete all of them, be in an active/current status at time of application, and to maintain the active/current status throughout their term of service. The only option is to substitute C2EX for a designation offered by NAR or an NAR Institute, Society or Council. This ensures that our Executive Committee brings a broad knowledge base and range of different perspectives to fulfill the role of approving committee recommendations. This requirement is also in line with NAR’s commitment to greater knowledge and understanding of diversity, equity, and inclusion.

The leadership qualification requiring applicants to have completed a designation from NAR or an Institute, Society, or Council, or C2EX - requires that such designation or C2EX be ACTIVE/CURRENT.

Yes, Committee Liaisons will be required to meet the same qualifications and performance expectations as members of the Executive Committee.

Some of the PAG’s recommendations that were procedural and organizational in nature and did not require a constitutional or bylaw amendment, were presented to and approved by the NAR Leadership Team in August 2020. Some of these recommendations are already being incorporated into NAR processes. The approved recommendations can be summarized as follows:

• Creation of a Strategic Planning Committee that would oversee the development and oversight of NAR’s strategic plan.
• Creation of a Leadership Identification and Development Committee that would be charged with reviewing and recommending to the Board of Directors qualifications, performance expectations, and accountability mechanisms for NAR leadership positions.
• Specific qualifications for volunteer leaders, along with orientation and training that focuses on the essential information, skills, qualifications, and performance expectations.
• Enhance NAR directors’ role to ensure ongoing communication and advocacy for NAR decisions, policies, and programs.
• Specific performance requirements for all appointed volunteer positions, that address attendance, participation, and training requirements.
• More opportunities for all to participate in governance meetings electronically.
• Greater awareness and understanding of the committee selection process to ensure transparency.
• Directors that are more fully engaged in the business of the association through participation and service on other NAR committees or advisory boards.

We asked, you answered, we listened. In its beginning phase, the PAG was all about asking questions of both members at large and of key stakeholder audiences. The team conducted research through surveys, stakeholder interviews, in-person forums at REALTOR® conferences, and reviewed similar issues from like-minded organizations.

Key takeaways from each initiative:

• 2019 Governance Survey Report (PDF: 1.99 MB)
• Executive Summary Conclusions, Oct. 2018 (PDF: 1.02 MB)
• PAG Involvement Survey, October 2018 (PDF: 996 KB)
• The Mission Driven Volunteer (PDF: 637 KB)
• Why Are Volunteer Leaders Killing Good Associations? (PDF: 264 KB)