September 23, 2013

"Bylaws Are Not Just Once in Awhile"

The Merriam Webster's Online Dictionary defines bylaws as; "The rules and regulations enacted by an association or a corporation to provide a framework for its operation and management."
The reason our national, state and local home builders associations (HBA) have bylaws can be summed up in 4 primary reasons;

  1. Consistency - rules and policies, in the form of bylaws, can be applied on a consistent basis so that no one person or group can dictate.
  2. Efficiency - bylaws include procedures for decision making so that the business of the association can be conducted efficiently.
  3. Protection - bylaws protect the group from internal conflict and financial risk as well as straying of course regarding overall mission statement.
  4. Legitimacy - bylaws give the members assurance of the mission, structure, and policies of the association. 
The local HBAs have their charters with The National Association of Home Builders (NAHB). NAHB bylaws (click here), as they pertain to the locals, are like a set of blueprint specifications, meaning "equal to or better than." Bylaws can be amended when times change to allow for modern day situations that may not have been present when the original bylaw was implemented. One bylaw in particular, "that the chief elected officer, at least one other corporate officer, and the majority of the members of the Board of Directors of such groups are builder members," seems to be one that is not consistently observed. There are some locals that have had an associate as their chief elected officer of the local HBA.  

This issue has been discussed at the national meetings within various groups and committees, as recently as the NAHB Spring Board Meeting in Washington, DC this past June.

Two points;
  1. This is a builders association and the chief elected officer (known as the president) needs to have "skin in the game." That would be a builder member. Builders deal directly with the legislative and regulatory roadblocks that constantly occur when building homes, risk their capital, hope that they bring the home in under budget, or at least at budget, and sell to a qualified buyer. This is not to say associates don't take risks but at the end of the day their number 1 primary "risk," as it pertains to the home building process, is maintaining overhead while waiting for the builder to actually engage in the building process and persuading the builder to buy their product or contract their service.
  2.  It is good for the image of the local HBA, from an external perspective, having a builder as president. Internally, it demonstrates a strong builder "ownership" of the local which makes it easier to gain associate dues because of builder presence and non dues revenue.
Reality;
  1. The housing depression ended the businesses of quite a few builders.
  2. The home builder "survivors" now have to focus on their business as the recovery slowly takes hold. This may mean less time to volunteer builder leadership roles.
  3. Local HBAs were not immune to the dramatic downturn, with membership totals dropping at paces that few have ever witnessed and. along with the drop in numbers, a loss of sponsorship dollars and other non dues revenue.
Could an associate be president? Of course they can, from a managerial perspective, with a certain caveat; if they are qualified, meaning time served on the board and their individual talents demonstrate a passion for our industry, not their "bank accounts."

Associate members;
  1. strategically plan their business' direction
  2. create and manage budgets
  3. develop marketing plans that help with their branding efforts
  4. work with or manage employees
  5. they are, in some instances, community leaders
These items are a few of the needs of a local president.

The local HBA must exhaust every avenue in assuring that this NAHB bylaw be followed because it's not in the best interest of the HBA to follow bylaws once in awhile. The facts are evident; some local HBAs have had, or currently have, associates as presidents. NAHB will not recognize that presidency due to the bylaws. Bylaws either mean something or they don't. If they don't, then throw them all out. If they do, adhere to all of them. If you don't like one or a few, act to amend. When one bylaw is consistently broken it opens the door for others to be broken as well. 

There are only two actions that can take place; 
  1.  strict enforcement of the bylaw or
  2. an amendment to this particular bylaw that would have this sentiment as a rough draft;
  • Do to the increased hardship of attaining a qualified builder in a particular calendar year, an associate in good standing and thoroughly vetted by that particular local HBA's board of directors, serve no more than one year given the emergent situation of not having a president at all.
  • The local must demonstrate that they have a leadership program in place, with help from NAHB, and that they have a pool of upcoming builder candidates.
  • No one associate member can serve more than one year with multiple builder presidents in between
This is not to say that this is a way to alleviate stress on your nominating committee. In times of need bylaws have to be amended to allow for such emergency situations. But they haven't yet which means the bylaw is the bylaw. 

There should never be a bylaw change that allows associates to be president of a local, however, why have a vacant presidency, or worse yet, a builder who can not fulfill his or her responsibility due to their need to focus on business, but takes the role because of the pressure of "you have to" when you could have a qualified and vetted (by builders) associate manage the local for one calendar year. This ensures the local's strategic plan for growth and success as an organization.  A sail boat with out sails just drifts.

There is a "danger" of allowing associates to be installed as presidents without developing builder leadersyou will eventually endanger your state builder leadership pool, if you do not strive to strengthen your builder leadership pool at the local level,

The NAHB board of directors, with their makeup being 100% local members, needs to carefully review this situation because a good amount of locals are facing this potential situation and would look for a compromise, meaning an amendment. Because bylaws are not just once in awhile.

  

Submitted by Michael Kurpiel, CGA, CGP 


         

8 comments:

Larry Kady said...

Bylaw correction

Mike, what was in your coffee this morning? Were the tea leaves upside down? If we don't correct the rules and enforce them, then what do you have? Chaos. Look that up and you might find NAHB. We need NAHB to continue to be our large voice of my small company and if we don't start facing the paradigm shifts In our industry, we will continue to burn through our reserves and then die. We have over 100 locals that lose connection to NAHB because a non builder is in as president. We have countless more locals where the EO changes the member to builder to not break the rule, so who is kidding who? Fix it, follow it, and improve it or die.... It is time we stop hiding behind the federation story and start acting as an accountable, responsible company. If we ran our businesses using the NAHB model, we would all be out of business. Let's start being proactive and move forward. I am not willing to continue investing in a dying organization. I am willing to do what it takes to prevent the demise of yet another big organization. I watched IBM, Polaroid, Kodak, Wang die while Ford, GM and Chrylser redesigned for a new business model. It starts with us and we need to make some changes happen or give it up. This correction to the by laws is not a dilution of our builders, they are gone and I don't think they are coming back. We need to keep the communication paths clear and flowing. When my outreach program is blank, this is helping our membership how???

Let's all get on the same page and start working this business like a business with responsibilities defined and accountability outlined and enforced. We have a tremendous fight ahead of us legislatively and we need to focus on that however, if we are dying, and it believe we are, then what's the gain again for our members?

Look up successful business - see if you can help us get NAHB onto that page...

Larry Kady Builder/Developer/Rebuilder
HBRAMA State President
NHAB MA State Rep
NEBRA past president
Managing Director - Jay Corp

Michael Kurpiel, CGA, CGP said...

I am an associate, as you know, and I firmly believe that we need to have qualified builders as presidents. In a year where that may not be possible, we should allow qualified associates to be president but I do want the HBA to exhaust all builder possibilities. I truly believe NAHB should set up a builder leadership program, like the NAHB Associate Members committee set up for associate leadership. Until we are at a true crossroads (we may very well be) we have to try our best to secure builder leadership.

Would love to talk to you more, by phone or when we get to Colorado, to better understand your thoughts. I do value your opinion, greatly.

Jimmie15 said...

Mike

As always thoughtful, sincere, and comment generating. I find I side with Larry's thoughts a bit more than yours at that micro level. At the macro level, Associates as local Presidents, we are in agreement. Simply, this is an idea that is long overdue. It is the reality for many locals and not just small rural locals either. Here in PA 3 of the 4 largest locals have amended their bylaws to allow for this eventuality. One has had an Associate serve with the second in line, one will have an Associate next year, and the other the following year. To me and many others the "old school" ways are just that and in today's marketplace class distinctions is not something our future members want.

I am reminded of the quote: "You don't need a title to be a leader." In our world that translates to you don't need to be a builder to be a leader. At the end of the day it is about leadership and the ability to lead, if one can one should.

I read too much complication into your proposals and wonder how NAHB will "help" with any of this in the depressed environment we are in. Simplify your thinking to only the thought that if any one local deems it appropriate to have an Associate serve as President, then they shall have that ability.

Thanks again for your blog keep it going.

Jim Miller
York PA-EO

Ann Garvey said...
This comment has been removed by the author.
Kathleen Ostrom said...

I totally agree w/Larry. The proposed by-law amendment is about the local associations choosing the best leadership so that they can prosper and grow their membership. This is not about 'associates'. NAHB is nowhere without the work of the local associations and their ability to grow and maintain membership. Our builders and associates join the local and not the national federation. Most seldom know they belong to a national group. The continuation of our national association depends totally on the local member paying dues and maintaining a membership. Our local members are very smart and will vet incoming leadership. If someone, a builder or associate member, has an agenda that does not promote the business of our federation, then I firmly believe they will not reach a leadership position at the local. In my state, Minnesota, we have over 50% as associate presidents. Ignoring them drives a wedge between local and national. I would rather have a terrific associate president than a bad builder who has been forced to the position simply because of a rule made when circumstances were quite different.
Kathe Ostrom, Remodeler
President CN Ostrom & Son
Builders Assoc of Twin Cities
NAHB MN State Rep
BAM past president

Anonymous said...

I certainly do like the passion of the parties responding and posting!
The sad truth of the matter is that in many instances, there are locals that do not have a builder "willing" to move up to a leadership role and haven't for some time. What you get is a builder, not really committed to leading but taking the role of president for several terms because there is no funnel to move anyone up! This "president" is in essence a manager not a president, and they end up becoming stale and ineffective. At the same time, there are many associates that were once builders and have chosen to be, or economy dictated they become associates. These people may still have the passion, skills and desire to be a leader but cannot truly be one because they don't have the "builder" title. What is the difference between the "HBA" and "BIA" not much more than one seems to encompass all and one seems to reflect only a few.
Again, I really appreciate the commentary and would love to discuss this further in Colorado. Looking forward to that conversation!

Michael LeCorgne, CGA, CGP, CAPS, CSP
Builder
Past State Associate VP
Member of Society of Honored Associates
Local and State Hall of Fame
Current builder member of local BOD

m kern said...

Yes,,, "Real Builders,,in the Real World" should be driving these organizations. Here in Santa Fe,, a group of PROGRESSIVE GREENIES got control of our local HBA and have alienated the old guard builders to the point that very few "builders" are involved in any meaningful way.The HBA in Santa Fe now walk hand in hand with the city and county politicians,,with very little regard for the welfare of the local builders. After being a member for 30+ years,,, I quit a few years ago as I was being silenced and could no longer support the organization.

Michael Kurpiel said...

My opinion, which could be considered a proposal, would be to have an associate serve for one year, as long as the local can demonstrate that it has a strategic plan in place to develop builder leaders. When new associates come to their first general membership meeting the first thing they ask, or think, is "where are the builders?" Imagine when they find out that one of their competitors is the president?? Another thing to be aware of is that you will have less builders to develop for state presidency which will translate, down the road, to less builders for NAHB chairman.you don't have to be a builder to be a leader, that is true. But perception is everything in this world and the home BUILDERS association would not work when an associate is president.

By the way, multiple people have stated that their local, and their state, has had associates as president. The blog article is titled "Bylaws Are Not Just Once in Awhile" for a reason. The locals have their charter with NAHB, not the other way around. Like I wrote in the article, NAHB bylaws are like a set of blueprints where they architect states "equal to or better than." You can't ignore, or cherry pick, bylaws and expect that your own bylaws, rules and/or procedures be adhered too. I will vote no to this proposed bylaw change UNLESS their is a caveat such as an emergency situation for a one year term.