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By Jeremy Conaway
A friend and client of mine, Elaine Hangis, from Lexington, Kentucky is one of the brighter practitioners of association management. She consistently approaches the profession at a higher intellectual level than most and is almost always ahead of the crowd when it comes to spotting new concepts.
Hangis recently participated in a regional economic conference that featured, among other notables, former Federal Reserve Chairman Paul Volcker. Volcker, who is now 82, served the Fed under presidents Carter and Reagan. He is currently spending his days advising President Obama.
As a lead-in to his presentation, Volcker was asked to share his assessment of what caused this economic crisis and what is needed to fix it. His response was blunt and to the point.
Volcker said the nation must see the economic crisis as a "wake-up call" and make some fundamental changes. He emphasized the need for more rigorous math and science education and more technology research that can be commercialized to create jobs.
He criticized the recent emphasis on the service economy saying: "We can't create wealth by serving hamburgers to each other."
In what has to be one of the most poignant comments of our time, Volcker said that Americans need to shift away from "financial engineering" and focus once again on civil, mechanical and electrical engineering.
"We need to regain our leadership in technology development and manufacturing", he said, "rather than churning out thousands of business school graduates who are focused solely on making big, quick and easy profits by manipulating money."
Volcker concluded his comments by pointing out that economic recovery will require us to figure out how to prosper in a new and different global economy, rather than simply trying to get back what we have lost.
"Hear! Hear! That's all well and good", you might say, "but what does this message say to our industry?"
For much of the past twenty-five years, the American real estate industry has focused its agent recruiting efforts on numbers versus quality. The industry's culture is rife with references to this practice, none of which are more to the point than the famous "mirror test." This practice reached its pinnacle in the mid point of this decade when almost half a million new agents were recruited, just in time to either cause or witness the end of history's longest real estate boom.
Today the negative effects of this flawed process are more than obvious. Significant numbers of these new recruits have abandoned this new career, chagrined by the failure to make good on the implied promise of instant riches. The remaining survivors appear to be languishing in the remaining offices of their now exhausted brokers awaiting a return of the 2002 market, a reality almost as distant as the legitimacy of those failed agents' claim to riches.
We know, as a matter of certainty, that the American real estate market will return, perhaps not to its 2005 glory, but certainly to levels that are sustainable and profitable. We also know, or should know, that we will not be returning to the legacy market of 2002. Those days are gone forever and in their place will be a whole new, and hopefully much more rational, marketplace and predictable transaction.
We know that this new market will be powerfully influenced by a whole new generation of consumers who will communicate, influence, reward and punish their real estate experience through social media technologies. We know that information will play a more important role than professional opinion in this new environment and that with its onset a whole new scenario of regulatory and financial tools will be in place.
We also sense that once it becomes clear that the market is returning, a lemming-like wave of humanity will return to the industry, once again seeking instant riches to be harvested with wit and personality rather than intellect, research and respect.
In this light, we return now to the wisdom of Chairman Volcker's comments. Just as we, as a nation, cannot build wealth by serving hamburgers to each other, neither can we, as an industry, build sustainable profitability by employing individuals who are just in it to get rich quick.
The validity of this position has been more than established by recent surveys reflecting consumer distrust and disdain of agents based upon their lack of knowledge about the residential marketing process, the local market itself, and their inability or unwillingness to negotiate on behalf of the participating consumer. Whether these specifics are, in fact, true is not as important as the knowledge that today's consumer is going to judge, rate and rank agents on a much different scale than the old "where they satisfied" test.
There is one other factor that we also know. Moving forward, well over sixty percent of the new market will be driven by consumers from the X and Y generations. Experts, authors and researchers reflecting on this demographic have been telling us, for a number of years, about their enhanced sensitivity regarding integrity, ethics and scrutiny.
While these generation-based factors may, in and of themselves, have been sufficient to change the ethical landscape in our industry, the recent recession and its aftermath have created an even more intense focus on the role of both ethics and integrity.
In other words, the stage is set. We know more about this new market than perhaps at any other time in the industry's history. Fresh from our last recruiting boom in 2003 and 2004, we also know exactly what we can expect with respect to individuals who will seek entry as the next generation of agents. Many of them will not contribute to profitability, or agree to be accountable, and they will not be consumer centric.
As an industry seeking to maximize its credibility before this new consumer, as brokers seeking to return to profitability, as agents seeking to return to a satisfying and stable career path and as investors seeking to generate a market level return on investment, the real estate world must have this conversation. It must make a decision regarding who will be its ‘face' moving forward, and it must decide whether the recruiting practices of the past are one of the lessons the industry has learned over the past seven tumultuous years.
This is the moment in time to take the high ground. This is the time to create an agent demographic made up of individuals who are looking for a careers "worth living," individuals of integrity, individuals who are willing to invest the time and resources into relevant knowledge, and individuals who understand the values necessary to create long term sustainable relationships with consumers.
We can do this. We must do this.
