Walt Albro is a former senior editor for REALTOR® Magazine.
Who Is Terry McDermott?
Incoming NAR executive vice president has business world track record
May 1, 1997
Meet Terrence M. "Terry" McDermott. He describes himself as a tough-minded businessman who values leadership over management technique, and lists his idol as corporate consultant Peter F. Drucker, author of Managing in a Time of Great Change.
On July 1, McDermott will join the NATIONAL ASSOCIATION OF REALTORS® and on Sept. 1 will take over as the new executive vice president.
McDermott, 54, will be the first executive vice president in memory without any prior connection to the REALTOR® organization. He's also the first whose experience is mainly in the for-profit rather than the nonprofit sector. His appointment was announced by NAR President Russell K. Booth in March, following an executive search began last fall.
For 24 years, McDermott worked with a major business publisher, Cahners Publishing Co., with headquarters in Boston, retiring after seven years as president and chief operating officer. For the past three years, McDermott has served as CEO of the American Institute of Architects, a Washington, D.C.--based professional society with 60,000 members.
McDermott will replace Almon R. "Bud" Smith, who is retiring after six years in the top NAR staff post. A Chicago native, McDermott majored in economics at Loyola University in that city and received his bachelor of arts degree in organizational development from the National College of Education, Evanston, Ill. As NAR EVP, McDermott will be based in Chicago.
Today's REALTOR® Associate Editor Walt Albro recently visited with McDermott at his second-floor office at AIA, one block west of the White House, to get a sense of McDermott's business and association management philosophies--and his personal style.
What have been your impressions of REALTORS®?
McDERMOTT: My personal experience with REALTORS® has been good. I once bought a house sight unseen over the telephone from a REALTOR® I trusted.
We were moving back to Illinois from Boston in 1975. We were using a REALTOR® whom we knew very well. We had worked with her to buy our first house in Illinois.
She called us up and said, "I've got the perfect house for you, but we're going to have to put in a bid right away. It isn't going to be available for long." So we said OK, and we made a bid over the telephone contingent on a walk-through within 48 hours. In terms of suitability for our children, it turned out to be one of the nicest houses we ever bought.
That shows how smoothly the transaction can work when you know the REALTOR®, and the REALTOR® knows you.
Does your business background help you in association work?
McDERMOTT: Very definitely. I think it's important that I've run a very large publishing and communications company, a $600 million business with 3,400 employees.
Publishing operates in a fast-changing marketplace that requires flexibility and quick response. There's no such thing in the communications industry as one way to do it. The only constant is change.
I'm used to working in an environment that, like the real estate industry, is rapidly changing, often by economic, demographic, and public policy factors beyond our control.
Are associations today becoming more like for-profit businesses?
McDERMOTT: Yes, to be successful today, they must have the same discipline as for-profit organizations. Members fully expect the staff of an association to live in the same world that they do and to respond to the same financial pressures and opportunities.
Another reason is that members are demanding more effective leadership, services, and benefits--all at less cost.
Are associations developing a more competitive mentality?
McDERMOTT: Absolutely. Association staff have to ask themselves, What have we done today for the members? Are they more competitive, more profitable, more aware of the opportunities and challenges around them as a result of something the association did?
Members are expecting that the assets of the association be operated according to the standards of a for-profit organization and that association staff be held to the same performance standards as those of a for-profit organization.
The only difficulty is that associations, being nonprofit, don't have the luxury that I used to have in the for-profit sector of receiving monthly profit and loss statements, market share reports, and other measurements of success.
Somehow, you have to give association staff measurable performance standards so that you create the same environment as in a for-profit organization.
Have you implemented this philosophy at AIA?
McDERMOTT: Yes. We're one of the few associations at which most staff income increases are derived from performance-based bonuses. Without this approach, you fall into the federal government mind-set; that is, gosh, it's the first day of the fiscal year, so everybody gets a mandated percentage increase in salary. With a system like that, how do you determine who's performing and who isn't? It's not a successful way to run a business.
Unless you have a competitive, performance-oriented environment, you're not going to attract and keep people who want to move ahead and be rewarded on the basis of their contributions. You're going to attract only people who want to be somewhat genteelly insulated from the competitive nature of business. Those days are gone forever--not only in the for-profit sector but also in nonprofits.
What are some specific ways nonprofits are acting like for-profit businesses?
McDERMOTT: Associations are looking at reducing staff size and positioning their assets more toward member goals rather than association structure. They're also outsourcing and creating strategic partnerships.
Here at AIA, we've outsourced eight or nine major components of the association. That includes everything from our convention management to our bookstore. We even outsourced all our photocopying and printing. Happily, those components have all improved in quality and profitability as a result of being managed by our commercial sector partners.
What would you point to as one of your major accomplishments at AIA?
McDERMOTT: The general perception of the membership that AIA today is far more responsive to its members' needs.
I heard a comment from our board that the average member's sense of ownership in AIA has been enhanced and that there is a stronger feeling among members that their professional society is out there focusing on true member needs and goals. I couldn't get a more positive comment than that.
How would you characterize your management style?
McDERMOTT: I'm the nicest tough guy you've ever met.
Do you follow any management school?
McDERMOTT: I believe in leadership more than I believe in management. I believe in almost everything Peter Drucker ever said. I believe in leading through a shared vision and passion for what we do. I believe in letting staff know that their contributions are the reason we're so successful. I believe in management by "no surprises."
I'm an extremely candid person. I don't hold my cards close to my chest. I'm also not a micromanager. I have no interest in doing everybody else's job.
I believe in loyalty to the organization and trust among the elected officers and the leadership of the organization and the staff.
I'm a great believer in management by walking around. I really like to know my people well. I care about them a lot personally. I want to make sure that people are growing in a professional way. I'm not an ivory-tower guy.
What do you do in your spare time?
McDERMOTT: I'm not a big relaxer. I'm a worker. As my wife would say, "If Terry starts to relax, he thinks he's coming down with something."
I'm an avid gardener. I love to dig in the dirt. That's an Irish thing, I guess.
I'm a waterfowl hunter--ducks and geese. I collect decoys. The decoys you see here in my office are those my wife won't let me keep in the house because there's no more space there.
I'm extremely family oriented. If I'm not working, I'd just as soon be with my family than out on the golf course. My wife and I love the ballet, the symphony, and the theater. We both love France. With one child in Boston and another in Ireland, we tend to travel a lot.
Highlights of Terry McDermott's Career
1994--present: Chief executive officer, American Institute of Architects, Washington, D.C.; responsible for managing staff of 150, budget of $34 million.
1987-1993: President, chief operating officer, Cahners Publishing, Division of Reed Publishing, USA., with a staff of 3,400 and $600 million in sales.
1985-1987: Executive vice president, Cahners Publishing; managed seven group vice presidents responsible for operating 60 publications.
1983-1985: Group vice president, Computer and Electronics Group, Cahners Publishing; responsible for a $75 million publishing group focused on electronic and computer technology.
1979-1983: Vice president and group publisher, Cahners Publishing.
1969-1979: Magazine editor, salesman, publisher, Cahners Publishing.
What Does Terry McDermott Bring to NAR?
"Terry brings fresh ideas and new perspective to NAR because of his unique background, which balances business leadership and association management experience. An analysis of NAR needs and a distillation of ideas gained during the comprehensive executive vice president search process led the Leadership Team to feel that this was precisely the type of person needed in the position at this critical juncture in NAR history." —Russell K. Booth, NAR president
"Terry brings a unique blend of association and for-profit management experience that should help NAR as it continues to streamline itself. He is a completely open individual. His work ethic and dedication are clear and well-known. That means he'll quickly learn the real estate business from members, and REALTOR® organization issues from executive officers." —Almon R. "Bud" Smith, NAR executive vice president
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Updated: January 14, 2022