Keeping to Your Swim Lanes—Roles of the Board and Officers in Condos, Co-ops and HOAs

Last week, we talked a bit about qualities to look for in a property manager. This week, I thought I would talk about serving your community as a board member or officer, and how that process can be as painless and efficient as possible. As you will see, a lot of it comes down to basic, good corporate management techniques, which should come as no surprise if you realize that Shared Ownership Communities (SOCs—condos, co-ops and HOAs) are essentially large, commonly owned corporations.

In New Neighborhoods we devote a significant amount of time to talking about the trials and tribulations of serving your community, especially on a board of directors. The main problem is that your average person hasn’t had to deal with elections or politics since high school, and the process of electing a community representative brings up a lot of odd personality traits—inflated self-worth, deal making, just general politicking. And so once the excitement is over, the people who have been elected tend to feel like they have been crowned, rather than simply elected. It’s basic human nature—it happens in all politics. But while strong leaders are important to any SOC, kings and queens are not.

I read a lot of condo/hoa blogs around the web, and the most frequent comments that I see posted are from readers who lament that their board members are sequestered dictators, making decisions without any community input and ignoring basic laws and rules that govern their behavior. Now, there’s no question that a percentage of those complaints come from people who are upset that an exception hasn’t been made for them on a particular rule—I’ve seen this happen first-hand numerous times in my own condominium. But it’s also certain that some boards in some communities have directors who have allowed the power of representation to go to their heads, and have begun to operate well outside the reasonable bounds of elected service.

First and foremost, serving as a director of an SOC is an elected, representative position. You are not anointed–you have been chosen among your neighbors because of your ideas or judgment, or maybe even just your smile (because, let’s be honest, that’s how politics works). But once you are a representative of your community, you owe it to the community to actually hear their comments and concerns, even the wackiest. As president, I never encountered a situation where I felt I needed to completely prevent a resident from speaking at a board meeting, unless he or she was being abusive or slanderous. Alternate ideas are never bad! If your thoughts make more logical sense than those shared by the resident, just explain why. Often, the owner may simply not be aware of the background of the issue, and may end up agreeing with you. But if you can’t support your position at a board meeting, maybe it’s not that strong a position. Simply blocking owners from speaking their mind just creates bitter and legitimately angry owners who then become the people who complain that their board members are know-nothing dictators. If your direction is strong and well-reasoned, you never have to fear it being challenged, and if it’s not, well, go back to the drawing board and listen to what someone else has to say about the issue.

Now backing up a bit, condo and HOA corporations are run just like any large corporation—there is a board of directors, who collectively make policy decisions at board meetings, and then officers like the president, vice president, treasurer, etc., who may also be board members, but not always. The officers are tasked with the “day-to-day” implementation of the board’s policies.

In the corporate world, directors and officers generally have years of management experience and training, and they know exactly how to do their jobs effectively and efficiently. But in the SOC world, board members and officers often have zero corporate experience, and many have never managed anything larger than their own personal budgets. But a good-sized SOC may be as big as many medium-sized corporations—budgets in the millions are common. Overall, this is where the biggest disconnect comes between being an effective director or officer. People with no corporate experience tend to believe that they are personally responsible for every action taken by the corporation, and they direct or preside accordingly.

Consider this—what would happen to a corporation like Apple if Steve Jobs personally and directly managed 21,000 employees? Obviously, that’s a little extreme, but even smaller corporations, with dozens of employees, can’t be managed by their directors or officers. Directors are visionaries—they are supposed to be making decisions about the direction of a corporation, approving large projects and guiding policy. The officers of that corporation then take the direction of the directors and translate it to the day-to-day managers, who are responsible for instructing employees underneath them. Sometimes, there are multiple levels of managers. Good managers delegate work to competent employees—they don’t insist on doing the work for themselves, and they don’t interfere with lower level managers’ ability to manage their employees.

Let’s then bring this into the condominium context. Say we have a condominium of 200 units with a $4,000,000 budget—a medium sized corporation. The condo has 20 or 30 employees, spread between office staff, valet, security, front desk and maintenance. There are various managers—the big chief Property Manager, an Office Manager, a Maintenance Supervisor, and even a Chief of Security.

Let’s forget about the board entirely for a moment. Let’s assume that the Property Manager is a dreaded “micro-manager”. He spends his days going from employee to employee instructing them on exactly what tasks they should be doing. He tells each individual housekeeper which room to clean. He tells the maintenance lowbie which garbage to change first. He even tells the office secretary to clean up his rolodex, instead of making the phone calls she had been assigned by the Office Manager.

This Property Manager is, straight and simple, a very bad corporate manager. For one thing, he has completely undercut all of his sub-managers, effectively removing them from their jobs and destroying any possible accountability for their work. In addition, he’s not doing HIS job properly either, as he certainly doesn’t have time to concentrate on the big-picture management items, like walking the property, coordinating with contractors, preparing projects for board approval, meeting with vendors, etc. He is doing the jobs of 10 or more people, but not doing any one of them particularly well.

Instead, imagine a Property Manager who comes in first thing in the morning and walks the property. She makes a list of items that need to be addressed, and then assigns that work to her various sub-managers in her daily meetings. She instructs the Maintenance Supervisor to attend to a broken door, she instructs the Office Manager to make sure the board packets are prepared by the next evening. Then, with those projects completely off her plate, she can turn to more important items, like negotiating a new contract with the pool maintenance company or discussing a rule violation with an owner. She has allowed her employees to do their jobs. If they don’t do them properly, she can evaluate and take action, but not without allowing them to NOT do their jobs properly first!

The exact same dynamic is true of board members and officers. Let’s say that the president of the same condo association insists on personally directing all employees. He switches maintenance employees from one job to another without any consideration of prioritization, he gives projects to the office staff without consulting with the property manager, he even directs security while on their rounds. This person is a prototypical “Condo Commando,” and he is doing the same disservice to the staff at the condominium that the micro-manager did just one level below.

Instead, the president of the association should be taking the policies and directives of the board and discussing them with the property manager, allowing the manager to make decisions about which employees engage in which tasks to get those projects accomplished. This way, if something isn’t done properly, the manager can be held accountable. Otherwise the president would simply be an unpaid and totally unaccountable property manager who has no training or experience. Would you hire such a person to manage your property?

And ultimately, that really is the important question when it comes to micro-managing officers—if you submitted your own resume to your community as a property manager, would you hire yourself? Are you qualified to do the job? Do you have any training whatsoever in managing a business, much less an SOC? 99.9% of the time that answer will be no, and that’s exactly why officers should never manage their properties—they should only guide and direct the manager to accomplish the priorities of the board.

Officers and directors frequently interfere with one-another, as well. The treasurer of an association is tasked with overseeing financials, the budget making process, and sometimes chairing a financial or budget committee. He or she generally is the point person who communicates with the association’s CFO or accountant, and then is responsible for communicating financial issues to the board. But what happens when another officer of the association feels that they need to be involved in every decision made on every issue, and goes off on their own tangent? Perhaps this person adjusts budget items after the budget committee has prepared them, or gives separate, inconsistent direction to the financial personnel. Who are they to follow? Having two bosses in a corporation is a recipe for disaster. Officers need to stay in their own swim lanes! The directors, at a board meeting, should clearly delineate the responsibilities of every officer (it’s already done for you in a lot of association documents) and then those officers should stick to their jobs. It’s efficient, it ensures that mixed messages aren’t given and it keeps individual officers from accidentally or intentionally subverting the will of the board. Because ultimately, it’s up to the board, as a whole, to determine the direction of an association, and the officers are simply intermediaries who make sure that vision becomes reality.

It’s hard being a director or officer of an SOC—something that can really only be fully understood by those of us who have served. But that doesn’t mean that we, as officers or directors, have the right to present ourselves as latter-day Napoleons. Serve your community honorably, listen to your neighbors and respect your fellow board members and officers—that’s the recipe for a happy, healthy Shared Ownership Community.

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