Waste Elinination In Condo or Homeowner Associations

The elimination of waste is the goal of any "Lean System", which has been popularized by the very successful Toyota Production System. It defines three broad types of waste; unreasonableness, inconsistencies, and activities that do not add any customer value. A condo or homeowner association is not exempt from these forms of waste and can also benefit from their elimination.

• Unreasonableness. This includes all the unreasonable work that a BoD imposes on its committees and members, such as forming a committee without a proper charter or description of the duties it is to perform, requiring a member to "jump through hoops" when satisfying a request for financial information, asking a member to investigate a project/idea, knowing that it will never be approved. Unreasonable work is almost always a cause of multiple variations.

• Inconsistencies. This is the variation and inconsistency that may exist within an association, such as; the enforcement of CCR's or the collection of delinquent maintenance fees, granting an architectural variance for one member, but not another. Lean focuses on how the work design is implemented and the elimination of fluctuation at the policy formulation level.

• Waste elimination. This specifies any human activity, which absorbs resources, but does not directly add value to association members such as; poorly run meetings, making a decision without sufficient factual information, continually revisiting a decision that has been made, calling a BoD member to find out the details of a past decision. These non-value-adding activities and results should be eliminated.

Lean is, in its most basic form, the systematic elimination of all forms of waste. Waste elimination is discovered after the process is in place and is dealt with reactively. It is seen through variation in output. It is the role of the BoD to examine the waste in the processes and eliminate the deeper causes by considering the connections to the unreasonableness and inconsistencies of the system.

What Does a Good Association Decision Look Like?

Clearly, the top function of a condo or homeowner BoD is to make good decisions that are best for the association and its members. When a BoD does not make good decisions, it can alienate its members, create distractions, and build mistrust towards the BoD. Decisions won’t stick - they will be revisited again, people will implement actions not chosen, or the results of the decision will be invisible in a matter of weeks. But, what does a good decision really look like?

There are two critical components; the quality of the decision and the timeliness of the decision.

• Quality of the decision. How would you recognize a high quality decision for your association if you saw one? Many would give answers like:

o All the right people have been involved
o We had all the best information available
o Risk was considered
o A decision was made—action occurred!
o Everybody bought in to the process
o The process did not drag on and on and loop around
o We did not get bogged down in the details
o There was a clear set of choices
o We knew about the difficult trade-offs to be made
o Implementation went smoothly
o Etc...

These are all important considerations among a long list of others. Generally, they can be summarized into six categories:
1. Is the right question being answered?
2. Have we generated a small set of creative yet feasible alternatives (or choices)?
3. Do we have meaningful and reliable information, particularly about risk?
4. Have we identified clear preferences and trade-offs?
5. Did we exercise sound reasoning, and clear communication about complex issues?
6. Do we have a commitment to action?

• Timeliness of the decision. The second component of good decision making is its timeliness. Nothing slows down an organization more than paralysis by analysis – the inability to make even smallest decisions quickly. Unnecessarily delaying a decision or making no decision is just the same as making a decision. You have simply chosen the option of taking no action. It means you are defaulting to the status quo.

When you don't make a timely decision, there are a lot of other bad things can happen, even though the decision itself may be a sound one. It can cause delays in decision implementation which in turn, can result in a missed opportunity or make a bad situation worse. It can put the association into a "downtime" condition that brings it to a temporary standstill on the issue being examined. It allows the grapevine and rumor mill to churn, which now brings further complications that have to be addressed. But, probably one of the biggest problems that it brings is a loss of confidence in the BoD leaders. Hesitation or a reluctance to make a decision is often the sign of ineffective leadership and is a surefire way for a BoD to lose support of its members and thus its ability to lead.

When it comes to decision making, successful BoD leaders have learned that action is vital. They live with the reality of consequences and know there will always be uncertainty in their decisions. No one can see all possible ramifications; no one can predict every contingency; no one can absolutely prevent failure. Strong leaders know that failure is not final, it is a learning opportunity. The real danger surrounding decision making is not "will I make the wrong decision" but "did I make the best decision possible given the facts and circumstances in a timely manner". Good leaders will always recover from poor decisions - they learn and become wiser. But weak leaders will mess around and miss opportunities. And once they finally make a decision, chances are their decision will have no momentum, no passion and no urgency and probably too late.

Tighten The Financial Belt Of Your Management Company

If and how you use a Management Company to help manage your association duties, will be an important area to examine for cost reduction opportunity. This category of expense can run upwards of 30% of an association’s annual budget -- money that you may be able to spend more wisely. Depending on the nature and severity of your financial situation, you may be forced to take on more of those duties even though it may not be your first choice. Elimination of some or all of the services, rebidding/renegotiation of the Management Company contract, innovative use of private contractors or specialty service providers, holding Management Companies more accountable for cost reduction, and/or “partnering” to jointly attack cost reduction, are all within the realm of possibilities.

The reasons for an association using a Management Company can range from “convenience” for some to a “necessity” for others. But, if an association’s BoD is facing a severe financial condition, it may have to take on more of these direct management duties than it would prefer. Since the use of a Management Company can represent a major expense to an association, it is an area of cost reduction opportunity that cannot be ignored.

There are several things that should be highlighted regarding the use a Management Company.

• While management companies can simplify things for a condo or homeowner association BoD, they do not replace the BoD. A Management Company reports to and receives its direction from the BoD and not the other way around. The BoD has hiring/firing authority and can eliminate, replace, revise, or renegotiate a contract with a Management Company.
• Inexperienced BoD’s must guard against a Management Company “dependency” where the Management Company is calling all the shots and the BoD is merely a rubber stamp. A good Management Company can be a real benefit to your company. They do bring experience, an extra set of hands, and usually ideas tried and proven in a condo or homeowner association environment.
• A BoD has a fiduciary responsibility to the association for which it serves. This fiduciary relationship requires the members of the BoD to act in good faith and in the best interests of the members of the association and that they exercise due care and diligence. A fiduciary obligation represents the highest level of responsibility under the law. Unlike a Contractor, a Management Company acts as an agent of the association and is also held to the same fiduciary responsibility as the BoD. Likewise, it has a duty to manage association’s costs in the most effective way possible.
• A Management Company, like any company, is only as good as its people. They may not have the necessary skill sets to attack cost reductions and may have “blind spots” that prevent them from examining new ways to attack cost creep that will eventually come into play. Like the BoD, they too can also fall into the complacency trap of simply meeting cost increases by raising association fees. Today's Management Company must do more than review monthly budget reports, handle violation notices, or perform the daily maintenance activities. They must minimize costs at every opportunity and come up with creative ways for condo and homeowner associations to combat rising costs or economic downturns.
• The relationship between an association BoD and its Management Company is usually a deep one, and one that can last for a long time. The longer a working relationship lasts, the better the two parties understand one another and work together. But, it also may be more difficult for an association BoD to change suppliers or to address a lackadaisical cost reduction performance. A responsible BoD must take any action that is necessary and to set the expectation with its Management Company that cost reduction is one of its primary responsibilities. It is also their job to replace them if they are unable to deliver.
• If an association BoD chooses to use a particular Management Company, it should expect a relentless effort to help them reduce their costs. This is a new concept for many, as they are much more comfortable with just delivering the services outlined in the contract. Take a look at your existing contract or a proposal from a potential Management Company. Do you see a statement that says they will deliver cost savings to the association? Or better yet, do you see a statement that says they will deliver (X) % of cost savings to the association? A Management Company like any other supplier does not like to be pinned down. It often easier to just deliver the service and pass alone any cost increases to association members in the form of increased fees or special assessments. Management Companies should be held accountable for cost performance and a provision should be incorporated into their contract to reinforce that responsibility.

Shown below are some ways to cut your Management Company cost:

• Determine the level of self-management that you will use and that you can afford (Take apart the Management Company contract line-item-by-line item and explore alternative ways to eliminate, revise it, or have the service performed by someone else at a lower cost. Separate the association “needs” from its “wants”. Have the Management Company provide quotes for each line item in the contract. This will allow for an apples-to-apples comparison with self management or other suppliers. Use this eliminated or reduced service level as a basis to renegotiate a lower priced contract.
• Use consultants, freelances or part-time employees, instead of full-time employees.
• Often, one of the largest expenses is bookkeeping. If you have an active volunteer group that is willing to take over some management tasks, you can realize significant savings by hiring an accountant to handle the books and to process payments/receipts.
• Competitively source your small service projects. For small service needs, it is not necessary to have a Management Company or professional contractor perform small maintenance tasks or to fix every little problem. (Handyman Services. For condo or homeowner associations that can't afford a full time maintenance person, contract with a licensed, bonded and insured handyman who can perform a monthly "laundry list" of small repairs. Combine tasks to provide a full day's work. Moonlighters. In most buildings, the building staff moonlights as painters and general repair persons. Talk to your staff and see if they would like to make extra money by doing some of the work that normally a professional would do. The best example of this approach is touch-up painting in halls and stairwells. Develop a closer alliance with subcontractors to perform work in the neighborhood to get small projects done quickly and cost effectively. Volunteers. You may have members who have special skills/hobbies (engineers, contractors, woodworkers, gardeners, skilled trades, etc.) who may be willing to perform small maintenance duties or projects. Do no be afraid to ask for their help. The use of volunteers is an excellent way to help keep your costs down.)
• Jointly explore with the Management Company any changes that the association cold make to reduce the Management Company cost that in turn could be passed along to the association. (Eliminate or reduce the amount of time that a Management Company is required at BoD meetings. Shorten the length of BoD meetings. Hold quarterly meetings versus monthly meetings. Hold daytime meetings during normal business hours to avoid overtime. Move the Board meeting to the management office to save manager time and avoid mileage charges. With an approved budget, proper policies in place and a management planning calendar, the Management Company should be able to handle most issues with only occasional input from the president.)
• Reconfigure how a Management Company handles administration of insurance claims and damage reconstruction. Insurance matters can take many hours of a Management Company’s time. If the contract agreement specifically states that insurance claim work is an extra cost to the association, the Management Company can bill the insurance claim for the time it takes to administrate a claim and renovation work. A similar principle involves time spent on collections or legal action against an owner. This management time should be billed to the delinquent owner.
• Rather than having the association bear the cost for preparing sale disclosure statements to owners who are selling their homes and buyers' lenders, have the Management Company bill owners and buyers separately for this service.
• Scale back on the frequency of services that are offered.
• Limited office hours or lengthened response time
• Offer part-time services for security, gate/door attendance
• Send out association dues on a quarterly basis versus a monthly basis. Allow members to pay dues on a semi-annual or annual basis, if desired.
• Hold minor repair items until enough are accumulated to allow for a more efficient utilization of maintenance contractor’s time
• Conduct less frequent inspections for CC&R violations and batch process related notices.
• Use electronic communications to members and record keeping to eliminate paper, filing, stamps, mail handling, etc. Allow for electronic payment of association fees.
• Eliminate all overtime and transportation expenses for Management Company employees
• Include in the Management Company contract a specific reference to the expected level of cost savings efforts required of the Management Company. This could be in the form of a specific amount or a percentage of operating costs. Then, conduct a performance review with the Management Company on the progress being/not being made. It is not uncommon for companies to demand a 10-15% annual cost savings from their internal departments or outside suppliers.
• Go out and get competitive bids and bring them back to your current Management Company so they have the opportunity to lower their price for you. Large service contracts like a Management Company should be competitively bid every year or two. Even if you are totally satisfied with the service received and have no intention of changing providers, it will demonstrate to the membership that the BoD is practicing due diligence and good stewardship. Also, if a particular Management Company is maneuvering for a contract increase, a competitive proposal will work to the association’s advantage in negotiating or verifying that the current Management Company is entirely justified in the increase. If it is to the advantage of the association, negotiate a long-term contract with the Management Company that states in exchange for a competitive price, the association will not seek competing competitive bids for a certain period of time.
• Confront your Management Company if it announces a price increase and re-bid the order where appropriate.
• Request that your Management Company prepare recommendations on ways for the association to reduce association waste, increase efficiency, or save money.
• Develop a scorecard for keeping track of Management Company service, quality, delivery and pricing. Implement a monitoring program (metrics, customer complaint system) to better understand the service / issues.

Condo or HOA Communication Skills #101

Effective communication skills form the foundation for successful management of a condo or homeowner association. They are so fundamental that we sometimes forget their significance or assume we are skillful. Communication skills enable you as a Board member to lead others. You cannot lead without being able to communicate your ideas well. People will not go with you unless you have established with them your ability to lead. That requires trust which is a by-product of effective two-way communication.

Show me an association that is rift with problems (including, member in-fighting and discontent, distrust and a very active rumor mill, etc.) and I will show you either incompetent Board members or ineffective communications, or both!

The intent of this article is twofold. The first describes how you can improve your personal communication skills and the second describes a high return communication technique that can be used with your association.

Effective personal communication includes; speaking and listening, informing others, and fostering open communication. When you master these skills, you harness a great deal of power – the power to get things done through others.

Effective personal communication involves:

• Knowing who needs what information and communicating that information in a concise and timely way
• Choosing and effectively using the most appropriate communication medium – oral or written – for those who will receive the information and how it will be used
• Knowing how to listen effectively

Shown below are some important personal communication skills to master.

• Speak effectively. You should make an effort to get your point across when talking and avoid rambling. Outline in your mind what you are trying to say and then stick to it. Try to eliminate speech habits that may annoy others, such as talking too slowly, too rapidly, or too hesitatingly. Become more animated in your style by using appropriate gestures and body language to “punctuate” you discussion. Also, work at varying your volume, pitch, and pace to emphasize your major points in discussions.

• Foster open communication. To build trust and solid working relationships with association members, it’s important to be seen as someone who is committed to sharing information with others and who goes beyond communicating only what is necessary. Developing a climate in which you and your members are open with information is critical in order to function effectively. You should find out what members want to know. Most are interested in things that impact them personally. Use the informal grapevine communication network as a way of keeping others informed. Wander around, have coffee with people, ask them questions, and so on. A proven communication strategy is to “over-communicate” rather than “under-communicate”, even if it means that you may have to retract something in the future. Just preface those types of communications with the statement, “this is what we know at this time, but it could change in the future -- so don’t hold me to it.” In other words, don’t wait to communicate something important until everything is finalized. Provide on-going updates as they occur and if you don’t want to communicate something at a point in time, let everyone know when they can expect to hear something.

• Listen to others. Listening involves hearing the speaker’s words, understanding the message and its importance to the speaker, and communicating that understanding to the speaker. It is key to developing and maintaining relationships, making decisions, and solving problems. When listening always follow this order: 1) hear, 2) understand, 3) interpret, and 4) respond; don’t jump from “hear” to “respond” without making sure you understand.

Communications with association members should not be left to chance – it should be carefully planned and managed. A useful technique for a Board to consider is the development a “staged communication plan” that provides a regular flow of information that addresses the things on their member’s minds along with the things that the BoD wants to communicate to them. This plan identifies what information will be communicated (new information, progress to date, anticipated problems, decisions made), how it will be communicated (personal contact, letter or email, group meeting), by whom will it be communicated (President, Secretary, all BoD), and when will it be communicated (date, frequency). Below is a sample plan.

As required or immediate

BoD decisions, meeting minutes, CC&R reminders, rumor control, emergency situations, breaking news, status report on key issues, notice of special assessments (anticipated or assessed), volunteer recognition, informational items (impending legislation, changes in the property tax assessment, sightings of unique wildlife, special events, new bike riding trails, fall color tours in the area, increases in water/sewer/trash collection, etc), highlight real people enjoying the facilities (special gatherings, normal day-to-day use, etc), feature articles of members, their families, hobbies, special achievements etc., changes in operations, such as major repair work on the pool, etc.

Monthly

Financial performance (budget vs. actuals), President letter (status report on key issues, breaking news, informational items)

Quarterly

Encourage & recognize volunteers (look for examples and reasons to thank someone), feature article on a committee activity or a particular aspect of condo or homeowner association life, any special accomplishments,

Annual

Year end letter (accomplishments, future outlook, holiday wishes), annual budget and maintenance fees, annual meeting notice and minutes, event calendar, contacts and procedures for requesting vendor services

Lead Courageously

Leading courageously is a very important trait of any successful association BoD. Today’s environment demands that BoD members make decisions that involve risk, and take their stand in the face of ambiguity or adversity. BoD members who lead courageously confront problems directly and take action based on what they believe is right. They win the respect and commitment of others by standing up for what they believe; making tough decisions despite ambiguity; by supporting others who make difficult decisions; and by following issues through to completion in spite of adversity. The following are valuable tips to help you lead courageously:

Clarify what is important to you. Identify your most, deeply held convictions. What is most important to me? What do I value the most? What is worth “fighting” or standing up for? On which of my values will I never compromise? Then use those convictions to guide your leadership.

Take a stand to resolve important issues. Pushing to resolve important issues requires clear communication, a strong emphasis on paying attention to and working with others, persistence, and the courage of your convictions. When asserting your position, be wary of using tentative language like, “I might be persuaded to …”, or “I’m not sure that it’s the best way …”. Instead, use firm, assertive language to state your position.

Demonstrate leadership courage. BoD leaders are often faced with situations in which taking the most appropriate course of action carries with it a backlash of complaints, problems, and negative reactions. It requires courage to take action in these situations. If others perceive you as lacking courage, try the following; Support others when they make tough choices; confront tough issues head on; Say “no” when necessary; When you are reluctant to make a change, ask yourself what is behind your resistance?

Drive hard on the right issues. Remember the old adage “choose your battles carefully” when you are deciding how best to spend your energies. You can’t possibly do everything, but it is especially critical for you to address the issues that get in the way of, or further the development of, your mission.

Confront problems promptly. When important individual or team issues come to your attention, it is critical to respond quickly. Addressing problems keeps them from growing and conveys the message to your team that you are willing to tackle tough issues.

Be decisive. Indecisiveness may result in the perception that you cannot make tough choices or take a stand on issues. Consider indecisive behaviors that apply to you and then try to remedy them on such things as; difficulty in determining which of several alternatives is best, immediately turning to others before you formulated your own options, procrastinating on deadlines, second-guessing yourself, using tentative language when describing your ideas, loosing touch with what is important to you, concern for taking a stand that will cause others to dislike you.

Pay Attention to Your Management Company Transition

The relationship between an association BoD and its Management Company is usually a deep one, and one that can last for a long time. The longer a working relationship lasts, the better the two parties understand one another and work together. But, when a condo or homeowner association Board of Directors (BoD) decides that its Management Company is not doing the job to its satisfaction and that it should be replaced, it instills a range of uncertainties, hopes, and fears. Even managers who have previously been superior managers may not be the right manager for that association today. Lots of things can contribute to this situation: Board personalities change, the needs of the community change, expectations change, skill requirements change, ---- and for whatever reason and nobody's fault, the manager may simply not be a good "fit". The decision to change is sometimes initiated by the Management Company itself due to internal staffing issues such as; resignation or reassignment of the manager, inability of the Management Company to make a profit, disputes with the Board or association members, etc.

Once the decision has been finalized on who to hire as the new Management Company and the contract has been signed, you enter a very important transition period. Most condo or homeowner association BoD’s woefully underestimated the importance of the transition period, or may not have given it any thought at all. The same is true for Management Companies. Even if either party does pay attention to this transition, it almost always focuses on the technical side of the business (by-laws, past BoD meeting minutes, financial information, delinquency and violation logs, business processes, etc.). It seldom focuses on the people side of the equation (the culture, unwritten rules, key membership influencers, informal communication channels, things to avoid, etc.). Any successful transition is maximized by jointly addressing both areas, simultaneously.

No matter how skilled or competent the new Management Company manager may be, s/he will go through a normal transition period to learn the organization and to get up to speed. These first months on the job are critical to building the foundation for delivery on promises and many believe that a new manager’s success or failure is determined within 90 days on the job.

Although everyone is counting on the new manager to be successful, it won’t just automatically happen. Ensuring a successful transition not only lies with the new Management Company, but also with the association BoD. If the association BoD expects to receive a return on its investment of time, energy, and money in selecting a new Management Company, then it should be actively involved in transition the new manager and invest the necessary time. This is not the time to be supportive from a distance.

Everyone loses when a new Management Company manager fails. Goals aren't met. Members are disenfranchised. Opportunities are missed, and often lost forever. How much does it really cost? The "soft" costs of derailment can be incalculable. The "hard" costs aren't. With so much at stake, you should do whatever you can you do to get the highest possible rate of return on your new Management Company investment? More importantly, why would you leave it to chance?
An important first step is for the BoD to understand how they want to use a Management Company. Then, here are some important steps for the new Management Company manager.

• Prepare for the job – before you start the job
• Learn as much as you can about the association
• Hold a “supervisor” orientation meeting
• Conduct an “administrative” orientation
• Hold preliminary (one-om-one) discussions with each BoD member
• Be visible and talk to association members
• Make contact with professional service providers
• Conduct a Leadership Transition Meeting with key association members
• Finalize your plans with your supervisor and/or BoD
• Secure some early wins
  

10 Habits of Highly Effective Associations

Taking a page out of Steven R. Covey’s bestseller book, “7 Habits of Highly Effective People”, a similar framework can be constructed for condo or homeowner associations. This is a collection of best practices that can play an important role in the effectiveness of an association. The implementation of these best practices involves knowledge, skill, and desire. Knowledge allows us to know what to do, skill gives the ability to know how to do it, and desire is the motivation to do it. These practices have a strong track record of success and will provide any BoD a high return on their investment.

Communication

Probably the most important element in the success of any condo association is effective communications. A successful communications system can forestall the development of cliques and factions, enable the association to provide services that owners want, and can help owners develop a sense of trust with the BoD. You should carefully craft a staged communications plan that identifies what information will be communicated (new information, progress to date, anticipated problems, decisions made), how it will be communicated (personal contact, letter or email, group meeting), by whom will it be communicated (President, Secretary, all BoD), and when will it be communicated (date, frequency). You want to give the association members a steady flow of information that addresses the things on their mind along with the things that the BoD wants to communicate to them. Other communication options include:

• Go electronic. It is time for associations to go electronic. If your governing documents do not allow it, change them. There are simply too many benefits to be gained. All the association’s records should be stored in electronic form to save space and money drain.
  
• Use e-mail for correspondence and go paperless whenever it is beneficial. Depending on what your covenants/bylaws and state/local government rules state, you may also use e-mail to distribute the annual budget or notify owners of covenant violations and overdue assessments.
  
• Websites can be developed and maintained at minimal cost to condo associations. An effective website can contain viewable and downloadable copies of all of the association’s material records, such as its governing documents, meeting minutes, financial statements, permits, insurance policy, committee structure, business processes, and annual budget. It can also contain forms, copies of the association’s newsletter, a homeowner directory, an event calendar, a community bulletin board. All of these features significantly reduce the need for paper, as well as increase an owner’s ability to become involved in the community. An association website is probably the best move your association can make to improve efficiency and reduce its administration costs.

Management infrastructure

The BoD must understand how decisions will be made, who is to lead and who is to follow, the procedures to be used, the authority levels of its members, the communication system, and a host of other things that should be considered in the performance of their work. If you do not use a management company, you will have to set up your own management control infrastructure. There are multitudes of opinions on the best way to manage a business and there is no loss for management consultants or books that have been written on this subject. At the risk of adding to the fray, it is recommended that a BoD focus its energy on the following elements of a management control system:

• Setting up a committee structure. An effective committee structure helps make an association strong. Committees can lighten the load by focusing on specific tasks that are assigned by the Board. A charter should be developed for each, as well-formulated marching orders can greatly improve the effectiveness of new committees. A charter describes the purpose and authority of the committee, clarifies responsibilities, assures accountability, and creates and limits authority.
• Establishment of several key business processes. Every organization, including associations, should have a set of key business processes in order for it to function in an effective and efficient manner. These processes help define the basic management system and should be well documented, communicated, and understood by all members for them to work properly. The following are recommended; Annual Budget Preparation , Architectural Variance Approval , Assessment and Fee Collection , BoD Request for Decision , Deed Restriction & By-Laws Enforcement , Emergency Contact , Maintenance and Repair Request . If a Management Company is used, they will typically have these in place.

Decision packages

A proven way to help a BoD make decisions is with the use of decision packages that describes everything one should know about an issue, along with a recommended course of action in a very condensed format. The advance work will help you to quickly come up to speed on pertinent information, alternatives that were considered, and an analysis of the preferred solution. It will help you make effective decisions in a timely fashion and save hours of wasted meeting time trying to get the decision makers to a common level of understanding.

Clear roles and responsibilities

There are two important ingredients for a successful Board: One is getting the best people to serve as members and the other is making sure that they know what they are supposed to do. Too many Boards fall into the categories of; “rubber stamps" that dutifully follow the lead of the association’s president; micro managers" who get too caught up in the day-to-day operations of the organization and can't delegate to those responsible for making things happen; or “ineffective” who can’t make decisions, particularly tough decisions that may be unpopular with some members. One of the largest sources of conflict in a BoD occurs when the roles and responsibilities are not clear. Most by-law provisions describe officer’s duties in very broad terms, leaving lots of opportunity for role confusion, overlaps, and/or omissions. As with any effective team, BoD members can’t perform effectively if role questions or overlaps are present. Don’t leave people to figure out things on their own. Get rid of role ambiguity. Nail down every person’s responsibilities with clarity, precision, and attention to detail. There should be no question regarding where one job stops and the next one starts. A detailed BoD roles & responsibility document that supplements the governing documents should be developed and agreed upon by BoD members.

Financial health

Healthy finances are absolutely critical to the sound operation of an association. If you finances are good, it takes the pressure off and will tend to overshadow the minor issues. There are many factors that come into play, including; accounting controls to protect the association’s assets, well thought out and implemented budgets to ensure there is enough operating capital to over the ordinary expenses of the association, and detailed reserve studies to provide enough capital for future capital expenditures. One of the most important things a BoD can do is to create the right cost-conscious mindset with all association members and particularly with the BoD and the Management Company, if one is used. BoD members should continually look for ways to reduce costs and to challenge every budget line item. Any cost increases should receive the highest level of scrutiny. Ask others to justify expenditures. Always, be on the lookout for ways to cut costs, even if they are small amounts.

Rapid decision making

Making timely decisions is a major responsibility of an association BoD. If decisions are not made in a timely manner, it can lead to owner frustration, additional costs, rework, increased wait time, and a host of other undesirable things. Effective BoD’s place particular emphasis on making rapid decisions. They institute processes to facilitate quick decision making, provide pertinent and factual information regarding the issue, provide for the exploration of appropriate decision alternatives, and finally to document all of this information for future reference.

Ethical behavior

Board members are elected to make decisions in the best interest of the association they serve. They are charged with a duty of loyalty and fiduciary responsibility to use good business judgment in conducting the governance of the association. Directors must make sure that their decisions work to the benefit and protection of property values in general and without consideration of personal interest or gain. Members of the Board are protected by the business judgment rule, so long as the Board acts for the purposes of the association, within the scope of its authority and in good faith. It is not illegal to err or even cause financial loss or other harm provided that the Board can demonstrate reasonable investigation, consideration, thoroughness, and good business judgment in reaching its decisions. But, truly ethical practices require more than a fear of legal consequences or a desire for a good reputation. They require a clear understanding of right and wrong, and a motivation on the part of directors, members and contractors to act in the proper manner at all times. This means adhering to not only the letter but also the spirit of all applicable laws and regulations. A written code of ethics policy helps to maintain a culture of honesty and accountability.

Effective Meetings

Efficient and effective meetings are a hallmark of a well run association BoD. A poorly run meeting is expensive and can burn up an inordinate amount of time. Effective BoD’s first know when and when not to hold a meeting. They avoid a meeting if the same information could be covered in a memo, e-mail or brief report. They set meeting objectives before planning the agenda for the meeting. They provide all participants with an agenda before the meeting starts. They give all participants something to prepare for the meeting to assure that meeting has significance to each group member. They practice good meeting mechanics like; sticking to the agenda, starting and ending on time, making assignments for items requiring action, and taking minutes. Also, savvy Board members NEVER have the board meeting "at" the board meeting. They ALWAYS contact other BoD members in advance of the meeting to get their input and reactions to important issues that will be discussed. This can be a time to build support for a particular course of action, to identify any “blind spots” or holes that you may have missed, and to gather information that may be critical for a successful implementation.

BoD leadership, management, and involvement

The Board's main focus must be to ensure the organization is aimed at providing the very most benefit possible for the association members that it serves. It must focus on the on-going capacity to provide that benefit and to assure that the proper management and control system is in place and that it is functioning correctly. For a Board to succeed, the number one key ingredient is: Involvement. Boards fail (and, in turn, associations fail) when board members become disengaged from either the mission of the association or their role in the governance of the organization. An engaged Board does more than simply show up for scheduled meetings and vote to approve minutes and budgets. Engaged boards partake in vigorous discussions that help shape the vision and future direction of their association. Engaged Boards ask questions of their Management Company and becomes educated on the issues their association is involved in. Engaged Boards read and understand monthly financial statements and accept their responsibility for ensuring the association’s short-term stability and long-term sustainability. Engaged boards define expectations for their Management Company and confront any poor performance. And, finally, engaged Boards must learn when it is appropriate to micromanage and when it is not.

10 Best Dressed Board Member List

Non-profit condo and homeowner associations face tough challenges to stay relevant, effective and viable. Given the voluntary nature of their BoD, they can have a particularly difficult problem of getting the best people to run their business. But, what skills, traits, and characteristics do the “best” Board members have? Shown below are the “How-To Guru’s” top 10 best dressed Board members characteristics or skills that should be nurtured and grown at every opportunity.

Leadership. They help create a common vision for the association, provide clear direction and priorities, and clarify roles and responsibilities. They step forward to address difficult issues and stand firm when necessary. They can assert their own ideas and can gain commitment and support from others. They build effective teams and can motivate others. Finally, they can champion change by challenging the status quo, acting as a catalyst for change, and paving the way for effective implementation.

Motivation. They drive for results and success and convey a sense of urgency. They drive issues to closure and persist despite obstacles and opposition. They demonstrate high standards of performance, sets aggressive goals, and works hard to achieve them.

Association Knowledge. They understand governing documents backwards and frontwards and know their responsibilities and limitations. They know and adhere to state law and administrative rules. They are able to use financial and quantitative date to establish realistic budgets and manage the business of the association. They possess up-to-date knowledge of condo or homeowner association issues and rely upon expert resources when appropriate. They have an understanding of relevant issues to the association and keeps that knowledge base up-to-date.

Organizational Strategy. They emphasize the need to deliver quality products and services at the least amount of cost to the members of the association. They anticipate association needs, take action to meet those needs, and continually search for ways to increase the satisfaction level of its members. They foster the wise use of scarce resources and look for ways to do more with less. They identify critical, high pay-off strategies and prioritize team efforts accordingly.
Self-Management. They demonstrate principled leadership and sound business ethics. They show consistency among principles, values, and behavior. They build trust with others and follow through on their commitments. They handle day-to-day work challenges and are willing to adjust to multiple demands, shifting priorities, ambiguity, and rapid change. They show resilience in the face of constraints, frustrations, or adversity and demonstrate flexibility. They spend the necessary time to prepare for and attend meetings, participate in discussions, review material, and ask questions.

Thinking. They consider a broad range of internal and external factors when solving problems and making decisions. They gather relevant information, consider a broad range of factors, grasps complexities and perceives relationships among problems/issues, seeks input from others, and uses accurate logic in analysis. They make timely and sound decisions, even under conditions of uncertainty.

Administrative. They develop short and long-range plans that are comprehensive, realistic, and effective in meeting association goals. They identify and implement effective business process and procedures for accomplishing work. They assign responsibilities, delegates and empower others, remove obstacles, and coordinates work efforts when necessary. They can allocate their own time efficiently, handle multiple demands and competing priorities, efficiently processes paperwork, and manages meetings effectively.

Communication. They speak clearly and express themselves well in groups and in one-to-one conversations. They crate an atmosphere in which timely and high-quality information flows smoothly between themselves and others and encourage the open expression of ideas and opinions. They actively listen to others. They prepare and deliver clear, smooth presentations and carry themselves well in front of a group. They convey information clearly and effectively through both formal and informal documents.

Interpersonal. They relate to people in an open, friendly, accepting manner, show sincere interest in others and their concerns initiates and develops relationships with others as a key priority. They develop effective give-and-take relationships with others and balance those needs with those of the association. They identify and cultivate relationships with key stakeholders representing a broad range of opinions and interests. They use informal networks to get things done and build strong external networks with people in the industry or profession. They show and foster respect and appreciation for each person whatever that person’s background, race, age, gender, disability, values, lifestyle, perspectives, or interests.

Manage Disagreements. Conflict is part of any dynamic condo or homeowner association. It arises because people care and want to do their jobs well. Conflict is beneficial when the focus is on finding the best solution. It becomes destructive when the focus is on people and “winning.” The goal should be to avoid “win/lose” situations and to ensure there is a productive resolution of conflict. The effective BoD members bring substantive conflicts and disagreements into the open and attempts to resolve them collaboratively and build consensus.

10 Worst Dressed Board Member List

Many Board members are under qualified, under experienced or on the BoD for the wrong reasons. It is alarming how many condo or homeowner association’s Board of Directors (BoD) are populated by individuals who provide little or nothing of real value, or, worse, actually work against the interests of the association. Some of these members are born with these characteristics and some of them are home grown, after many years of practice. They frequently have little skill in group dynamics and the art of working in teams. The result is that individual Board members default to what they do best in order to control the situation. In other words, some directors revert to behaviors that manipulate others or the environment so they can get what they want. How can you spot these manipulative behaviors and how can you neutralize them. Identifying them is the easy part. What to do about is much harder. These are the “How-To Guru’s” 10 Worst Dressed Board members, in no particular order of disruptive behaviors.

Worry Monger. One of the primary responsibilities of a BoD is to make timely decisions. This ultimately requires that members take a position by stating their personal opinion or voting on a matter. This can be excruciating pain for the Worry Monger. They prefer to be non-committal, ride the fence to see what way the wind is blowing or worse yet, make no decision at all. What if I am wrong? What will other people say? How can I be 100% sure this is the correct decision? In their minds, no decision or a delayed decision can be a wise decision. They are experts at delay tactics and say things like; We need more information or data. Let’s form a study group or committee. That will never work. Let’s discuss it at another time. Sounds good, but I don’t think we can sell it. We have never done it that way before. You can easily spot them because they tend hide behind questions and rarely state what they really think. The Worry Monger can be one of the most destructive types of Board members, because they shut down effective and timely decision making.
Solution: These folks are slippery and hard to pin down. They usually have a lot of practice at shifting responsibility and in the art of delay. If they are couching their opinion by asking a question, then call them out by asking them, “What is your opinion on that matter? or “What do you think we should do?” If they are inappropriately pressing for more data, ask them, “Why would that additional information make a difference?” or “Can we make a reasonable decision now, rather than waiting for this additional information?” Many times, these people need lots of facts and information. Another technique is to document all of the relevant information on decision being requested of the BoD in the form of a “decision package”.

Dominator. This type of BoD member is in constant reactive mode and is a poor listener. S/he is often viewed as controlling, opinionated, egotistical, and uses more than her/his unfair share of air time. They can be overpowering, overcontrolling, and bossy to others. Their motto is “it’s my way or the highway!”, as they have already figured out the ideal solution or action that should be taken. They are aggressive, refuse to share responsibilities, and can be unappreciative of other’s contributions.
Solution: A BoD member or chair should speak privately to the Dominator in a “heart-to-heart” conversation that is direct, clear, specific, and to the point. S/he should be reminded that this style of managing can be very damaging to the team and the repercussions that can occur. If the dominating behavior persists, a public response is necessary. During the Board meeting, when the Dominator presents an idea, the first question the chair should ask is, “What does everyone else think about that idea?” The chair also might ask, “We have heard what (Dominator’s name) thinks, does anyone have an alternative position?” If the Dominator happens to sit in the chair position, the chair-elect — with support from other officers — may need to be the person who steps in to privately offer support to this individual by working through agendas together or serving as a mentor. S/he should be reminded as a member of the BoD group; they do not have a special privilege to pursue personal agendas or ideas not commonly shared as priorities of the whole.

Seat Warmer. These “do-nothings” rarely challenge/probe or come out from their hiding. They avoid work like the plague and can sit through an entire meeting without saying a word, causing the rest of the BoD to wonder why even bothered running for the Board. This individual may not pay attention during meetings, typically does not follow through on assignments, and exhibits great amounts of apathy. They may be in over their head or totally out of their league of capability. Overwhelmed, s/he shuts down, withdrawing from participation.
Solution: Although this type of member is not usually destructive to the Board, they are also not a contributor, leaving the bulk of work to others. If they are out of their league, they might benefit from educational and training materials. A fellow Board member might serve as a mentor to them for a period of time by walking through the agenda, sharing methods for reviewing Board materials, and debriefing after each meeting. The chair could draw the person out by asking them for their opinions during a meeting or praising them when they offer one that is unsolicited. If they refuse to do any work, ask them why and reinforce that everyone has to carry the load. Continue to ask them to perform duties that are within their capability and thank them when they agree and particularly if they complete an assignment.

Weak-Kneed. These individuals live in fear of being person­ally tainted by any kind of controversy. They lack a key characteristic of any good BoD member— courage. With every challenge they begin hyperventilating for a settle­ment, even if it means selling out on principle or against the prevailing better judgment. They avoid risk and never take a stand in the face of ambiguity or adversity. They do not confront problems directly and rarely take action based on what they believe is right.
Solution: These people need lots of reassurance and reinforcement. Encourage them to take calculated risks and ask themselves, “What is the worst thing that could happen?” Then, help them decide if proceeding is worth the risk. Championing something that one believes is right or important requires conviction. It is not always easy to go against the mainstream or choose the more disruptive course of action. Therefore, helping the person to know what is most important to them will strengthen their convictions and values. Ask them questions like; What is most important to you? What do you value the most? What is worth “fighting” or standing up for? On which of you values will you never compromise?

One-Trick Pony. The One-Trick Pony Board member is truly excited about being on the BoD because s/he can help "get the right things done," but he has no idea how to go about governing an association or running a business. S/he comes to the Board one or two issues, which suck up endless discussion time meeting after meeting. The person's narrow focus is an obsession in his/her life, and s/he draws it into every conversation. S/he also misinterprets Board materials related to his/her pet issues and fails to read unrelated Board materials prior to the meeting, which results in unpreparedness.
Solution: The short-term solution with this type of Board member is, first, a private conversation acknowledging the problematic individual's concern, defining the inappropriateness of the behavior, and emphasizing the need to read materials and address issues that cover the entire range of the association’s business. Second, if One-Trick Pony remains so, then during the meeting the chair can appropriately and tactfully restate the opinion expressed by the individual and directly ask the relevance of the statement to the current debate. Long-term, the options are few. If a BoD decision has already been made on the person’s pet issue, then reinforce that the decision has already been made and that it will not be revisited at this time. Try to convince them to recognize that the association has competing priorities and that the Board's job is to focus on the big picture. Such understanding comes with persistent, consistent Board training.

Nay-Sayer. This type of Board member is critical of almost any idea or solution offered, turning complaining and whining into new art forms. A Nay-Sayer often rolls his/her eyes, shakes his/her head, or inhales loudly with dramatic flair but offers little to advance the conversation. They discredit ideas before they’ve been fully explained and have a complete fear of the unknown. Their favorite phrase is: "That’ll never work."
Solution: The chair should provide a safe, open forum to air each BoD member’s comments and encourage the Board to actively listen with an open mind and suspend personal judgment until all ideas have been fully explored. The chair also should employ the Board's rules of engagement to ensure that diverse opinions are shared. When the Nay-Sayer finishes nixing, the chair should ask if anyone perceives positive aspects in the concept presented.

Flame Thrower. The Flame Thrower is volatile. They appear to have no impulse control or self-discipline and are intent at tearing things down. They often make outrageous statements, feed the rumor mill, and are driven to comment on anything and everything. They are often characterized as "troublesome” or “loose cannons,” since they exhibit unfocused, unpredictable, temperamental, and egotistic behaviors. They are aggressive and believe that a strong offense is a good defense.
Solution: The worst thing you can do is ignore the situation; it will only burn further out of control. The first step is a private conversation focused on the how this behavior is disrespectful to other BoD members. The chair should address the concerns of inappropriateness and review the rules of engagement for the Board. Publicly, the chair must not react to the inappropriate remarks or escalate the situation. Instead they should douse the situation by trying to stay focused on the big picture or the particular agenda item being discussed. They should enforce the rules of engagement (i.e. Robert's Rules of Order) so the BoD may have an orderly, balanced debate. If the situation becomes out of hand and all means of control have been exhausted, then it is perfectly acceptable for the chair to threaten to end or actually end the meeting right then and there.

Pontificator. This type of BoD member is an expert at distracting a Board and taking them off into the weeds of Never Land. They do not follow an established agenda because they are too busy promoting their own interests or issues that are important to them at the time. They will often give their opinion on such things as “matters of state,” world events, social trends, the association’s history, or his/her own area of expertise. They like to hear themselves talk and burn up the valuable time of the BoD on unrelated topics.
Solution: The best way to assure that no one derails a BoD meeting is to first have an established agenda of topics and expected durations. You now have a basis for keeping the meeting on track. When the Pontificator starts to take the meeting in a different and unrelated direction, the chair should ask him/her, “How is that related to the agenda item that we are now discussing? If it is not, then let’s get back on track.” or something like, “That is very useful information, but let’s get back to our agenda item.”

Secret Service. Closely related to the Worry Monger, this type of BoD member is always looking over his/her shoulder and is shrouded in secrecy. Knowledge is power to them. They hold things very close to the vest and only give limited amounts of information to association members. Their motto might be, “What they don’t know won’t hurt them.” or “That information is on a need to know basis, and they do not need to know.” Another factor might be that since they do not want to look like they don’t know what they are doing or open themselves up to criticism, they should wait until everything is thoroughly checked, verified, and finalized.
Solution: Progressive BoD’s must realize that timely communications to their association members is not only a responsibility, but also a duty and requirement for running an effective association. The Secret Service members should be reassured that it is in their best interest to help alleviate the fears and concerns of association members. They should be encouraged at every opportunity to communicate early and often. They must be helped to realize that it is OK to sometimes to put out “half-baked” information as long as they tell association members that everything has not yet been finalized and things could change.

Sensitive Tooth. Any strength can also be a weakness and this type of BoD member can be overly sensitive to the needs and concerns of others. They become “shrinking violets” whenever a tough decision has to be made, particularly if it involves people. Their judgment becomes clouded because someone could be hurt, even though it may be in the best interest of the association. They can be at a loss when confronted with situations that require basic technical expertise or clear thinking. They may sweep problems under the rug when in conflict, may ignore the task in favor of relationship issues, and may take criticism personally. Unfortunately, this approach to problems won’t get them resolved, they’ll only grow.
Solution: These BoD members may need encouragement to recognize and pay as much attention to the details of the task as to the people. Help them understand that criticism or rejection is often objective and should not be taken personally. If they are uncomfortable making unpopular decisions, then don’t put them in the lead position for making them, if at all possible. If this is not possible, come to their rescue and don’t leave them hanging on a limb when confronted by angry association members.

Even though this is 10 item list, I will add an 11th.
Incompetence. There is no way to “sugar coat” this type of BoD member. They are in way over their head, which may be the result of no one else volunteering for the position or a miscalculation on their part of their own capability to perform the job. These are not necessarily bad people and their hearts are very likely in the right place. But the fact is that they may not have the necessary skills, experiences, or temperament to be an effective Board member.
Solution: Try to use these people for non-critical activities and minimize the damage that they could do. There is usually enough work to go around for everyone and you certainly do not want to discourage a “willing worker.” If this is not possible, then you may have to spend time and effort in mentoring and educating this Board member. If that does not work, you may have to employ “work around” strategies and hope for a quick replacement.

It's OK for a Board to Micromanage its Management Company!

We have all heard it before. Micromanagement is mis-management. It is bad for a condo or homeowner association Board to micro manage its operations. Just get out of the way and let the people do their jobs. This cry is particularly loud with Management Companies or property managers. They say, empower your employees and give them the freedom to explore, own the problem, deliver and sometimes, fail. Don’t watch over their shoulders and don’t try to jump in and fix problems as soon as you see them. Hands-off management leads to success.

Ideally, this is a great idea. The problem is that not all Management Companies can handle high levels of independence at all times. There are situations when they need help, oversight, and yes, even someone watching over their shoulder. Too many Boards blindly abdicate their responsibilities to a Management Company. This is wrong! When Board members are elected as the association leaders -- then they should lead the association. Many Boards simply choose not to lead. They believe that if they hire a reputable Management Company then the management of the association will take care of itself. Do not sit back and be the victim of a Management Company’s “standard practices”, lack of cost cutting aggressiveness, poor performance, or profit making motives. It is not in the best interest of your association and you must do more than loosely manage your Management Company. In order to do this, you have to stay “connected” and on top of what is happening in your association.

The universal fear of micromangement comes from stories of almost legendary failures associated with overbearing, in-your-face managers who feel that knowledge and control equate to power. This can be a huge management issue that frequently leads to under-performing organizations; however, it is not the only characteristic of poor Board management. Just as bad is a Board that is too timid to get involved with how a Management Company is managing their operations or with key projects that commit substantial association resources. If a Management Company lacks experience in certain areas or is not delivering the expected performance, then a responsible Board must intervene.

There are number of other reasons why a Board may feel that it should micromanage their operations, including:

• The board has no clear sense of its role in the organization / Board Members think this is what they should be doing.
• The board has no policies (rules) that delineate appropriate roles for staff vs. the board.
• Management of day-to-day work is what board members know from real life.
• We've elected them on the board to perform a task, not to lead.
• Fear that if they don't do it, no one else will (or no one will do it as well).
  

Shown below is a four-quadrant chart that can help guide when more active management involvement or micromanagement is required on the part of Board members.

Generally speaking, if Management Company has loads of experience and is a high performer, the Board can give that Management Company a lot of freedom, simply checking on progress now and again. This can be done primarily with a variety of periodic management reports along with regular personal contact on how things are going. In this situation, limited micromanagement is a good way to (a) stay on top of some of the details of the business, (b) determine whether a Management Company is doing things that they should be doing, (c) remind the Management Company of how much autonomy they actually have! The idea is to just jump in, ask a bunch of questions, and see if things match up the way they should. If so, jump right back out. If not - time to dig deeper.

If an experienced Management Company is not performing well, however, the Board needs to more closely and actively monitor the Management Company efforts and use that increased attention to try to bolster that Management Company performance. Performance reports should be used to gage performance and to point out any shortfalls that are being experienced. The Board should also make sure that performance expectations are clear, so that there are no misunderstandings.
Inexperienced Management Companies need to be managed in a very different fashion. Those who are high performers need to be given more freedom and room to experiment and, perhaps, experience small failures. The underlying management style should be one of teaching and guiding. These Management Companies don’t enjoy the freedoms of their experienced compatriots, but they still get a lot of freedom. They should rely upon the experience of existing Board members or draw upon industry best practices.

If an inexperienced Management Company is performing poorly, however, the Board needs to virtually remove all freedoms from their environment and micromanage the Management Company by working with them on a task-to-task basis. There is simply too much at risk to abdicate their responsibility. If a Management Company stays too long in this quadrant, then they should be prime candidates for replacement.

Micromanagement, therefore, is needed in the low-experience, low-performance quadrant and, to some extent, even in the high-experience, low-performance, actively monitor quadrant. More importantly, the Board’s style needs to be different for each of the four quadrants. Even Boards that understand the basics of this need often miss that an experienced Management Company may need to be closely managed as a result of poor performance. Similarly, an overwhelmed, inexperienced Management Company can easily slip from being a high-performer to a low-performer, requiring more attention than before. Again, any low performing Management Company for extended periods of time should be prime candidates for replacement.

Condo and homeowner Boards need to be in tune with what is going on with their association and their Management Company, and adjust their style and effort accordingly. Sometimes, micromanagement is absolutely the right management tool for the job at hand. It should, of course, be used sparingly and its primary motivation should be to move the Management Company into a quadrant that gives them more freedom to learn and excel.

If Boards are inappropriately micromanaging because they don't know what else to do, then the obvious solution is to show them a different role. If Boards micromanage because they are concerned and/or scared, then the obvious solution is to allay those fears. Finally, if Board members micromanage because they have been asked to act as staff, then the obvious solution is not to ask them to perform staff functions.

The Board's main focus must be to ensure the organization is aimed at providing the very most benefit possible for the association members that it serves. It must focus on the on-going capacity to provide that benefit and to assure that the proper management and control system is in place and that it is functioning correctly. For a Board to succeed, the number one key ingredient is: Involvement. Boards fail (and, in turn, associations fail) when board members become disengaged from either the mission of the association or their role in the governance of the organization.

An engaged Board does more than simply show up for scheduled meetings and vote to approve minutes and budgets. Engaged boards partake in vigorous discussions that help shape the vision and future direction of their association. Engaged Boards ask questions of their Management Company and becomes educated on the issues their association is involved in. Engaged Boards read and understand monthly financial statements and accept their responsibility for ensuring the association’s short-term stability and long-term sustainability. Engaged boards define expectations for their Management Company and confront any poor performance. And, finally, engaged Boards must learn when it is appropriate to micromanage and when it is not.