October 11, 2005
Why did they leave?
I was talking with a manager that I've known for more years than either of us care to remember. She had left the firm she had been with for 15 years and started her own company. We were discussing the fact that the number of community association management companies in our market had doubled in the last year and that the majority of them had been started by people like her, experienced managers who, for whatever reason, decided to make a go of it on their own. Hurt feelings, turf wars and a leveling of fees has resulted.
Managers leave companies for all kinds of reasons: better opportunities elsewhere, burn-out, personality conflicts, incompetence, pay ceilings, new challenges, and so on. I'd like to look at the group that CEO's would like to keep and kick around some ways to do so.
What do you do with the manager who has been with you for 10 or 15 years and has hit the top end of the pay scale? Few associations are willing to pay the premium for that experience for more than a few years. Sooner or later, a new board starts comparing costs with nearby associations and figures that experience isn't worth the cost. You then have to move a lower cost person in and then find additional income to cover the long-term employee or coming up with some stop-gap measure that is rarely satisfactory to either party. Companies will often start up branch offices with that person heading it up, but even that has limits....where do they go from there?
Here's an idea to think about, why not let them run their own company as a subsidiary of yours, rather than watching them become a competitor? I'm not talking about a partnership....most mangement company owners are alpha-types who don't play well with others. Instead, form a reasonably independent firm that targets a niche market that you would like to get into. Instead of trying to fit high-rise management into your firm which was built on HOA management, let the new firm specialize in it. Specialization is an attraction to clients. Lets face it, who would they rather contract with, a firm that does nothing but high-rises or a company that has one or two in their portfolio.
You can share computer networks, financial managment and maybe some other back office systems, but in the front of the house they can design and build the company to fit their niche. It beats trying to pack a new market into a structure designed for something different, which never quite seems to work as well as you want it to.
How you choose to structure this new entity is up to you, although it should be created to succeed, not loaded down with obligations and requirements that restrict or frustrate it. Whether you choose a completely new name to help it with its new market or whether you want to keep some semblance of your existing name for branding is up to you. I think that a new name, followed by "A subsidiary of ....." might accomplish both purposes.
Give your best people a chance to live your lifestyle. It's a better option than facing them as a competitor.
Posted by joewest at 12:53 AM