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March 22, 2007
What You Should Know About Your Manager
About 50% of the community associations in the United States have managers. These may be employees of the association or they may be employees of a firm contracted by the association. Whichever, there are a few things you should know about them which may help make the relationship smoother and ultimately benefit the association.
Managers Come From Varied Backgrounds
There are no college or trade school courses that help prepare someone to become a community association manger (CAM). Most training in management occurs after they've been hired, either through the company they're working for, or local or national trade associations like the Community Associations Institute. There has never been agreement as to what type of background contributes to making a successful CAM. Some companies prefer to hire people with a background in service industries, such as hospitality. Others look to people who are strong in maintenance. Some prefer retired military, or those with experience in municipal or county government. Surprisingly, few look to the rental or commercial management industry. The point is, if you have a reasonably new manager, they are going to have some strong points and some weak points for the first couple of years. If they are employed by a management firm, the firm usually provides support and training for the weak areas.
A Manager Is A "Generalist"
To manage a community association, a manager needs to have some knowledge of landscaping, engineering, architecture, mechanics, law, finance, taxes, government, personnel, psychology, psychiatry, leadership, parliamentary procedure, negotiation, contracting, aesthetics, technology, ecology, sociology, and a few other -ologies I can't even remember. The liklihood of finding a manager who is an expert in all of these areas, is nil, especially geiven the industry pay scale. So there are going to be times when they can't answer a question off the top of their head. What they should be good at is finding the information that will allow a board to make an informed decision. If you want to take advantage of that strength, then don't wait until the board meeting to ask a question. Give them the question in advance of the board meeting and you're much more likely to receive a good answer.
A Manager Is NOT An Attorney or CPA
Taking the last item a little further, I've never run into a board yet that likes spending money on legal or financial advice. As a result the manager is often asked questions that they should never attempt to answer. Not only are they not qualified to give certain advice, but they could end up in serious trouble if they do. It's called "practicing law without a license" and the legal profession takes it very seriously. If your manager tells you that they can't or won't give you an opinion regarding an issue that involves the law or an audit or taxes, they mean it, and a board should understand that and go to the people who are qualified to do so.
Your Manager Probably Won't Be With You For A Long Period
This is very true for portfolio managers, those that work for a management firm. The finances just won't support it. While there will always be exceptions, you'll probably find yourself with a new manager every 2-3 years. Why? First, this is still a new industry, barely 35 years old, that is for the most part unregulated, misunderstood, and underpaid. The people who enter it do so with a minimal understanding of what's involved, since their are no college or other courses that provide some insight into the industry. It has a very tough learning curve, demanding a lot of time and aggravation. As a result, some people give up quickly. Others, who stay, find that the pay often doesn't reflect the work load and expertise demands.
One scenario that is constantly seen is the association that has a good manager. After 2 or 3 years, the association may find that the manager is promoted within the company and no longer manages as many, or any associations. Or, since the management firm has to annually raise the manager's pay in order to keep him or her, the association may no longer wish to pay the subsequent fee increase, and so the manager is re-assigned to an association that will and you find yourself with a new manager who is probably less experienced. This often leads to dissatisfaction with the company and the association going to the market for a new company.
There are some specific market exceptions to this. Areas that have a high number of older associations that have been through this cycle a number of times have often come to the understanding that there is a cost involved with expertise and stability, and have made the decsion to pay that cost.
The Manager Is Not Responsible For the "Success" or "Failure" of the Association
Although they may have a significant impact, the manager executes the decisions of the board. The board is ultimately responsible for what occurs. Good boards find and keep good managers and get rid of bad ones, bad boards don't.
Managers Don't "Run" The Association
They may be at the other end of the phone when you call, but they work at the pleasure of the board. In monitoring some of the forums dealing with HOA issues, it is surprising how often the comment "the manager running the association" appears. Often they are the most visible figures, or the ones who sign the violation letters, and so the assumption is often that they are "in charge". While there are board's that, by virtue of ignoring their responsibilities, effectively give over the running of the association to the manager, the best association's figure out that the manager is an integral part of the overall team that is needed for the best chance at success.
Manager's Are Human
They have good days and bad days, successes and failures, hits and misses. They make mistakes (remember they're not experts in everything), but they usually have many more up times than down. They are human - if an owner berates them at a meeting, for something real or perceived, they're going to feel it, and react. Like board members, they prefer "no surprises", especially those from board members who seem to like popping unexpected questions at board meetings.
Managers' Work Best When Part of a Team
Manager's know they work for the board (yes I know, technically they work for the association, but the board is empowered to administer the affairs of the association and that includes management). They like clear, concise directions, clear lines of authority and communications. They prefer to be talked to, not around or about. They would prefer to work with you, not without you.
Just some things to think about when you think about your manager.
Posted by joewest at 10:39 AM
March 18, 2007
Follow the Money Trail - Part II
Our last posting (way too many days ago) commented on the rash of embezzlements and other financial misappropriation's that had occurred. Since then a few more have surfaced bringing the total to seven in the last month. All were apparently by people who had worked with associations honestly for years. Some were caught by internal processes, some by external. Its really not all that hard to steal money from an association. It is hard to do it over a long period of time or for large amounts. The first time I ran into it was over 30 years ago when a VP and partner in the management company I was working for got caught submitting false invoices to associations for work that wasn't done. He got canned and the money was returned, but they never took criminal action against him, which was too bad, because the next time I saw him he was an Undersecretary at HUD during the Reagan administration - you all remember that scandal - guess who was front and center?
But its not just the management companies - President's and Treasurer's are finding ways to make their lives just a little more comfortable. It happen's the same way it does in hundred of thousands of companies across the U.S. every day. My wife commented the other day about a new employee who had been given a cell phone by the company to use for company purposes. This was clearly spelled out. When her first phone bill came in it was over $500 and when the company billed her $480 for the personal calls, she was the one upset.
Ethics is something that isn't taught in schools, at least in a formal class. Its supposed to be taught at home and in the church. But parents don't teach their kids much anymore, 50% of them aren't around, and even when a kid has both parents often they're both working so much and running so many errands that the only lesson that gets taught is how easy it is to get away with something since few are watching and fewer seem to care.
If I say that there has been a noticable decline in ethics during my lifetime, I start to sound like my Dad. Which means that if both of us are right (and we usually are), we shouldn't be so surprised when the periodic embezzlement pops up, its really just a sign of the times - Enron steals billions, board President steals thousands. I guess that's why I feel a little better when an association management company wins a national business ethics award. Some people are fighting the the tide.
If we see a few more companies or association officers get caught with their hands in the cookie jar, I think you're going to see state versions of Sarbanes-Oxley, with management company CEO's and Association President's having to sign off on annual financial statements swearing to their accuracy.
The formula for safety is simple - pay attention to what you're supposed to and have somebody from the outside look over your shoulder now and then. If you're not going to do it, then have the decency to tell the association so they can get someone who will.
Posted by joewest at 9:18 PM