An interesting feature of homeowner associations is that they are either self-managed or managed by a community association management firm under the direction of elected volunteers of various backgrounds.
Experience has shown that there are some drawbacks to this concept:
- Many associations are run more as social organizations instead of business enterprises that are comprised of assets often valued into the millions of dollars.
- Continuity in running a community association is often difficult to maintain because board members usually serve for a few years at most and there are turnover issues with professional community association management.
- Board members and managers often lack training and education.
The Community Association Institute offers professional training for managers and board members. Listed below are some pointers taken from its’ M-! 00 course material. (A highly recommended course for new board members and managers.)
What are some of the signs of a weak or ineffective management situation at a community association?
- An increase instead of decrease in action items carried over from one board meeting to another.
- An increase in unit owner attendance at meetings and complaints about poor service.
- Untimely or no response to maintenance requests.
- Inability to fill board positions – or resignations due to “personal” reasons.
- Surprise assessments or unexpected financial shortfalls.
If community associations such as condominiums and planned unit developments are considered non-stock business enterprises that are often valued in the millions of dollars, then it is necessary to measure performance of how a property is being run and have plans for maintaining and enhancing values.
There are several methods for measuring management performance whether self-managed or managed by a professional management firm.
One is an owner survey and the other is a management audit.
A management audit, sometimes called an operational audit in the commercial world, is a useful tool for measuring performance. These are the factors that are included in a review of an operation:
- Review and updating of the association’s governing documents including rules and regulations.
- Appearance and physical condition of the property .
- Owner/resident satisfaction.
- Financial condition.
Once a management audit has been completed the board and unit owners should have a good idea of where there association stands and what action may be required to shore up weaknesses.
The results of the management or operational audit would be a major input to an annual management plan.
An annual management plan is a statement of goals and objectives and includes a yearly cycle of tasks.
As stated in the M-100 syllabus, a management plan addresses a community association’s administration, governance, and community aspects.
These are the typical areas that would be included in the annual management plan:
- Rules and regulations – enforcement policies and current applicability.
- Repairs and upkeep programs.
- Vendor services.
- Communication programs for the unit owners and residents.
- Finances – Adequacy of budgets, replacement fund analysis, monthly fee collections.
- Administrative activities – meetings, elections.
- Insurance and risk management.
Periodic performance reviews and an up to date management plan will help to provide objective measures and guidelines for board members and managers.
If commercial enterprises find it useful to prepare plans and review performance, then community associations should too. The benefits far outweigh the effort and expense.
Walt Williamsen has vast experience as a property manager. He has been active with CAI-CT for many years, serving as President from 2001-2003. Walt is a frequent speaker at CAI-CT seminars and he coordinates our popular Ask the Experts: Leadership Forum program. Walt is the owner of Condominium Consulting Services, LLC.
