In 1974, Peter Drucker, a well-known management consultant and author of more than three dozen books said, “There is one thing most boards have in common; they do not function.”
While Drucker’s blunt assessment was aimed primarily at corporate leadership, his analysis is apropos when talking about condominium and homeowners association boards as well. While every board and every residential community is different, the best, most effective boards often share the same set of traits—and the same is true of the worst ones. That’s why it’s vital that boards have a solid plan and do things right, and avoid conflicts in their buildings. Because unless a board runs its community in a fair, functional, and solvent manner, things can go haywire—fast.
“One of the biggest ways to be successful is teamwork,” says Lea Marcou, community association manager for Associa Chicagoland. “I know a lot of times board members disagree, and it’s fine for them to disagree and share different opinions, but they need to do it respectfully. It doesn’t do anyone any good if they are yelling. It doesn’t look good to the homeowners who attend these meetings, and it doesn’t accomplish anything.”
Asa Sherwood, president of FirstService Residential Illinois, characterizes a successful, functional board as one that is professional, having timed agendas and a plan in place for every board and resident meeting.
“It starts with the mindset of having board members interested in running the association like a business,” he says. “If not, it’s hard for them to get going down the right path. Oftentimes, board meetings get sidetracked because there isn’t strong leadership, the agenda is not set correctly, and the board is fighting for three hours. That shouldn’t happen.”
Other traits shared by successful boards include paying attention to good advice and guidance given by professionals, having consistency in following policies, and respecting fellow board members in spite of differences.
Andrea M. Sorgani, president and community association manager for ALMA Property Management, a division of RealManage, LLC, notes it’s important to run a community in a fair, functional and solvent manner.
“Be fair to all, and do not deviate based on any prejudice—i.e. just because an owner is very nice but has a renter who is not, is not a reason to not enforce the rules,” she says. “Just because an owner is rude, indignant and does not want to follow the association’s policies is no reason to deviate from the consistent practices of enforcement with civility and fairness.”
Strength in Diversity
One of the leading characteristics that makes a board successful is having members who come from diverse personal and professional backgrounds. Another key is working together and not going against the grain, says Jory J. Carrick, the president of Williamson Management, Inc., in Bensenville, Illinois.
“My definition of success would be every board member understands their role, works as a great team, and really works for the betterment of the association in the short and long term. They also must have an historical understanding of where the association is, and they have a good plan of where it needs to go, and they all work in unison in trying to get there.”
A board that’s top-heavy with accountants, or engineers, or retired teachers may lack the breadth of experience—and variety of ideas—that will be found on a more well-rounded board. Since every board member brings his or her own professional and personal experiences to the job, with a wide range of backgrounds, it’s more likely that new ideas will surface. At the same time, it’s essential for those people to be willing to listen to each other’s perspectives.
That leads to another characteristic of successful boards: Openness, and an interest in continuing education and training for board members to help them better serve their community.
Michael D. Baum, president of Baum Property Management in Aurora, Illinois, notes that very few new board members know that the Illinois Condominium Property Act and the Common Interest Community Association Act supersede their governing documents.
“They often do not know what a limited common element is, and what a reserve fund is, let alone the proper method of funding it,” he says.
Cheryl Murphy, executive director of the Illinois chapter of Community Associations Institute (CAI-IL), notes the most successful boards educate themselves on the best practices for running their associations.
That’s why the organization offers board member education in the form of a seven-course series called Dedicated Community Association Leader (DCAL), which covers understanding financials, meetings & elections, governing an association, insurance, ethics, and more.
“Sometimes people join their boards before they fully understand what is required to be successful,” she says. “After taking 22 hours of education a board member can earn the DCAL recognition and be assured that they have the knowledge to be a successful board member. Those who don’t want to take advantage of the full series can educate themselves with individual courses, online, or at homeowner forums.”
Sorgani says it’s important that all board members are aware of the rules, and understand the CICAA and ICPA, and be consistent in following the guidance and laws these documents provide.
The Right Way
Sherwood notes boards should adopt and follow streamlined communication protocols with both residents and management, and this includes having one point of communication between the board and property manager.
“Another piece that all strong boards have is the ability to plan and execute on capital projects. It’s a huge part of being on a board, and it’s an area I don’t think enough time is spent on,” he says. “That means not only having a plan for this year, but the next five years.”
Board members don't have to agree—but they should respect each other’s' differences and work toward the benefit of the whole community.
“What we’re seeing in Chicago is a respect for each other’s roles,” Sherwood says. “Whether it’s board member to board member or board to resident, or even board to management. What we have found with the very successful boards is that people understand how much time the boards are putting into the association.”
Another important thing for boards is to budget for actual needs of the association—and not try to cut corners to avoid having to raise fees or level an assessment on owners, either to avoid resident pushback against an unpopular decision, or even out of genuine sympathy for residents of limited means.
“If the dues need to be higher in order to maintain and sustain the community, then the board has to fulfill their fiduciary responsibility,” Sorgani says. “This does not mean that you cannot come up with a viable plan of operation that may allow for a stepped program in raising assessments, or a one-time special assessment. Know what your plan is before you endeavor to finalize any financial plans.”
Baum believes that the best-run boards should develop and codify policies for the management company as well. He feels that written policies will properly communicate the way they want the association to be managed.
“After the board has developed a set of policies, it is the role of management to comply with those policies (if sound and reasonable), and it is the role of the board to monitor the results to make sure that the management is carrying out the established policies,” he says. “This allows the board to free itself from the operational details and tasks of the association, allowing it to focus on mission, strategic goals and results.”
The Wrong Way
Of course, crystal-clear communication, fairmindedness, advance planning and airtight organization are all ideals—and even well-intentioned boards don't always measure up. Common mistakes or pitfalls that boards make, according to Sorgani, are fighting, having personal or hidden agendas that are not good for the whole, micro-managing their community's outside professionals, and not being consistent in following rule enforcement.
The biggest complaint about boards usually concerns communication. That doesn’t mean there needs to be a glossy newsletter going out each week with details on what’s going on, but there should at the very least be a memo that’s available after each board meeting to alert residents as to what’s going on. These can be posted in the elevators or emailed to each homeowner.
Marcou says that a board should make conversations transparent and not try to do business behind closed doors. Even if nothing shady or questionable is going on, it simply doesn’t reflect well if it looks like they are trying to keep things from non-board residents.
“It’s very tempting to try and approve something by email just to get it done, but again, it’s about the transparency and following the right procedures so they don’t get in trouble for approving everything in an open forum,” Marcou says. “Unfortunately, that can come back to bite them.”
Sherwood shares another common mistake among boards that aren’t doing well: being too political.
“Board members sometimes try to be popular, whether it’s for the betterment of the community or not,” he says. “For example, maybe the board doesn’t increase assessments for five years in a row, and tout how they are heroes for doing that, yet they are disregarding the capital projects they should have been planning for.” Whatever goodwill may have been accrued through freezing fees quickly evaporates when residents suddenly get hit with a big assessment out of the blue.
Another issue that will send a board down the road to dysfunction, acrimony and even legal trouble is uneven or selective enforcement of community rules. “If the board decides to enforce a rule, they can’t do it because there’s one person they are unhappy with,” Marcou says. “They need to be consistent. If they are telling one person they have to paint their door, they better be treating everyone equally and think about the fairness to the whole association.”
Baum adds that a dysfunctional board is when there are five people trying to give direction to the manager. “We try to streamline that communication because once you get too many chefs in the kitchen, it becomes way too complicated,” he says.
A Strong President
A sign of a strong, functioning board starts with a capable board president.
“You need someone with a strong personality who is able to control the chaos and guide a conversation constructively,” Sherwood says. “Conflict can be good—but only when debated in a controlled way, and with a path to an end result. But it can often take over a meeting. A major function of a board president is to chair the board meeting and continue on with the agenda in a professional manner.”
One of Sherwood's properties is Century Tower in Chicago, which has a seven-person board with a strong board president. “We know that all communication and direction comes from him in a clear and concise manner, so we know we are working on the true priorities of the board,” Sherwood says. “That is something that helps any board stay on top.”
The Last Word
A person who joins a board should be someone who is interested in the physical, fiscal, and social well being of the community. They are to be involved and share their talents to the best use of the board.
“This is not to be a context of personalities that shine, or a popularity contest,” Sorgani says. “This is a serious role that a person undertakes when they agree to serve on the board. Work together with civility, respect and a common goal for the good of the majority.”
Sherwood adds that it’s important for everyone involved to understand that the board and management are on the same team. “Everyone is working together for the betterment of the association and successful boards will work alongside management, rather than against them.”
Keith Loria is a freelance writer for The Chicagoland Cooperator and other publications.