Have you ever spoken to someone who had once been involved with community association management and who has since moved on to something he or she claims is more fun and profitable? A quick way to get them reaching for the antacids is to remind them about the old days as an association manager: meetings until 1 a.m. , phone calls from irate homeowners, malcontents attempting to recall the board of directors or fire the manager. The list could go on and on.
Mylanta might not be enough to treat their pain: They may need to apply a cold pack. Often these folks ended their community association management careers simply because they "failed." Along with their personnel, they may have not been properly trained in some of the more important aspects of the trade.
They may not have understood that community association management is a service business much like the hotel or hospitality industry. Many managers neglect this fact—to their peril—focusing almost solely on standard, technical, day-to-day functions of rules enforcement; performance against budget; maintenance plans; and the like.
Community association management places a priority on service—not financials, budgets, buildings and grounds, or rules. Managers take care of people in their most personal of all areas— their homes and neighborhoods. This chapter outlines several positive suggestions that will help managers, management companies, and even self-managed associations to proactively put service first for their customers, the homeowners.
Hire Attitudes
Possibly the most important lesson for management company chief executives and department heads is to hire personnel who are successfully involved already with community management or who come from people-oriented professions such as the hotel or hospitality industry. Herb Kelleher, CEO of Southwest Airlines, may have said it best: "We hire attitudes." You can teach technique easier than disposition.
Fabled Service, an analysis of Nordstrom's success by Betsy Sanders, found that the key is "the employees' freedom to focus on the vision: excellent customer service under all circumstances." Sanders quotes Albert Schweitzer: "There is no higher religion than human service. To work for the common good is the greatest religion."
It follows that a community association management company's vision statement must emphasize service to the customer. Once that vision is embraced by all managers, the outcome becomes a fait accompli.
Change Focus
Much has been written recently on the topic of managers focusing on "building community" as opposed to the old standard of enforcing covenants, conditions, and restrictions (CC&Rs). The two are not mutually exclusive and actually work together hand-in-hand. This "new" concept is really nothing more than a change in emphasis—toward service rather than technical efficiency.
The community association management industry is changing whether managers like it or not. This evolution derives from customer demand. The "building community" theme is simply a market response to changing demand.
Regrettably, there are still many misconceptions about "building community." It is not an effort to be all things to all people, or an attempt to manufacture harmony by getting together in the common area each Friday night to sing campfire songs. Quite the contrary.
Building community is about justice in rules enforcement, not just punishment and "sending a message." It's about flexibility and reasonableness, not "who carries the biggest stick." It's about facilitating, not ruling. It's about alternative dispute resolution. Most of all, it's about a greater commitment to customer service, that is, service to the homeowner.
Comments on Community Building
This has been a hot topic at the Community Associations Institute's national conferences and in CAI's bimonthly magazine, Common Ground.
Bill Overton, PCAM, correctly states: "It is time to take our association management services to another level." We need to be emphasizing harmony and improved neighbor relations. How you do that is simple: education and open communication. Service needs to be a priority for management and its boards of directors every day, all the time. A flight crew reviews every item on its checklist every flight before it cranks up the engines. We must too. Developing "vision" statements that emphasize service, communications, and loving thy neighbor should be a "no-brainer."
As Brent Herrington, PCAM, says, "It's up to us as managers to provide this leadership, to take a more holistic approach to community association management." Managers are the ones who must articulate this approach during the homeowner orientation process, and stress it during the strategic planning process. Managers must set the tone of service orientation.
Certainly there is merit to some of Larry Pothast's "rugged individualism" concerns, outlined in a letter to the editor of Common Ground: "Individualism is a fundamental need of all people. Boards would do well to impose fewer restrictions...." Unfortunately we are at the mercy of developers and lawyers in regard to this obstacle. This is where the education must start.
If the community's founders create unreasonable restrictions and rules, it is predictable that board members will believe that it is their duty to enforce and promulgate these rules. The only way to prevent unreasonable rules from being foisted on a community is to have community managers give their input at the association's design stage. Managers, fully educated in the school of hard knocks, know what works in an association and what doesn't.
Pothasts' comment that "The idea that any board or manager can (or should) nurture and satisfy the personal and social needs of all its members is doomed to failure" misses the point. Building community means educating members to be good neighbors—nothing more. To reiterate, if opening communications and emphasizing the need for "community" are practiced daily by management and the community's leadership, Overton's dream will prevail. Sure there will be some who will "grab the family musket" from time to time, but harmony will prevail to a large degree.
Patricia Kinney, president of Kinney Management Services in Phoenix , refers to management's role with boards in another letter to Common Ground, stating: "We should be prepared to provide the necessary leadership, regardless of which style they choose." We need to be so outrageous in our emphasis on service and community building that board members have no choice but to follow our lead!
A Review: Various Management Types
Let's look at the different types of community association management. Essentially there are four, with hybrids:
1. Self-management: This consists of a board of directors performing the management duties themselves. Normally self-management is found in smaller associations or when board members have the necessary time on their hands and are skilled at the fundamentals of community management. Occasionally, however, boards do this simply for egocentric reasons. If that is the case, it is usually only a matter of time before the membership steps in and mandates the hiring of professional management.
At the very least a self-managed board of directors should attend as many CAI seminars as possible and stock their library with CAI literature. Also, the board should outsource the accounting.
I show my bias by suggesting that, over the long haul, self-management is not in the best interest of a community association. There are too many issues a board of directors must deal with that require professional management advice (e.g. financial, communications, building and grounds maintenance, reserves, and so on). Those factors, plus the need for continuity that professional management provides, are worth a few extra bucks a month for each of the association's members.
2. On-Site Management: This is a popular form of management typically found in large-scale planned communities. Some high-rise communities retain an on-site manager without the utilization of off-site management (that is, a professional management company). Assuming the manager is qualified, this form of management is superior to self-management. "Qualified" can be subjective, but certainly the manager should have received at least one of the following credentials: either a Certified Manager of Community Associations (CMCA®) or an Association Management Specialist (AIMS®). In California , managers might also become a Certified Community Association Manager (CCAM). A Professional Community Association Manager (PCAM®) designation is preferred. Other helpful designations include Certified Property Manager (CPM), for community association managers actively involved in the renting of association units, and Registered Cooperative Manager (RCM), for managers of cooperative housing.
Using an on-site manager means that the board delegates the responsibility for day-to-day association operations to the on-site manager. Although this sounds simple, many board members feel it is their duty to micromanage their manager and his or her personnel. All board members should be required to write on the blackboard 100 times: "I will not micromanage!" Good managers need only policy, goals, and procedures—not daily direction.
An agreement or contract signed by both the manager and the board is essential to make sure there is no question as to what the parties expect from each other. Mutual performance feedback should be done periodically with the participation of the manager, directors, and membership. If the feedback session is going to involve criticism, the meeting should be held in executive session without the membership in attendance.
Since there is only one manager involved, board members should do everything possible to educate themselves on association issues. This means attending local CAI seminars and reading CAI literature. It goes without saying that the manager should pursue continuing education.
Finally, since this type of management has limited resources, the association should use outside consultants. The financial function, for example, should be outsourced. This type of outsourcing reduces the worries with respect to turnover, sickness, and so forth. Additionally, software and hardware problems become someone else's headache.
On-site management is preferred over self-management because: "Professional management pays, it doesn't cost." Over time, a community association will more than reap the benefits of sound advice and direction from its manager and vendors assuming the retention of a quality manager.
3. Off-Site Management: Many community associations choose to hire an off-site professional management company. The reasons are simple: the cost is often less, the breadth of services and expertise offered are more than a typical on-site staff can offer, risks and liabilities are transferred, and continuity of operations is superior.
Most management companies are still not charging enough to cover the expenses necessary for providing the professional services required to satisfy their customers.
Those necessary services entail:
- Ongoing internal and external training programs for staff and customers;
- Financial management and accounting services provided by the company or subcontracted;
- Information technology, including the property being linked to the management company for accounting, e-mail, and other information transfers;
- After-hours emergency assistance;
- Providing a choice of pre-screened vendors and service suppliers;
- Providing management advice and counsel short of that required from other professionals such as lawyers and certified public accountants; and
- Timely service with a smile.
Since the community association management field is relatively new and has not yet matured, fees remain low. In industries that are regulated, many of the "bottom feeder" companies are forced out. This fact reminds me of an old saying: "Competition is good for business, but business is better without it!"
To cut hair in any state in the United States , you must satisfy certain educational requirements, take a test, and work under the scrutiny of an agency that can take away your license, and therefore your livelihood, if you fail to meet standards. Unfortunately, at present, virtually anyone can manage a community association—giving the management company access to millions of dollars and the right to give advice that affects the single largest investment most people have, their home! No educational requirements, no testing, no outside scrutiny, nothing! Certification programs like the Certified Manager of Community Associations (CMCA®) must take root throughout the country soon. Only one state, Florida , requires that all community association managers be licensed. ( Hawaii requires that the management firm be licensed, but not the managers.)
The advantages of professional management are continuity, breadth of service and expertise, and the transfer of many of an association's operations and liabilities to another entity.
4 . Off-Site Coupled with On-Site Management: This form of management is again commonly found with large-scale and high-rise community associations overseen by prudent boards of directors. This type of management offers the best of both worlds. The on-site management team has the time to really manage. The off-site manager worries about training, accounting, human resources, and other issues that can be time-consuming for an on-site manager who runs the show. The on-site manager is freed up to focus on strategic planning, vendor oversight, architectural violations, enhancement of the association's sense of community, and guidance for the board of directors and committees.
The Benefits of Experience
In addition to providing exceptional service and assuring that community leadership is infused with the understanding of what "community" is all about, managers must provide a number of other services to effectively facilitate the community building process.
• Participation in Building and Development: As mentioned previously, management must be a part of the development team. Landscape and building architects can learn a lot from what managers have had to work through as practitioners. Lawyers will also benefit from the problems that managers experience while attempting to enforce the provisions contained in old-fashioned documents.
• Developer Transition: When managers are not fortunate enough to be involved with the design phase, they need to understand the importance of a detailed transition. Mistakes often are made when transferring governance control from the developer to community members. For want of a simple—but detailed—checklist, the community and its management are off to a rocky start. Managers often have been frustrated by not being able to find certain sets of minutes, copies of "as-builts," the corporate seal, a copy of a previous year's audit, and so on. A good working document to start your checklist is CAI's Guide for Association Practitioners (GAP) Report #3—Transition from Developer Control, written by Amanda G. Hyatt. This document will provide many items managers need to incorporate into that checklist.
Once the transition is completed, managers should make sure the transferring party, i.e., the developer, signs off on the document along with the association manager, and management company or association board member.
Transition is also an excellent, and usually underutilized, opportunity to build community spirit between members and the developer. It is important to start early and include al! parties in the planning process. By working together on a detailed transition plan from the very beginning, the homeowners feel more of a vested partnership with the developer, and traditional hard feelings—the developer being seen as the "bad guy"—are minimized. This equates to smoother turnover and fewer lawsuits—good results for everyone.
• Training: Ongoing staff and customer training is no longer a luxury; it is a necessity. Many management companies have learning centers dedicated to continuing education.
With technology changing daily and client expectations increasing, education is a front-burner issue for management companies. Someone within the management company or an on-site staff member should be delegated the responsibility for education. Management companies should also be involved in client education, even if this only means providing a seminar for new board members on the basics of their fiduciary responsibilities and how to read the financial statements. New-member orientation should be included in the curriculum. Community association governance and operations are new concepts for even the most sophisticated residents. An ounce of prevention in the form of education will save time and avoid misunderstanding and frustration later on. Don't overlook the importance of encouraging community involvement, either.
For management company employees, standard training should include: software training; building and grounds fundamentals for community association managers; legal basics taught by a specialist in community association law; and cash versus accrual accounting taught by a certified public accountant specializing in community association audits. All community association employees should be required to take instructions on customer service and how to answer the telephone properly.
A few of the organizations that provide excellent training for reasonable prices are CAI, the Institute of Real Estate Management (IREM), and, for managers of cooperatives, the National Association of Housing Cooperatives (NAHC). In California , there are also the California Association of Community Managers (CACM) and 1 Executive Council of Homeowners (ECHO). Also, don't overlook courses offered through community colleges and universities. Fred Pryor, the American Management Association, and other one-day-seminar specialists also offer great training opportunities. If managers do not keep up with the times, they will not be able to compete.
• Corporate Mission Statements: Management companies should develop service-oriented corporate mission statements that everyone in the company can buy into. Since community association management is a service business, companies should develop a service culture.
As mentioned previously, Fabled Service is a must read. The book provides a good starting point for the development of company mission statements. The Greatest Salesman in the World by Og Mandino is also an excellent beginning for a corporate mantra. Management companies need to train their employees and their client boards in service philosophy, not solely in management technique.
• Managing the Managers : Association managers are extremely busy people. Typically they have at least one too many clients to assist. Someone in the company should be assigned to look over the shoulders of these managers to provide back-up assistance.
Depending on the size of a firm, this responsibility could be shouldered by the president or a middle manager with a reduced caseload. Some of the standard items the supervisor should be checking on are: meeting minutes, financial statements, site inspection reports, the currency of tickler files, property, visits, and calls to board presidents (a great service check). These supervisors should also be reminding the managers of the importance of focusing on building community. Are association rules reasonable? Are they being enforced reasonably? Are board decisions in the best long-term interests of the association, and not just short-term?
Having fun in this business is paramount. Individual management styles will dictate how that happens. Personnel need to see their leaders as people they can be relaxed around and at the same time be able to lean on when help is needed or "dumb questions" need to be asked. Lunches, Friday-evening social opportunities, and picnics are just a few of the ways management can make sure their staff has an opportunity to have fun and "let their hair down." The George Patton approach to management expired a long time ago. The president of my Rotary Club is Fred Weyand, a retired four-star general and former chair of the Joint Chiefs of Staff. He is and always has been one of the nicest people you could know. He is also one heck of a manager, and he has always gotten things done without intimidation. Community association managers can too!
The Future of Community Association Management
I see fewer, not more, management firms in our industry in the future. The companies that are left will be required to meet higher standards of service.
Certainly the new "community building" tools will make community association managers' jobs easier. In the end, they will create more time for managers to spend with their clients and personnel. Hand-held computers, industry-specific software of all types; video conferences; enhanced building maintenance; high-tech building materials; more sophisticated clients; higher-caliber, more service-oriented employees; improved transportation—these are just some of the reasons community associations and the people who manage them should see a brighter future.
Directors will continue to become more sophisticated. They will willingly pay for enhanced services. The association membership will demand less contentious neighborhoods, reasonable rules, and top-notch facility and grounds maintenance.
Community association management companies already are operating differently, both on-site and off-site. The tools of the trade I spoke of earlier—software and brighter people—allow management companies to do more with less personnel. Service with a smile allows for smoother operations—management becomes simpler when both the management company and the customer are happy. Community association management will not become problem-free. However, in the future, there will be fewer problems and the association will operate more efficiently.
Kevin and Jackie Freiberg noted in the book Nuts that Southwest Airline's credos, "think small, act fast . . .ask questions, think results" got that airline's personnel thinking like owners. As a result, and starting with the firm's CEO, Herb Kelleher, "they see themselves as servants of the people. . .they are most interested in the freedom and welfare of others."
