Monthly Archives: May 2019

community associations, Management, Management Insider

Management Insider #1 – Helping the Marketplace

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As I near my one-year anniversary of launching Association Bridge as a full-time venture, I am realizing how much freedom I have to share information. For 30 years prior, I spoke in the voice of a community association manager.  The last 20 of those years were as an executive in the field.  During that time, whenever I commented on the management business, I am sure some people thought that I had an agenda.  In a recent conversation with a client, I had an Aha! moment.  I was able to explain the realities of the management business with absolutely no dog in the fight.  I was able to help that client perceive their reality clearly in a way I couldn’t before, or at least couldn’t quite as effectively.

One of the many ideas that came out of this month’s CAI Annual Conference had to do with the board-management company relationship.   Sy Syms, an iconic discount clothier came to mind.  He had a great company motto: “An educated consumer is our best customer.”  Well, Sy was right and it works in our space as well.  The more a community association board understands about the business of management, the better their odds of securing the services they need.  They stand a better chance of forging an effective partnership with a management company.

Education and Partnership

Yes, I said partnership.  The most satisfying and sustainable relationships are mutually beneficial to both parties.  A zero sum game is transactional, not relational. Elements of partnership are integral to any sustainable relationship.  Trust and confidence are fundamental.  Why would business relationships be any different?

I think that can be a challenge in the community association management marketplace for a few reasons. Hyper-competition and commoditization have resulted in artificially low fees. This is at the core of failure cycles that can inhibit the perception of value, respect, and ultimately, trust.   

The Aha! Moment

The moment I mentioned in the introduction was an Aha! moment for my client, which was why it was an Aha! moment for me.  This board had already recognized they needed on-site management to provide the level of service they expected.  But it did not stop them from expressing dissatisfaction over the performance of their community manager.  They noted he had nine clients and took too long to address concerns or give them adequate support.  They already knew he was overworked, but they didn’t see the fuller picture until I asked to see their financial statements. The interchange that followed went like this:

Me:  So your monthly management fee is $1,686.  That’s about $400 per week.  Let me tell you a little secret.  How much of that do you think goes towards your manager’s salary?

Board: (collective shrug)

Me:  Probably about $100, give or take.  So… how much time do you think $100 gets you each week?

Board: Ohhhhhh

Suddenly, everything made sense.

Solutions

Boards are going to have to go a little deeper.  Management companies are going to have to let their clients see what’s behind the curtain a little more.  When that happens, partnerships can happen.  Failure cycles can begin to transform into success cycles. 

This is the first of a new series of blogs.  My goal is to help community association volunteer leaders understand the management business.  I hope the insights into the challenges companies face and the opportunities that are available will help Board members to ask the right questions and make the best decisions when selecting and working with their management company.

business life, Professional Development

Go Where The Ideas Are

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As I reflect on CAI’s National Conference just completed, one word jumps out at me – ideas.  I had the privilege of facilitating two sessions of TED-style talks and co-presenting on promoting professionalism for Chapter Executive Directors. In all three sessions, I found myself saying some version of “This is where great ideas happen!”  In the first two instances, I was referring to the conference itself.  The last time it fell out of my mouth, I was referring to local CAI Chapters.  All three were from the gut and unscripted.  By the time I heard CAI’s next president challenge attendees to share at least one thing during the conference I’d already received and shared many.  I’ve learned to come to conferences ready to learn, notepad in hand, scribbling furiously during presentations, and jotting notes during conversations.  After three days in Orlando, I’m energized and reminded of the power of ideas.

Shout Outs

I was primed before I even got to the event thanks to all the session preparation.  The collaboration with all six Ted speakers was electric.  Each of them gave away a piece of themselves and packed a ton of value into their 18 minutes on stage.  Our minds were stretched and challenged, and we walked away with actionable ideas.  I want to recognize all of them here.  Thank you to Neda Nehouray, PCAM, of HOA Organizers, Brandon Page of Specialized Pipe Technologies, Emily Schmidt of Speaki2i, Connor Doyle, PCAM, of Giant Steps, LLC, Justin Davis of AppFolio, and the mystery man, Steve Economou, of Rainscapes Environmental.  The audience and I are grateful for them all.  I’m glad these talks were recorded. I am looking forward to seeing them once they are posted online by CAI.

I am likewise grateful to my co-presented Jessica Towles, CAI Trustee, and Lieberman Management Services.  Our industry is fortunate to have someone in a leadership position who is so incredibly passionate and determined to advance the industry.  The collaboration for our session on promoting professionalism helped sharpen my focus and provided an outlet for some ideas that have been swimming around in my head for a long time.    

Ideas and Eggs

Ideas remind me of eggs waiting for fertilization – potential waiting for a catalyst to become a new creation. We carry around countless impressions, thoughts, and concepts just waiting to be connected and energized into a fully formed idea.  Our existing ideas get connected to new ones and become something completely new.  That’s why it’s so valuable to go where the ideas are. Once you’re there, you never know where it may take you.

Idealand

Conferences can be a treasure trove for ideas.  Presentations are an obvious source.  There is a tendency to get energized by them, but leave all the ideas at the door on the way out of the hotel.  One way to make those ideas stick is the oft-underutilized source of ideas – fellow attendees.  Some of my best notes from last week came from amazing conversations and meetings I had outside of the sessions.  Talking about session content allows you to burn them into your brain.  Listen carefully to how others share their perceptions of the ideas shared.  It will broaden your understanding and the collaboration might generate ideas.

Where Else Can You Go?

  • Read and Study:  Take in knowledge from books, blogs, research, or whatever pushes your brain.  Studying the material – highlighting and making notes, pausing, and meditating on the content to let it sink in, is even better for idea fertilization.  Lingering in a new thought can be a powerful thing. Re-reading material you’ve read before can be an eye-opener.  If you are growing, you are a different person than you were the first time.  You’ve changed, things have changed, and you might see things in a different light. If nothing else, you’ll remind yourself of gems from the past.
  • Video:  No, not cat videos…. Nothing wrong with that from time to time, but we are looking for ideas here.  There are some great talks captured online.  TED.com is a great place to start. If you are a visual learner, this is a great place to go.  TIP: Take notes!
  • Audio Learning:  Podcasts, talks, books, whatever floats your boat. I’ve found an enormous benefit of using my driving time to take advantage of audio learning.  Brandon threw out a terrific line in his talk at CAI National, “Make your vehicle a temple of self-directed learning.”  As a side benefit, I’ve found that I am a more relaxed driver.  Now when I hit a traffic jam, I think, “Cool! I can get another chapter in!  TIP: I find that if I listen to a book or an article first and then read it, my retention increases and the ideas flow.    
  • Non-Industry Specific Digital Learning:  Follow interesting people on social media. Hint: Schedule a specific, limited time block for this so as not to get sucked in, only to land on those cat videos after 3 or 4 hours.  You can get a ton of ideas from Udemy.  I am currently enjoying a Seth Godin course now and have another one on tap when I’m done with this one.  The ideas that have come out of it are worth far more than the nominal price I paid.
  • Do Industry Learning Face to Face:  Whether you are pursuing industry-specific designations or continuing education credits, avoid the webinars, and go live whenever possible.  It can be like a mini-conference.  Live learning is a fuller experience.  I’ve never taken a class where I didn’t walk away with at least one new idea that was at least in part sparked by participant interaction of some type.
  • Talk to People:   Any of the seven people listed in this blog is a great place to start. They are all idea generators and great collaborators.  Look for ideas in day-to-day interactions.  Put the smartphone away for a while.  Texting has limited idea generation capability, and if you are distracted by the phone, you’ll miss opportunities to talk and be fully engaged.  Be interested in others.  Ask questions.  As an introvert in many social situations, I know this can be tough to do.  I sometimes call to mind the words of my mother when she told a story about my Pop-Pop. If he jumped on a Baltimore trolley and no one was speaking, he made it his mission to start conversations and have the whole car buzzing by the time he got off. I’m not nearly as bold. But I figure if he could do that, I can at least strike up a conversation with one new person at a time.  One thing can lead to another.  Ideas may be the result.  Seek out those who are different than you and can stretch you. Go beyond the usual chit-chat when you can, and avoid negative nonsense.  

“Great minds discuss ideas; average minds discuss events; small minds discuss people.” Eleanor Roosevelt

  • Collaborating With Yourself:  If you don’t schedule to invest in quiet, reflective time, it might never happen.  Find things that stir awe inside of you.  Ponder the blessings in your life.  Allow yourself to be filled with gratitude and love, which connects you to something larger outside of yourself.  My grand-daughter and I heard a talk about awe, and we came up with our three-word description of the process: “Whoa! Wow! Thanks!”  The process creates chemical changes in your brain and allow your mind to connect dots that had been obscured in the day-to-day.   
  • Write:  There is something about composing that changes your brain.  Getting your thoughts out of your head and onto the paper or screen can also help you to clarify your ideas and trigger new ones.  An idea left unwritten can all to easily become promise unfulfilled.

I Don’t Care Where You Go – Just Go!

Everyone has different learning styles, attention spans, experiences, and inspirations.  Everyone is in a different place in their lives and careers.  Yet, one thing is sure for all of us – ideas create solutions and energy.  Who doesn’t benefit from those?

You may find your ideas in completely different places than I.  Some of the fertilization techniques might be effective for you; others might not.  Find what works for you and keep at it.  The ideas are there for you.  I don’t care where you go, just go and get them.

community associations, Ethics, Management

Do The Right Thing – Beyond A Written Code

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I do my best to make sure this blog and my social media channels provide positive messages, intended to work towards solutions. I’ve described the space as a “snark-free zone.” This time, I’m going to rant a little. It may come off a little snarky, but the goal remains the same – solutions.

It’s A Big Deal

I’m angry. A headline the other day read “Maryland HOA Management Company Accused of Taking $2.5M from Associations.” This company appears to have taken advantage of their client’s trust and misappropriated their funds. The allegation seems well founded. Jerks.

I’ve been angry before. Almost three years ago to the day, a former management company owner pleaded guilty to the same amount of theft from several of his clients from the same county in Maryland. Déjà vu I was still a management company executive at the time. We took over one of their clients several months before their house of cards fell. Fortunately, the CEO hadn’t gotten his hands on their funds, but I still remember the files coming over in black trash bags. You can imagine the quality of the financial records.

The vast majority of professionals engaged in community association management would never even think of perpetrating such malfeasance upon their clients. A large percentage of us dedicated to serving community associations see it as more than a job. We recognize it for what it is – a trust. So we work hard to live up to that trust. And yet, the entire industry gets tainted every time a bad player does something like this. Honest people get painted with a broad brush of distrust and disrespect. That makes me angry.

Don’t get me wrong, in very rare occasions bad actors have darkened our industry in the past. In some cases, it led to beneficial legislation. One management company failed to disclose ownership interest in service companies they recommended to their clients. In that state, that practice is now illegal. In another case ten years ago, an executive with an ownership interest in a management company was sentenced to prison for embezzling over $3M in finds from 400 clients. That led to manager licensing in Virginia. The former case might not seem as bad as the latter, but both speak to the core of the problem – abuse of trust.

Think About the Little Things

There are codes of ethics in place to set standards. For years the Community Associations Institute has required all credentialed managers to adhere to a code. To review the document and a very detailed Code Clarification Report, click here. 

A written code can’t prevent bad actors. When I stumble across emails where a manager has shared a competitor’s proposal with their favored contractor and allowed that contractor to submit his proposal afterward, I get angry. Even though that manager didn’t embezzle money, that’s a direct violation of the anti-competition clause.

Other situations aren’t so obvious. I understand that some contractors like to give gifts to managers. It’s part of relationship building. However, it can quickly become a slippery slope. When a contractor who regularly treats a manager to ballgames and dinners seems to get preferential treatment from that manager, a line may have been crossed. When it starts to walk, talk and smell like an “Ol’ Boys Network,” it probably is. If it becomes quid pro quo, it’s a problem. The schmooze fest makes me angry. And a little nauseous.

Loopholes

There used to be a gap. CAI’s ethics code didn’t apply to management companies that held the AAMC designation. That allowed some companies to receive remuneration from business partners to be on a recommended vendor’s list without disclosing this to their clients. In the political realm, I believe they call it “pay for play.”

I interviewed a few managers who were looking to leave a firm in part due to the pressure they felt to promote the preferred vendors. Technically, they were not violating the manager’s code of ethics because they didn’t get directly remunerated for the recommendation. The companies weren’t violating anything because the manager’s code didn’t apply to them. But the whole thing made these managers uncomfortable, and rightly so.

I am pleased to report that this gap has been closed. As of 2016, the manager’s code of ethics applies to management companies with the AAMC designation. Bravo, CAI!

Trust, But Verify

Most financial malfeasance can be averted. Boards have reason to be hurt and angry when they learn that the managers they entrusted with members’ assets have abused that trust by unethical and criminal behavior. Still, Board members cannot escape the fact that governing documents require they exercise fiduciary responsibility. The buck stops with them. In too many cases of theft, Boards either did not have controls in place, were asleep at the switch, or some combination of the two. It didn’t have to happen. CAI publishes guidelines I urge EVERY Board to consider and make sure are in place.  Fraud protection procedures and a modicum of oversight mitigate against the possibility of theft.  

Please Do Something Else For A Living

If you are a manager or a management company and do not appreciate the depth of what is entrusted to you, please quit. Don’t be a jerk. Do something else for a living. This industry needs dedicated, ethical people with the heart of a servant. Those character traits seem more and more rare these days, but they still alive and well in the community association industry. What we do makes a difference. Help us advance this industry, or please get out of the way.

Beyond The Code

Here’s the bottom line. Those of us who serve community associations are taking care of other people’s stuff. They need to be able to trust us. The heart of ethics is trust, not a formal code that can only legislate actions. Intentions are important. We need to be golden. Period. With trust in such short supply in the world at large, we need to go above and beyond.

I never saw the movie Do The Right Thing by Spike Lee. But I remember seeing a clip that has stayed with me ever since I first saw it. 

The Mayor: Doctor…

Mookie: C’mon….what, what?

The Mayor: Always do the right thing.

Mookie: That’s it?

The Mayor: That’s it.

Mookie: I got it. I’m gone.

Always do the right thing. Got it?

Best Practices, Risk Management

Proactive Risk Management – An Investment

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An in-unit inspection and maintenance program can bring tremendous benefits to community associations. A careful analysis of each situation is needed to determine if and how a program should be undertaken.

Condensation drain line back-ups can result in thousands of dollars in damage. Leaky valves left unattended may result in the need for mold remediation. Burst washer hoses and rusted out water heaters could easily result in a significant master policy claim. One faulty smoke detector can result in injury or, worse yet, loss of life.

Can associations prevent such things from happening? Of course not. But a systematic in-unit inspection and maintenance program can go a long way to avoid or mitigate them. This may be an opportunity to prevent damage and control expenses. In-unit programs can also contribute to energy conservation, quality of life, and value to association membership.

Why Not A “Risk Management Inspection Program?”

Many high rise buildings have a seasonal filter change program. Why stop there? Why not use this as an opportunity to address other conditions and provide value to the members? Take the opportunity to raise awareness of potentially problematic conditions and assist unit owners to fulfill their duty to maintain? The list should include everything from tub grout to smoke detectors.

4-Point Analysis

1. Risk Management Analysis – Property Configuration: What kind of community is it? Will conditions in one home create problems for other homes or the Association as a whole? This kind of program would not apply to single-family home HOAs. High rise condominiums and cooperatives would undoubtedly benefit. Mid-rise and garden communities might also benefit.

2. Risk Management Analysis – Component Exposure: What are the elements in units? What damage could those elements cause? What are the potential soft and hard costs of that damage?

3. Resources: Is there on-site staff? If so, what are their capabilities and time constraints? Are contracted services an option?

4. Legal Considerations: A careful reading of the governing documents is required gain clarity on the ownership and maintenance responsibility for unit components. What is the Association’s authority per its governing documents and prevailing law? What liability considerations exist? These factors will play a part in how a resolution establishing the program is worded. Review with Association Counsel.

Implementing the Program

1. Using the 4-Point Analysis, decide on the intensity of the program. The scope could be as simple as an inspection followed by a report of findings to owners. This could also be an opportunity to check the condition of balconies and for early evidence of water damage from exterior sources a resident may not have noticed. Or it could be more extensive to include the performance of maintenance tasks such as filter changes, toilet flapper replacement, smoke detector replacement, or water alarm sensors.

2. Document the program as a policy (legal assistance is strongly recommended), and include inspections list and procedures.

3. Communicate, communicate, communicate the plan and its implementation. Highlight the reasons for, and benefits of, the program. Please do NOT send the message that this as a rule that must be followed. That would blow the opportunity for a very positive message.

4. A plan for following up is vital. The Board should decide in advance how to handle non-compliance.

Bonus Points

Some Community Associations have mitigated risk by implementing a policy to clarify and define unit owner maintenance responsibilities. The Association may be able to require the use of components that control loss. A braided ice-maker line is far less likely to fail than a plastic one. Heavy duty clothes washer hoses are less likely to burst than standard hoses. The Association may be able to require proactive replacement of high-risk components based on age of the component, such as for water heaters. Once you’ve identified the components in units at your community, consult with Association Counsel to craft the resolution. There may be pushback from some owners. Here again, communicating from the perspective of benefit to the owners and highlighting the benefit to all makes all the difference.

Too Much Work?

It may seem like adopting a comprehensive in-unit risk management program is too much work. But think about this – what can happen if you don’t do it? How much administrative and maintenance staff time is sucked up when emergencies happen? What happens to master insurance premiums when the loss history is littered with water or other damage? How many unit owners or their tenants have an awareness of how the components of their units work or should be maintained? Thinking about these factors when conducting your 4-Point Analysis may help you to see this as an opportunity to benefit members, the Association, and staff. If so, it’s not an expense. It’s an investment.