Best Practices, Budgeting, condo associations, Cooperatives, HOAs, long range planning, Reserve Studies, Strategic Planning

14 Things Your Reserve Analysts Might Not Tell You – And It’s Not Their Fault (Part 3)

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Two weeks ago,,  we shared five focus points to help you analyze property components. Last week, we offered another five, which were practical considerations to discuss with your reserve analysts in order to estimate project expenses as accurately as possible. To recap, we’ve covered:

1. Engineering Study for Stuff You Can’t See
2. Elements Impacted by Code Compliance
3. Piping Systems
4. New Construction Technology
5. Underground Piping and Wiring
6. Project Design & Management Expense
7. Logistics for Limited Access Projects
8. Collateral Damage
9. Items Outside Study Period
10. Strategic Improvements

We close out the series with the last four nuggets. These cover areas where the Board has a level of discretion and help you deal with some thorny cash flow issues.

11. Interior Renovation Upgrades: Interior renovations can take many forms. If you don’t tell your analysts what you have in mind, they are left to guess. For instance, I helped one client to plan for wallcovering, painting and lighting that would last through two cycles of carpet. In another case, the whole lighting plan was to be revised. That specific data had to be plugged into the reserve study.

12. Alternative Funding Options: If the community is behind the ball financially, debt service, special assessments, or a combination of the two might be options to consider. Clarifying the Board’s authority to do either and strategically planning to communicate options to members are absolutely crucial. This will no doubt be the subject of a future blog. Your reserve analysts should be able to help you to run “what if” scenarios, but you are going to have to tell them what those options might be.

13. Big Trees, Drainage & Other Landscaping: I’ve heard arguments that greenspace does not belong in reserve studies. However, mature trees and landscaping can be really expensive to remove, not to mention replace. Over time, surface drainage can become ineffective and might even lead to flooding. A review by an arborist, landscape designer or architect can be a real eye-opener. You can consult with your reserve analyst and auditor to confirm the appropriateness of including such items in the replacement reserve. If it gives either of them heartburn, you have an option. See #14 below.

14. Major Periodic Maintenance: I regularly see five-year electrical panel and switchgear maintenance in reserve studies. I even see the cost for future reserve studies in some reserve schedules. Even though these expenses may not pass the test as a reservable component, it makes sense to flow the funding evenly from year to year. Including such expenses in the operating budget could have significant impacts on fees. The fact that it’s on a schedule and in the financial plan helps Boards to maintain the discipline to actually tackle these vital projects. Depending on the property there might be other major periodic maintenance that is just as vital and has a similar financial impact. Hydro-jetting of plumbing stacks and laterals, dryer duct/vent cleaning, HVAC duct cleaning, and chimney inspections and cleaning can add up. There may be a couple of approaches to consider. If the property can be divided up with a portion of the work done each year, it would flatten out the expense. But if that’s not feasible, you might ask the reserve analyst to include such projects in the study. If the analyst (or the auditor as noted in #13) or the Board is uncomfortable with that approach, there is an option. You can create an operating reserve, set up a schedule of expenses, and calculate a monthly contribution to that reserve in the same manner as the replacement reserve. This will make sure the money is in the bank, keep you from deferring critical preventive maintenance, and even out the financial impact on association members.

Who & When?

We’ve identified a number of capital projects that may require additional professional support to properly plan and estimate replacement costs. Investing funds up front to work with a qualified, structural engineer, mechanical engineer, construction manager, construction estimator, project manager, elevator expert, fire protection system engineer, architect, or contractor can significantly mitigate the possibility of unhappy surprises and create a realistic funding plan. We’ve identified a few areas where legal and audit advice is advisable. Making this a point of discussion with your reserve analyst will help. Some firms that provide reserve studies are multi-disciplinary and may have some of these resources in-house.

The optimal time and depth of study will depend on the projects themselves. Hopefully this series has helped you to take a hard look at the components in your reserve schedule, do a risk analysis and take the holistic approach described in last week’s blog. Once you’ve identified elements that may benefit from further analysis, check the timing. Early on, perhaps you can get some inexpensive thumbnail estimates (hint – plan for the worst, guess high). If you are getting to within about five years of a large project, it might be time to make a more significant investment and hire specialists to take a deeper look. The more complicated the project, the more important this is.

Bottom Line

A truly comprehensive reserve plan can make all the difference in the financial health of a community association and the quality of life of its members. The reserve study is a tool. Your reserve analysts are your partners. See the bigger picture. The better the data, the better the study. The better the study, the better the plan. The better the plan, the better the execution of the plan. The better the execution of the plan, the better the community.

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Best Practices, Budgeting, condo associations, Cooperatives, HOAs, Reserve Studies, Strategic Planning

14 Things Your Reserve Analysts Might Not Tell You – And It’s Not Their Fault (Part 2)

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Last week’s blog offered five focus points to improve the accuracy of your reserve plan. Nuggets 1 through 5 help you analyze property components. This week, we share nuggets 6 through 10. These are practical considerations to discuss with your reserve analysts in order to estimate project expenses as accurately as possible.

These all come from my experience working with clients through the years. In some cases, I noticed a disconnect between plan and execution. In their planning process they dutifully used the expense listed in their reserve study. However, once the project got going, additional necessary expenses that were not anticipated in the study were funded from replacement reserves. This made it appear that the projects were over budget, resulting in weeping and gnashing of teeth, not to mention death glares in the direction of their reserve analysts. The truth was that these projects were not over budget, rather they were under planned. In other cases, under planning occurred when clients failed to take a bigger picture or strategic approach to planning projects. The lesson is clear: The more accurately you can see the future, the better the odds you can get there.

Clients who implemented this week’s nuggets planned more realistically and utilized reserve funds to the maximum benefit.

6.  Project Design & Management Expenses: Wise associations elect to engage professional engineers, architects, and/or project management firms to develop specifications, facilitate the bidding process, and provide quality control for major capital projects. Depending on the nature and size of project, the investment can be in the neighborhood of allowing 10% to 15% of the total project costs.

Lately I’ve been encouraged to work with boards that understand the impact of major projects on their management team. Projects that impact residents in an intense way take human resources to make sure they run smoothly. Hiring additional staff or a professional project manager can make all the difference between a great project and one that sucks the life out of every resident, board member, and team member. Too many associations ignore the fact that without that support, something will give – the quality of the project, the quality of day-to-day operations, or both.

Reserve studies may not anticipate any of these expenses. You may need to direct that they be included.

7.  Logistics for Limited Access Projects: If something is hard to access, it’s going to be more expensive to replace or maintain. Sometimes A LOT more expensive. Getting a handle on those costs can be crucial to estimating the total price tag of a project. A cooling tower on top of a 27-story high rise is going to cost exponentially more than one on the ground floor. If a building elevation presents challenges in accessing a roof, the costs of roof or gutter replacement and periodic major maintenance on components like soffits and trim go way up. Contractors and construction estimators can be lifesavers in helping to avoid some gnarly surprises.

8.  Collateral Damage: This can be a tricky one. Technically, the association may have limited or no responsibility for replacing unit components. But what if they are altered to access common element replacements like pipe risers? My favorite example to illustrate the point: Let’s say the only way to replace a piping system is to go through 1950’s era ceramic tile. You’ll never match the old tile. Will the Board repair the plaster only? Tile one mismatching wall? Or replace all the tile in the unit? Multiply the expense by all the units in that tier. The answer might make a significant impact on project costs. Here, your first call may be to association counsel to be clear on your responsibilities and options. Then you’ll have to make a business judgment. Just don’t wait until you start the project to decide. Get clarity in the planning process and plug the info into the reserve study. That is not your reserve analyst’s responsibility, it’s the Board’s.

9.  Items Outside Study Period: Many studies include only those components that have useful lives within the period of the study (usually 30 years). The rationale is that if you conduct studies every three to five years, the component will eventually make its way into the study. But some major components such as electrical switchgear, transformers, or piping systems may have useful lives of 50 years or more and they may be major expenses. Waiting to fund those expenses over only 30 years could create a big bump in required funding levels when they magically appear in the study. Plug them in now.

10.  Strategic Improvements: Instead of replacing components in kind, it might make sense to rethink and plan. For instance, a property may have high-maintenance components such as wooden exterior soffits, fascia, and rake boards. These require repainting every few years and eventually sectional or full replacement. It might make sense to replace them with low-maintenance materials. More expensive up front, but much less expensive in the long run. Original gutters might have been undersized and should be replaced with larger ones. If gutters and downspouts are being replaced, it might be the golden opportunity to replace wood trim with low-maintenance material. The Association could pay only once for mobilization for two projects and save money in the long run. Better yet – think strategically and tie these projects in with the next roof replacement to get to best bang for the buck. Take a step back and see property components in a broader context. Adjust the plan accordingly and make sure the data gets plugged into the reserve study.

Perspective

No one wants to increase fees. It can be tempting to ignore the potential for additional expense, even if it means losing out on savings in the long run. Making the best use of members’ assets is a key element of the board’s fiduciary duty. Think strategically, plan wisely.

“Leaders keep their eyes on the horizon, not just on the bottom line” –Warren Bennis

Next…

Next week we close out this series with the last 4 nuggets. These will help you to recognize areas where the board has a great deal of discretion in the planning process. Many community associations are facing the tough realities of under funding and have to include options such as loans and special assessments in their funding plan. We will help you to partner with your reserve analysts and other professionals to develop scenarios and choose the best plan for your community.

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Budgeting, community associations, condo associations, Cooperatives, HOAs, long range planning, Reserve Studies

14 Things Your Reserve Analysts Might Not Tell You – And It’s Not Their Fault (Part 1)

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Reserve studies are invaluable tools for condominiums, cooperatives, and homeowners associations. Used properly, they assist boards and managers to make good decisions for reserve funding with long range planning in view. They also help to plan for near term capital projects. The reserve study provides a basis for a systematic and disciplined approach to reserve funding and capital project planning.

At the same time, I’ve heard too many complaints from clients through the years about accuracy of the data included in their reserve studies. This tends to occur when unpleasant and unplanned realities throw a monkey wrench into the best laid plans. I’ve found that either an unrealistic expectation or a poor understanding of the study process are typically at the root of the issue. This series of 3 blogs helps to address the first issue. I’ll provide tips on how to work with your reserve analyst in another blog soon.

What a Reserve Study Is…And Isn’t

Professional reserve studies have two components – a physical analysis and a financial analysis of major property components. The physical analysis helps to estimate the remaining useful life. The financial analysis turns it all into an actionable plan to recommend a funding level that ensures the Association will have enough money in the bank to replace components when needed. For more details, you can review CAI’s National Reserve Study Standards, and the Association of Professional Reserve Analysts Standards of Practice.

Reserve studies are relatively inexpensive as compared to other engineering analyses. There are reasons for that.

  • Reserve analysts are by definition generalists engaged for the specific purpose of creating an overall financial plan. They do not undertake the detailed condition reports, basis for design, or specifications that a specialty engineer may create in preparation for a particular capital project.
  • Reserve studies do not include destructive testing. No walls will be opened, ground dug up, or other means to get into the details of conditions unseen.
  • Reserve analysts are neither omniscient nor clairvoyant, nor do they possess X-ray vision. You’d have to pay a lot more for that!

Throw Me A Bone, Man!

The good news is reserve analysts LOVE data. The more valuable information you can give them, the more they will plug into the study. The better the study, the better your plan.

Here are a few nuggets you should consider feeding to your reserve analyst. Complicated condominiums and cooperatives, especially high rises, are more likely than HOAs to benefit from the additional data points listed in this blog series. Regardless, it’s worth taking the time to consider whether each of the 14 nuggets factor into your association’s reserve plan. I can tell you they’ve either saved my clients a lot of heartburn, or I learned about them because of my clients’ heartburn!

These first 5 nuggets deal largely with building components. The next 2 blogs will address discretional expenses, practical project planning, and approaches to thorny cash flow issues.

  1. Engineering Study for Stuff You Can’t See: This could apply to components like waterproofing systems under patios, parking lots, green space, fountains, etc. Without doing destructive testing and taking a look at what is underneath, you may have no idea how much it will cost to design and replace a system you can’t see. You will likely pay far more for this engineering study than you will for the reserve study, but it will be well worth it. One client’s reserve study had estimated system replacement for four garages to be $500K. When it was all said and done they paid about $1.1M…. per garage! The information gleaned from their engineer’s work helped them to prioritize and pay for the project. If they had that information up front and included in their reserve study they could have avoided sticker shock.
  2. Elements Impacted by Code Compliance: The typical reserve study assumes like-for-like replacement. However, local code may require a building to upgrade an old system to meet current codes, exponentially increasing the cost of some projects. This is particularly true of fire protection systems and elevators. Getting cost projections from sources familiar with local codes can save you from ugly surprises.
  3. Piping Systems: No pipe will live forever. Yet, I have seen common piping systems omitted from reserve studies for whatever reason. Also, determining the remaining useful life of copper piping is easier than ever before thanks to non-invasive technology. Obtaining a pipe condition study for domestic, HVAC and waste piping can provide invaluable data.
  4. New Construction Technology: Sometimes new building products or construction techniques can post a challenge until there is a track record of periodic major maintenance, rehabilitation or replacement. Installing contractors, architects or engineers involved in the new construction can sometimes provide some insights to help plan for future projects.
  5. Underground Piping and Wiring: This can be a big one for garden communities, especially those built in the 1960s as apartments, and particularly those with central HVAC plants. I don’t always see underground electrical feeds, HVAC piping, or domestic water piping in reserve studies for communities that have these components. Tracing a break or a leak, digging up between buildings to replace a section of wiring or piping and restoring the grounds on an emergency basis is an expensive proposition. It is surprising how much electrical wiring has been laid in the ground without being run through conduit. This can even impact the planning for replacement of light poles. Identify the risk and make a plan to include in the reserve study as needed.

Hard Reality

In some cases, the engineering and design costs outlined in the 5 nuggets above might exceed the cost of your reserve study. But that’s irrelevant. Think about the impact of not having the data. Underfunding by any means is a bad strategy.

When & Who?

In the third and final blog in this series, we’ll identify potential resources and factors that will help the Board to decide when to reach out.

Next…

In next week’s blog, we will discuss data points related to practical considerations when planning for projects. I will again reach back into my bag of experience to find the things that made a huge difference for my clients through the years.

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Attitude, Book Reviews, business life, values

Book Review #1 – Lessons and a Tribute

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The Backstory

For my first Tomasaurus Rex Blog book review, I chose one with a very personal connection. It is one of my favorite business/life stories. Over the course of my long association with Arthur Dubin back in the Dubin & Associates days, he shared a number of anecdotes about a man he knew in his youth. As near as I could make out, this big-hearted fellow named Jerry had been a big deal at some point. From Arthur’s stories, I gathered Jerry had owned the Philadelphia Eagles. I learned he regularly treated kids to Eagles and Baltimore Bullets games. I knew he had lost his fortune but was not clear exactly how. But the real story was the man behind all that. The Jerry that Arthur described was a kind and generous man who has treated more people to restaurant meals than anyone in history. A famous practical joker, he also had a great sense of humor.

What I did not know when we joined Zalco Realty in June of 2000 was that Jerry Wolman was a real estate phenomenon in the late 50’s and 60’s, that he had embarked on building the tallest skyscraper in the U.S. and that his empire collapsed as a result of issues related to that project. I did not know that Zalco Realty’s owner and chairman had been associated with Jerry and that Zalco’s beginning was in some way connected to the remains of Jerry’s real estate holdings. I also did not know that Jerry kept an office at Zalco.

So we Dubin employees moved into Zalco’s Silver Spring office as part of the merger arrangement. My next door office neighbor was this extremely friendly older fellow named Jerry. As we chatted amiably about life and business, I noticed that the guy especially lit up when talking about two things – his family and sports. He exuded kindness and generosity of spirit, one of those people for whom you sense you would be happy to do anything for. I got the feeling I could learn a lot from this guy. One day I told Jerry I’d love to better understand the art of the real estate deals and pick his brain. I explained how I would love to get off the financial hamster wheel one day but that I was limited by a lack of capital. Jerry told me, “Aw Tommy, you don’t need money to make money. You just need balls!” So old school.

Then one day our discussion turned again to sports. He casually mentioned he once owned the Eagles, but it was a long time ago when I wouldn’t have known any of the players. Jerry had not yet grasped that I am a bit of a sports history nut. After reeling off the names of half a dozen or so players, his eyes flashed as he broke into that big Jerry smile and he exclaimed, “You know!!” After a few months of being next door to the guy, the light bulb finally turned on. I walked into Arthur’s office and asked, “That guy Jerry I’ve been talking to for the last 6 months – that’s The Jerry?” Arthur, incredulous, replied, “You didn’t know that?”

Fully enlightened, I thoroughly enjoyed my time with Jerry until he moved out of Silver Spring and into an office at the Ellicott City spring water bottling business he was working on at the time. We caught up every so often. It was always a delight. Jerry was the kind of person you want to be like when you grew up, in part because in some laudable ways he never grew up. He was the guy you wanted to introduce to all the special people in your life. I was grateful my wife got to meet the man I had talked about so much before she passed. As I learned more about his history and did a little research on the Philadelphia Flyers and the John Hancock Center, I was amazed at his irrepressibly positive attitude. The fact that he never expressed any bitterness whatsoever towards those who appeared to have done everything from serving him poorly to being outright disloyal showed me the meaning of grace.

The Summary

I knew Jerry was a class act, but my appreciation grew considerably after reading the book. He never claimed to be a perfect man, just a regular guy from Shenandoah (“Shendo”) PA. The book chronicles his life from boyhood to his chance arrival in Washington, DC. He kept his eyes open, thought creatively, and found opportunity, eventually presiding over a $100 million (roughly $750M in 2018 dollars) real estate development and management empire. His business practices were old school, to say the least. Deals were sealed with handshakes. Your word was your bond. Eventually, he lived his dream and bought the Philadelphia Eagles. Soon after, his holdings included the Spectrum arena and the fledgling Philadelphia Flyers. Then it all came apart. Construction faults in his most ambitious construction project and his resolve to remain personally responsible for the business required him to liquidate his assets, including his beloved Eagles. Along the way and well after the financial fall, Jerry touched countless lives with his kindness and generosity. In the end, many of those to whom he gave grew in material wealth. Some owed their fortunes to him. But with the love Jerry shared and got back from friends and family, he remained the richest of them all.

The Gold

Jerry’s story is a touching and, in the final analysis, uplifting story of what a person can accomplish. It also teaches how to recognize the failures of the past and admit errors while staying focused on the present. Success and riches of real value transcend cash, power and toys. It’s about family, and dreams, and effort, and people, and giving, and love. I don’t know anyone who has given as much away as Jerry did without ever keeping score. Naturally, proceeds from the book went to a charity close to Jerry’s heart.

Jerry’s inscription in my copy of the book. A tough guy unafraid to express love – pure Jerry

We lost Jerry in 2013. I wish you could have met him. I miss him, but his impact on my life remains. I’ll tell Jerry stories as long as I live. Soon, very few will remember the man. The book is already hard to get. Don’t miss out.  Amazon still has a few copies.

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Attitude, business life, community associations, Management

3 Kinds of Jobs

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In my late teens I had a ridiculously intelligent friend. Dave was an engineering student at the University of Maryland. I remember him lamenting how he missed a perfect score on the verbal part of the SAT by 40 points. Of course he aced the math part of the test. Dave’s book smarts were most impressive. But what I appreciated more was his analytical approach to life in general.

Hassle

Dave worked a part-time job assembling printed circuit boards. He fussed about his boss, he fussed about the job, and he fussed about the foibles and folly of business in general. Finally, he came to an epiphany. With impish grin and eyebrows raised, he proclaimed. “I now understand business. The company and the job titles are irrelevant. There are actually only three jobs in business; Hassle Creators, Hassle Transferers, and Hassle Receivers. If you are a Hassle Receiver, do anything you can do to get promoted to Hassle Transferer or quit. Of course, the best job is Hassle Creator, but that’s usually the owner.”

Dave’s Three Job Theorem still crosses my mind every so often. It still makes me laugh. In a narrow, simplistic sort of way, it’s true. It’s also a bit naïve. Owners deal with plenty of hassle. There are no pure Hassle Creators.

Job/Career/Calling

Years later I found an even more studious approach to the workplace. Kouzes and Posner’s The Leadership Challenge  recognizes that people tend to see what they do for a living in three different ways; as a job, as a career, and as calling. Not nearly as funny as Dave’s Three Job Theorem, but a tad more refined. And while Dave’s categories were hierarchical, Kouzes & Posner’s are applicable to any position. It’s an attitude.

The three approaches speak to a level of commitment and personal satisfaction. A job? 9-5. Punch the clock A means to an end. A career? You do it because you have a plan. A calling? That one always repelled me a little before studying Kouzes & Posner. To me, “calling” used to imply some sort of divine will, and that seemed a bit over the top. After I stumbled upon community association management (like so many of us did), I realized that I felt drawn to the work. But I still didn’t buy in to any kind of personal manifest destiny. The clouds didn’t part, there was no voice from heaven. I just enjoyed the bigger picture of what I did. There were parts of the job I was not thrilled with. Yet, there were elements of the work I enjoyed very much. Taking care of people, fixing things, helping people enjoy where they lived, making a difference in the lives of others, and helping leaders find fulfillment in their service all drew…or called…me.

I also found myself repelled by the idea that everyone should find some mystical perfect situation. Sure, seemed to find their “calling’ early in life. But it seemed to me that many more found it later after developing their skills and interests over time. There was work involved, and it was rarely perfect. The gold was in the process to get there.

A Choice – Work

Kouzes & Posner helped me to realize that while a calling could theoretically be divine in nature, it is primarily finding things to do that were in harmony with your personal values and goals. That is what draws, or “calls” you. I remember the beauty of one of the examples cited in the The Leadership Challenge. A hospital janitor, a position my friend would certainly rate as a Hassle Receiver, viewed has job as a calling. Why? He explained, “I help people get better.” Not only did he recognize that the quality of his work made the environment healthier, but was called by the ability to make a bigger impact. He found that the way he did the work – the way he interacted with patients and their family and visitors, with a smile, a kind word, a simple kindness – made all the difference. I seriously doubt the gentleman grew up thinking this was his dream job. But his life experience and attitude put him in a position to see what he did for a living as a calling.

Grit by Angela Duckworth and Known by Mark Schaeffer do a great job debunking the cosmic calling concept. There’s no reason to feel pressured if you can’t magically find your calling. Try stuff. Learn stuff. Notice when you are at your best and figure out why it worked. And you calling doesn’t have to have anything to do with earning money. If a job allows you to pursue a calling, it’s worth it.

Great/Neutral/Bad

Which leads me to one of my old definitions of the 3 types of jobs. I used to say a great job helps you to be the person you want to be. It energizes you, inspires you, and fortifies you. A neutral job doesn’t necessarily help you to be the person you want to be, but it doesn’t make it too hard, either. You have space to grow and at least some opportunities to live your values through your work. I defined a bad job as one that makes it very hard for you to live by your values. This kind of job sucks the life out of you, leaves you exhausted and requires a herculean effort just to show up every day.

It’s Up To You

No matter how you analyze your work, what you do with it is a choice. One person’s horrible job is a dream job for someone else. Knowing yourself, what motivates you, and the values and goals you choose are at the beginning of navigating your path.

I’ve never been a fan of the term “work-life balance” because it gives work equal value to life. That’s nuts. Work is a part of life. The key is the extent to which your work is in harmony with your purpose. And it does not matter how. I know people who hold seemingly mundane part-time jobs who are happy as clams. Why? Because that job allows them to do the volunteer work they love. And this allows them to find joy when working a job others might find meaningless

Getting this right usually takes time. Recognize that not only what you do but how you do it can make a big difference in enjoying what you do. Things change and you’ll grow. Who knows, a neutral job might become a good one, even a great one. I will always treasure an email I received from a manager who invited me to attend her PCAM induction ceremony.  She wrote, “The first time you interviewed me, you asked if community association management was a job, a career or a calling for me. At that point, I answered that it was a career, but now I can truly say it is a calling.”

As the late, great Jim Rohn said, “Accept all experience. See what it can teach you.” Whatever role work has in your life, you will probably have to spend a good chunk of your life doing it. You might as well find a way to enjoy it!

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Attitude, business life, Human Resources, Management

Get Stuff Done and Have Some Fun – A 20 Question Checkup From the Neck Up

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It’s Labor Day here in the U.S. We celebrate it by taking a day off. Something about that always made me laugh a little. The truth is, “celebration” and “labor” are rarely found in the same sentence. Apparently, somewhere between 70% and 90%  of employees do not feel engaged in their work. My experience working closely with community association professionals leaves me unsurprised (and saddened) by those statistics.

I got some interesting comments about an online job bank announcement I posted a few years ago for a client. I must have been a little frustrated when I wrote something along the lines of “butt covering, blame shifting, can’t do managers need not apply.” I may have used the term “retread…” I was serious. A burned out, disengaged manager just wouldn’t cut it. The client had a keen BS-o-Meter and needed somebody who would walk the walk.

It occurs to me I’ve developed a list of contrasts in my head – behaviors, character traits, and perspectives that seem to reveal the difference between managers who excel and enjoy what they do, and those who seem mired in mediocrity and misery. I use these to evaluate manager candidates. I also use them as a self-test to see if I am falling into non-productive habits. Here goes…

  1. Am I more bored or more curious?
  2. Am I intellectually lazy or looking to learn?
  3. Am I prepared or am I winging it?
  4. Am I focused on personal credit or team success?
  5. Am I covering by butt or am I taking ownership?
  6. Am I setting a positive tone and creating a space for others to mirror me, or am I mirroring others and leaving mood up to chance?
  7. Am I looking for ways to make a difference (no matter how small) or am I doing just enough to get by?
  8. Am I frowning more or smiling more?
  9. Am I stuck in the weeds or am I seeing the bigger picture?
  10. Has my thinking become task-based (my job is done when I check the box), or results-based (my job is done when the goal is met)?
  11. Am I spending more time explaining procedures or the principles behind the procedures?
  12. Am I spending more time explaining why things can’t be done or getting things done?
  13. Do I have a bias for action or stasis?
  14. Am I holding myself accountable or making excuses?
  15. Am I complaining about unfairness (that which I cannot control) or am I being my best self (that which I can control)?
  16. Am I focusing on the disappointments of the day or what I can learn from them?
  17. What words am I using more often – us and we, or I and me?
  18. Is it getting to be a J-O-B or is it a career (or better yet, a calling)?
  19. Am I thinking or just doing?
  20. I am blindly following my client’s instructions, or am I helping them make educated decisions?

The old adage is correct – you reap what you sow. When you focus on doing better and being better, you are far more likely to feel better and get more out of every experience. It’s so tempting to take the easy path, to be negative, and to blame others. I guarantee you see people around you who do that every day of their unhappy lives. That stuff rubs off. That’s why I like to do a checkup from the neck up from time to time. And if you pass the test and your situation is still crummy, perhaps it’s time to apply #13 and find a new situation.

Do you have a contrasting question to add to the list? Please share!

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Communications, community associations, condo associations, Cooperatives, Customer Service, Emotional Intelligence, HOAs, Magic Beans

So You Think You Are a Good Listener and Other Delusions

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In his outstanding book The Excellence Dividend, Tom Peters states that listening is, among other things, “the heart and soul of engagement and thoughtfulness,” “the basis for collaboration and partnership and community,” “the linchpin of memorable service” and “the bedrock that underpins a commitment to EXCELLENCE.”

We know listening is important. Yet, studies show that we are not as good at it as we think we are. Fortunately, it is a learnable skill. It is an area in which we can always improve. There are lots of resources available to help us focus on the art of “active listening.” Strategies include:

  • Pay Attention: Use your eyes along with your ears. Look at someone intently enough long enough to determine eye color. What do their body language and facial expressions tell you? What are they NOT saying?
  • Acknowledge: People with problems typically want two things in this order: (1) To be heard (2) To get a solution. Until someone is confident you hear them, you have zero basis for dialogue. Give them all the cues you can to show you are engaged. Open your stance, nod, smile. Use verbal cues like my favorite, “Oh wow!” Let ‘em talk. Empathize.
  • Clarify: Ask questions. Then ask more questions. Get the whole picture. Repeat statements back and summarize. I am partial to the phrase “I think what I heard was…” This gives the other person permission to correct you if your understanding requires adjustment.
  • Ignore Your Biases: We are all biased. We all make assumptions. We all listen through the filters of our experience. You might think you are completely objective, but you’re not. Nobody is. Recognize your biases and assumptions and do your best to get past them.
  • Suspend Judgment: It’s easy to impute motives, especially if you have a history with someone. But even if you are correct, there is no value in thinking about them. Acknowledging others’ emotions does not mean judging the validity or even the appropriateness of those emotions. Do your best to focus on facts.
  • Take Notes: Careful note taking keeps you tuned in. It dignifies the other person. It’s a great tool for the open forum part of Board meetings.

Why Are We Lousy Listeners?

You might think you are a good listener. More than likely you are deluded. Even if you ARE right, you’ll still need to work on it. There are many obstacles to being a good listener. Be aware of them and work to overcome them.

  • Did I mention we are all biased and make assumptions? Imperfect humans are subjective by nature.
  • We focus on us, not the other person. Instead of fully listening, we are formulating our brilliant response, thinking about how wrong or annoying the other person is, or feeling rushed or stressed.
  • We may be “18 second interrupters”.  Peters cites research that indicates an average doctor will interrupt the patient presenting her symptoms after 18 seconds. The habit is not unique to doctors. Yikes.
  • Distractions…Oooo look – a squirrel!
  • Electronics: A disproportionate number of the problems people have asked me to fix in recent years originated with electronic communication issues. Some conversations need to be offline. Listening with only your eyes has its limitations. If a conversation starts to go sideways, pick up the phone. Or better, go face to face. If you’ve grown up communicating mostly through an electronic device, you’ll need to learn to use the full range of human abilities to be a good listener.
  • The big one… missing the bigger picture. Employing active listening strategies does not guarantee success.

It’s More Than Listening

Listening is part of something bigger. You can employ all the active listening strategies and still be ineffective. Your IQ can help you to learn the techniques, but your EQ, or emotional intelligence, will be the key to being a good listener and effective communicator.

If you are not genuinely interested in other people, in solving problems, and in making a difference, you are likely not listening well and people can smell it. It really does start with you. And people don’t always make it easy! I’ve often thought that a key to success is the ability to be respectful of others when their attitudes, words or actions are not what we would classify as respectable. Just remember, being empathetic with others doesn’t mean you have to agree with them. It does mean you have to listen hard enough to imagine what it might be like to be in their shoes. That can require a very high level of emotional intelligence.

Final Words

“The best way to persuade someone is with your ears, by listening to them.” – Dean Rusk

More gems from The Excellence Dividend – some of the “Good Listener Rules.”  (Buy the book. Seriously.):
• A good listener does not EVER take a call, even from her or his boss.
• A good listener takes EXTENSIVE notes.
• A good listener CALLS (better than e-mails d%#n it) a couple of hours later to thank the other for his or her time.
• A good listener the next day with a couple of follow-up queries.
• A good listener does NOT pontificate!

“Never miss a good chance to shut up.” – Will Rogers

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change management, Communications, condo associations, Cooperatives, HOAs, leadership, Management

We Are All Geniuses…or Insane. Your Call!

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I’ve heard this quote, widely attributed to Albert Einstein, for a long time. As it turns out, he may or may not have ever said it. Thing is, it resonates so well that it’s easy to attach genius to the observation. So why not Einstein?

We silly humans tend to choose familiarity over change, even if it makes us miserable. I’ve noticed it in my world of community association boards and managers. Instead of taking an honest look at our results and trying to figure out how we got there, we’ll practice what Canadian brand transformation specialist Alan Quarry calls “glue diligence.” We do it because we’ve always done it that way, and dang it, we’ll never change!

…And then we blame everybody and everything else for our frustrations and failures…

One of the most important changes we can make is to see ourselves differently. For the longest time, the thought of being a salesperson made me cringe, just a little bit. But a few years ago, I realized sales and marketing were weak areas in my business skillset. It was time to hit the books. Funny thing is, a few of the writers I learned from in my study of leadership through the years started off as sales guys.

THE ART OF LEADERSHIP AND SALES

I didn’t fully connect the dots until I read Daniel Pink’s brilliant book To Sell is Human. It finally hit me. I gave myself permission to see myself and my role a little differently. The art of leadership is the process of helping people move from one place to another. Outstanding leaders share a vision so compellingly, people buy in because they see the benefit. Yes…BUY IN. Therefore, leaders sell and it’s a good thing.

Sales done right has never been ugly. Great salespeople believe they have something of value to sell, provide service and value first, and create a space where people can see themselves taking advantage of the value proposition. They are not selfishly manipulative. They are connecting dots. In essence, they don’t sell anything but an idea, creating a space for others to buy. They understand the wisdom of Jeffery Gitomer’s words, “Nobody likes to be sold, but everybody likes to buy.”

THE SUPERPOWER

The process of sales is the process of leadership. If we are to lead, we must sell. And to be truly effective, we need the superpower all great leaders and salespeople have – the ability to be an agent of change. This is leadership at its highest level – the ability to lead change, sensing when and how to initiate, support or facilitate it so that the stakeholders in an organization make it their own.

And yet, how many board members and community managers see themselves as leaders, salespeople and change agents?

WHAT WE HAVE HERE IS….A FAILURE TO COMMUNICATE

So many times it comes down to communications skills. We all have a tendency to communicate from our standpoint. Managers are trained to be technically proficient. Board members may be trained in governance. Unfortunately, as a result both are frequently ineffective. They are “doing their jobs” while missing the point. It has led to community association members disconnecting from their communities. Quoting from memory a comment from the Wall Street Journal, “People tend to have the same emotional connection to their HOAs as they do the Internal Revenue Service.” Ouch. It doesn’t have to be that way.

Think about how the message is received and you might realize you are coming off like Moses descending the mountain with stone tablets from God. Our message may be important, but it’s not THAT important. Worse, we may be accidently sending the message that people exist for the governing documents, when the truth is that those documents exist for the people. Or you may be coming off like a mean nun with a ruler, ready to whack all those disobedient children.

It doesn’t matter what you say. It only matters what is heard. And while you can never control what’s heard, you really need to think about the message and work your brains out to communicate from the receiver’s perspective, not your own. That’s what great leaders, salespeople, and change agents do. Make it real. Show the value. Explain the Why. And be patient. Because until you do these things, you’re just part of the increasing noise in your members’ lives.

INSANITY OR GENIUS?

If you are not connecting with your community or your client, if you are frustrated, it may be time to stop the insanity. Make a change. Start with how you see your role. Be leaders. Be sales people. Be change agents. Communicate like the best leaders and salespeople with the change agent superpowers.

Change the message and the delivery so it actually reaches your audience. It’s about them, not you. Make it real. Show value. Be a genius!

Thanks to Ed Loonam, PCAM, of Property Management Associates in Virginia Beach, Virginia, who gave me the inspiration to turn my SEVA-CAI CA Day sparks talk into a blog post!

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business life, Startups

The Crucible of Overwhelm

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It happens.  Sometimes self-inflicted, sometimes thrust upon us, and very frequently a combination of the two.  There will be periods of time when there’s just way too much to do.  Your mental RAM maxes out and your brain freezes up right when you need to move quickly from one thing to another.

Over the past couple of months, the circle of death of my mental laptop has been a frequent visitor.  All the work required to prepare to launch into self-employment again is bringing back memories. Neural pathways I thought were long gone have reappeared, for better and for worse.  I’ve been busier over the last thirty days than I’ve been in a very long time.  It will no doubt remain that way through August.  It’s a good problem to have in one way – I get to eat!  At the same time, these are the experiences that test one’s mettle.  The pressures that come from having way more on your plate than you can reasonably handle creates a crucible.  I started thinking about what I’ve learned through the years and watch myself act and react to the challenges of the day.  The process is often painful, but also beneficial. I’m remembering what I already knew and learning new stuff.  Here are a few things that keep flashing through my mind.  If you feel overwhelmed from time to time, I hope they help you in some way.

1.       Better a purpose than a plan.  When the pressure is on, sticking rigidly to the plan can be disastrous.  Things never work out perfectly, especially when there are time crunches and other uncontrollable variables impacting you.  Everything seems to take longer than you expect.  The stuff and people you thought you could count on might not come through.  Overwhelm teaches you to prioritize and reprioritize.  As conditions change, plans change.   Be clear on your purpose, your goal and the general direction to get there.  Be flexible or you’ll drive yourself batty.

2.       There’s gotta be light at the end of the tunnel.  If you know overwhelm is temporary, it’s doable.  If there’s no end in sight, you’re doomed.  Some people live in constant overwhelm.  They won’t live long.  The perpetual cortisol’s gonna kill them. If you can honestly say you’ve done everything in your power to manage the situation, and still can’t see the light (or worse yet, realize it’s a train), then perhaps it’s time to change direction.

3.       You’re gonna suck sometimes.  It’s OK.  Overwhelm may bring out the best in you, but it can definitely bring out the worst.  Little mistakes pop up.  Unclear communication mucks up the works, whether you’re speaking or listening.  Distracted actions, forgetfulness, you name it.  Stress + velocity (+ sleep deprivation) = errors.  Do your best to mitigate them, but don’t beat yourself up too much.  Look for support, ask for support and appreciate support.  Get a good proofreader. Or else you’ll find that this is where long-lost bad habits come back with a vengeance.  I grew up with a hot temper.  I’ve worked for decades to manage it and have gotten fairly good at it.  Well…it’s back.  The crucible is calling me out.  Neural pathways are burned in our brains by chance or by choice and they don’t go away.  The triggers are still there.  So, be aware of those triggers and do your best to choose to be your best self.  You won’t be perfect but don’t give up. 

4.       You’re gonna do amazing things.  Crucibles have huge upsides.  Stripped of the luxury of time to doubt yourself, you’ll do things before you think you are ready and they’ll work out just fine.  There’s a lesson there.  Pushed to what you thought was your limit, you’ll do more.  Or better. Or both.  You might be too busy to see it now. But you’ll look back and realize how remarkable you were.

5.       Remember your Why.  There was a reason you decided this thing was worth it.  Keep that vision close in mind.  Remember how this ties into your personal governing values.

6.       Moments matter.  This is when it’s really hard to stay in the moment.  You’ll be tempted to be in the future a little too much. Annnnd go back to #3.   You’ll find yourself thinking and saying, “I don’t have time.”  Just remember this is primarily an emotional response, not an analytical one.  You probably don’t have time to spend on superfluous things.  But you certainly have time to invest a few moments to lock eyes with the person you are talking to and really listen to the whole sentence.  To look up and appreciate a beautiful blue sky, to laugh, to smile, to connect.  And perhaps most importantly, stop, drop and roll.  Pausing will feel counterintuitive.  Yet, doing so for a minute or two to take a breath, to analyze, to recalibrate, and to refresh will be a time investment in the long run. 

7.       Be grateful (and be ready to apologize).  Say thanks.  A lot.  And realize you’re going to miss a cue or a nuance.  You’ll say the wrong thing or do the wrong thing.  Be quick to apologize.

8.       Feed your soul.  Hopefully you have a routine that allows you the time and space to invest in yourself.  In overwhelm, those routines tend to fall by the wayside.  It’s best if you can stick with them, but if you fall off the wagon, beware of all-or-nothing thinking.  If you can’t seem to do everything to feed yourself, do something.   I’ve found audio learning in the car has been a great benefit.  I also thought about little things that fill me up and will look for opportunities to enjoy them – the sound of my daughter’s laugh, watching the grandkids play, quiet sunsets, just a page or two from an upbuilding book or blog or article, a little prayer, a smile from a friend.  They all light me up.  They all remind me of the best things in life.

What feeds your soul?  If you can’t eat a full meal right now, at least grab a nice, healthy, little snack.

Hang in there.  It sounds trite but it really is all good.  The crucible helps you see yourself more clearly.  You’ll learn and you’ll grow.  It won’t go exactly as you planned, but you’ll be in a different place when it’s all said and done.  And regardless of the exact result, what you learn along the way will make it worth it.  Even if you fall flat on your face, as long as the process leads you to see, appreciate and live your values more completely and your life more fully, you win.

 

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Best Practices, change management, community associations, condo associations, Governance, HOAs, leadership, Uncategorized

Dear Boards: Suck It Up and Be Transparent

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James Dyson developed over 5,000 prototype designs for his revolutionary vacuum cleaner between 1979 and 1984. Nobody cared until 1983. An Italian appliance maker agreed to sell them by mail order. It was not exactly a success; only about 500 units were sold that year.

But Dyson was undeterred. He never forgot his unhappy experience with a typical vacuum in 1974, when he noticed it seemed to lose suction easily and required a lot of maintenance to maintain optimal performance. He knew there had to be a better way. He was sure his “cyclonic separation” technology was the answer.

Who Wants to See Dirt?

One of the key features of the vacuum was its clear plastic dirt collector. Market research at the time said people would hate it. But Dyson sensed that people would want to see the results of the vacuum’s performance, no matter how ugly it might be. So in 1991 he launched Dyson Appliances Unlimited. Was he right? Today Dyson is a multi-billion pound (British) company employing over 8,500 people. But you don’t need to know statistics to see his impact. Take a look at the appliance shelf at your local department store or Amazon page. How many competitors copied him?

Historically, vacuum cleaners trapped dirt in a hidden bag that was removed and thrown away. The clear dirt collector went against the grain of conventional wisdom at the time. In his ebook Who Do You Want Your Customers to Become?, Michael Schrage quoted Dyson: “The interesting thing is that when I did this, all of our competitors just fell about the floor laughing; they were actually delighted that I’d been so stupid. And the retailers wouldn’t have it . . . We went into the stores, and our vacuum has all this (expletive deleted) in it. The retailers are absolutely hostile. They say, ‘No, no, no, it’s a complete mistake—make it smoked or tinted or something.’ But I persisted, because I found it really fascinating that you could see exactly what was happening; you could actually see the nature and texture and type of dirt you’ve picked up.”

Schrage concluded, “While Dyson’s transparency defied the industry’s conventional wisdom, customers knew they could see with their own eyes how well their innovative technology worked. Dyson offered a simple, easy, and inexpensive user experience that invited customer confidence….Transparency creates trust. Dyson’s contrarian innovation was an investment in trust. Dyson empowered his customers to come to their own real-time conclusions about his product’s performance. “

What’s This Got to Do with Community Association Governance?

Too many boards of directors of community association are nervous. Nervous about contention. Nervous about bad PR. Nervous about looking unprepared. Nervous about being wrong. Reflexively, they retreat into secrecy, even when state or local statutes require open meetings.

I get it. People can be tough. Most communities have hard cases living in them. I remember Elvira, a unit owner in a particularly contentious condominium I once managed. She was the Board’s harshest critic, never missing an opportunity to call out any and every imperfection. When I asked her why she didn’t step up and serve on the Board, it became clear she didn’t want to be accountable. She just enjoyed holding others accountable.

I also remember my first condo management job. I was a contracted, interim building manager for a small and elite condominium in Washington DC. I went to work every day with a knot in my stomach, certain I would blow the building up. At the end of my tenure, the whole community threw me a going away party. It was amazing. I cornered one of the board members and said, “I don’t understand. This was my first management job. I made plenty of mistakes. Why were you so happy with me?” I’ll never forget the answer.

“Tom, you told us about every little thing that went wrong. We knew if anything really bad happened you would be honest about it. You have no idea how valuable that was to us to have a manager we could trust.”

“Transparency creates trust”
– Michael Schrage

Humility and openness are invaluable. They set a tone and can change the game. My mentor Arthur Dubin, President of Zalco Realty, and I still recall a president of a condominium we helped turn around back in the day. The condominium had been the victim of paralysis by analysis. This was due in no small part to egos that got in the way of seeing reality and being responsible for decisions that might not work. A brilliant oncologist, this president was always willing to admit when he didn’t understand something. He asked the questions others were afraid to. His standard line was, “talk to me like I’m 5 years old.” The board became more comfortable discussing matters openly and sharing information on topics in progress with owners. All their dirt was in the open. Nobody got sued, the community came together, and stuff got done. More than 20 years later, Arthur and I still reminisce about “Dr. Bob” moments every so often.

Consumers pay good money for a vacuum and want to see the results. They trust their money was well spent, even if what they see might be a bit distasteful. They know the technology works. Seeing the results allows them to draw their own conclusions. Community members pay their fees. They want to have confidence that the organization they are funding is working well. They want to have confidence in the process, even when the news is a less than pleasant. Seeing the process unfold allows members to buy in for themselves.

So your gut reaction may be to stay “safe” in the shadows. This is a fear-based decision. You already know those don’t work out too well (FEAR = False Evidence Appearing Real). You may make assumptions about how members will react to seeing the dirt. And it’s true that in our litigious society there are reasons to be discrete. But knowledge gaps will be filled by the rumor mill. The Law of Omitted Data (i.e. if a percentage of information is omitted or missing, bad data will spread at an exponential rate over time) runs amok. This creates a vicious cycle of distrust, secrecy and dysfunction.

So yes, it can be tough ESPECIALLY in challenging times and with bad news. Take a deep breath and be as open as circumstances permit. Change the game and begin to turn vicious cycles into success cycles. This is not theory. It works. Give it a shot – suck it up and be transparent. When the results start to flow you’ll be glad you did.

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Useful stuff for community association leaders and the professionals who serve them