A Look at the Board/Management Relationship
By Rolf Crocker

I was recently asked to speak to a large group of Board members on the subject, “Community Association Management – What It Is and What It Is Not”.  This is not easily defined, since there are multiple philosophies from both the Board perspective and from management.  It is clear that Boards and Management have a symbiotic or interdependent relationship.  Further, it is also clear that the successful models, regardless of its execution, are predicated on trust – trust that the Board is seeking to do the right thing and that Management will use their best skill and judgment to carry out the wishes of the Association as expressed through the Board.  Since it is virtually impossible to cover all of the various iterations, I thought it best to distill it down to the following concept:  Defining and Managing Expectations.  The respective roles of both the Board and Management must be clear in order to minimize confusion, clarify accountability and ensure positive results.

The Role of the Board. The Board is comprised of owners elected by their peers to serve as Trustees for the organization.  Their service is defined by the governing documents and the Law.  The historic role of a Board of Directors is one of guidance and oversight.  By guidance, I mean developing the plans and policies that will guide the actions of the organization over a defined window of time.  By oversight, I mean the Board is held accountable to the membership for results, but is not down in the trenches swinging hammers or driving lawnmowers.  The oversight role, by definition, requires the Board maintain a “mountaintop” perspective of where the organization is, where it needs to go and providing proper navigation to arrive safely at the predetermined destination.  This cannot be done effectively through micromanagement of minutiae.  A Board has to see the forest through the trees.

The Role of Management. First and foremost, management is guided by the terms of the Management Agreement (or job description for site managers).  Management serves as the agent for the Association, acting in good faith and utilizing his/her best skill and judgment to execute the plan and policies of the Association.  The manager actively pursues continuing education in industry ‘Best Practices’ as well as legislation and case law as it relates to the discharge of duties.  As the hub of the Association, management fulfills (at a minimum) the following roles:

• Administrator – Support the Board in the execution of their duties
• Implementer -  Responsible for the execution of the Association’s policies and procedures
• Team Builder – bring together the appropriate personnel to accomplish the goals of the Association
• Customer Support – Assist owners with their day-to-day needs as it relates to the Association

Defining Expectations. There are two (2) levels of defining expectations of management:  1) Contractually and 2) Operationally.  The Management Agreement (or job description) should spell out the obligations of the parties, specifically the ‘Level of Service’ expectation and its requisite pricing.  Here is where most management/Board relationships fall into trouble.  As an industry, we have historically defined our pricing for service on a ‘per door’ price.  Unfortunately, this does not contemplate the myriad requests for service that can come to management from the Association(s).  There is no way to tell if there will be one or twenty violations or two or ten maintenance requests.  All human resource allocations in businesses are predicated on the number of hours required to fulfill the contract.  That is why the key for both management and the Board(s) is to find the ‘sweet spot’ between price and service:  It cannot all be done for one low price, yet the Association should have a reasonable expectation of what it is receiving for the monthly fee.

Operationally, expectations need to be defined through some form of written plan and/or policies.  To accomplish this, the Board and management need to set up an annual Orientation/Workshop event in which they can look at the Association from the macro view, map out what needs to be accomplished and set specific milestones for completion.  Only then can the Board have a true metric or benchmark to assess management’s performance in the ‘results’ category.  This will also assist the Board in maintaining the ‘big picture’ view, keeping them from getting sucked down in the day to day minutia of the Association.  John Carver’s ‘Policy Governance’ model is increasingly being embraced as a way to define these expectations.  Additional information on this model can be found at http://www.carvergovernance.com/model.htm.

Managing Expectations.  Management firms should review the management contract with the Board annually, so everyone is aware of the contractual obligations.  Work from an annual plan (see above paragraph) and set up quarterly or semi-annual opportunities to review progress from both sides – Board and management.  If clarification or corrective action is needed, it’s always better to address it sooner rather than later, as original issues will be obscured by the mounting avalanche of newer issues crashing down on you.  If an expectation exceeds the contracted scope of work, define it in writing, including compensation.  Always work to build a trusted Team relationship.

There’s No ‘I’ In Team.  Of course, there’s no ‘we’ either, but there is a core concept to embrace on both sides, one that I’ve referred to before and that is this – it’s not about me (you).  The symbiotic relationship is real.  The key to making it work is trust.  Trust is built by clear and candid communications in defining and managing expectations.  If expectations change, then sit down and redefine them together.  By diligently working through these processes, an unstoppable team will be built – a true ‘win-win’ for Boards, Managers and the ownership they serve.