What Makes a Director Outstanding [Part 3] – Understanding How The Role Is DIFFERENT

What Makes a Director Outstanding [Part 3] – Understanding How The Role Is DIFFERENT

All the knowledge and experience from the working world (“day job”) can actually hinder a volunteer’s effectiveness in the world of HOA governance if the differences between the two worlds are not understood. Outstanding directors have learned that much of what worked for them in their day job will likely work poorly in the context of board governance. The chain of command is completely different in a community association. In the workplace, there is usually a person who is the “big boss”, somebody who is your immediate supervisor, and someone who you supervise. In the association, no single person is in charge. Decisions are made by the board, so the chain of command is horizontal and not hierarchical. The president in a common interest development is not the “big boss.” The president has far less power in most nonprofit corporations since all important decisions are made by the board, and so the president’s vote is no more important than any other. In this very different paradigm, the individual director typically has no personal power. Once directors embrace the framework of the board as decision-maker, they understand that they cannot make individual promises. This restraint can be very freeing since no individual is responsible for the association and its actions, as all decisions is made by board vote. So, when confronted at the pool or parking garage by homeowners demanding action, the director can truly say they can’t individually do anything and suggest the homeowner bring their concern to management or to a board meeting. Directors failing to adapt to the group decision-making process will often stray outside of corporate...
El Presidente Is Not El Jefe

El Presidente Is Not El Jefe

The office of HOA president is often misunderstood, and very serious disfunction for associations and their boards, as well as heartburn for the president, can be the outcome. At the outset, it is critical to understand that the role of the HOA president is dramatically different than the for-profit corporate president. The typical for-profit president is hired to be the boss, and can hire and fire, create or terminate contracts, and otherwise run the show. On the other hand, the HOA’s boss is not the president, but its board of directors. Corporations Code 7210 confirms the chain of command in the common interest development – “the activities and affairs of a [non-profit mutual benefit] corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board.” In a for-profit corporation, the day to day running of the business is typically the responsibility of the president, along with hiring and firing staff. In most associations, day to day execution of board decisions is executed by the association’s paid professional manager. The association president has just one vote on the board, and that vote is no more valuable than any other director. Directors who always automatically defer to the president are not fulfilling their responsibility to the association – which needs each director to contribute. A “super-director” does not exist in the HOA world – each director is just as important as the others. HOA presidents often feel that it is their responsibility to instruct the HOA’s manager, employees, or vendors on how they should perform their jobs. However, in doing so without express...

New Year’s Resolutions [Part 3] – The Manager

As the association’s professional manager, I resolve to Number one: Follow the Golden Rule. Attitude check: Remember I am a professional, and will give the board the best advice I can. I am not employed to be silent. Strive to give the board the answers it needs to hear, regardless if it is the answer the board hopes for. Avoid reacting defensively to upset homeowners, and will make sure they are informed as to the “whats” but also the “whys.” If the board disregards my advice, I will document it in writing to the board. Not attempt to give specialized advice, but will refer the board to the appropriate specialized professional. Try to please all, while knowing that I can’t. Be knowledgeable: Pursue professional designations and attend seminars to keep me up to date. Be prepared at any board meeting to explain significant deviations from budget. Understand the Business Judgment Rule, and confirm the board has sufficient information to make each decision. Encourage my board members to join the Community Associations Institute, knowing educated boards are better boards. Better board meetings: Protect the board from overly long or disorganized meetings. Create agendas with consent calendars to quickly handle non-controversial items. Alert the board when an agenda is too ambitious. Become comfortable with the fundamentals of Roberts Rules of Order. Help the board stay on topic and on agenda. Alert the board if it is handling matters in closed session which should be in open session. Bring the HOA governing documents, including all rules, to every meeting. On each agenda item, be prepared to provide a recommendation or recommend retention...

New Year’s Resolutions [Part 1] – The Director

As an HOA director, I resolve to: Always: Follow the Golden Rule. Reboot my attitude: I don’t control my neighbors, I serve them. An attitude of service will help me to be less defensive and stressed when neighbors challenge or criticize board decisions. Advocate our board follows the law and governing documents, spends money wisely and properly preserves and maintains community assets, while also being mindful of the board’s relationship with our HOA community. We will balance the legal, financial, property and community considerations in our decisions. Remember that my position as a volunteer is different than my work. Unlike at work, we cannot fire our HOA neighbors. Be aware that not all neighbors know their rights and responsibilities under the law and governing documents, and I will be patient and willing to explain the rules and decisions. Be knowledgeable: Review our governing documents (CC&R’s, bylaws, and rules). Review financial reports on budget, reserves, expenditures and delinquencies. Understand the Business Judgment Rule, and always make sure the board has sufficient basis for each decision. Encourage my board colleagues to join a Community Associations Institute Chapter, and take advantage of the written materials, seminars and classes CAI offers to volunteers. Improve board meetings: Help to limit our open board meetings to at most 2 hours, with a goal of an average meeting length of 90 minutes. Arrive at meetings prepared, having reviewed the agenda and board packet. Listen attentively during Open Forum without interrupting, and give my neighbors the same level of courtesy and attentiveness which I expect from them during the board deliberations. Stay on topic during discussions. Meet...

Manager: It Might Be You, or Maybe Us

Many associations struggle with a poor manager relationship, resulting in a frustrated board or a terminated manager. However, such struggles can sometimes arise from the board’s actions and likewise can be resolved by a change in board practices. Truly, some managers are simply not cut out for the job. The need for excellent HOA managers increases along with the growing number of community associations. However, some are poorly qualified, overloaded with too many associations, disorganized, poor at customer relations, or even unethical and dishonest. No excuses can be made for such managers, and they should not be accepted. However, some managers are not allowed to succeed in their roles, as boards set them up for failure. Before an association gives up on its manager, ask if any of the following factors are present. You don’t, so I will Often, a director who performs managerial tasks will explain that “somebody has to do it.” This will insulate a poor manager from responsibility from their performance, and will discourage a good manager who wants to do their job. What we have here is a failure to communicate Many boards never establish expectations regarding communication flow, including the designated points of contact, and what type of response time is reasonable. Set mutually agreed expectations and make sure both management and board honor that agreement. Remember, not everything needs to be handled now. Your manager probably receives over a hundred emails a day from homeowners, so allow them to triage the critical from the lesser. The handcuffed manager If a board does not trust the manager, then the association may need another manager....