10 minute read
Back to the Future: Modernization of an Association
BY KRISHNA YALAMANCHI
Modernization of an Association
HOA BOARDS FACE many challenges. The most frustrating are often the result of the most mundane and tedious responsibilities of association management: keeping records, maintaining mailing lists, paying bills, notifying members, scheduling and managing meetings, dealing with maintenance requests and simply being transparent with members. These routine duties can consume a workday and expose the association to risk.
To be sure, the details of business is a fundamental part of the proper management of the HOA. The question then is how to streamline the mundane and make the information gathered work to the benefit of the association through improved transparency and productivity. Especially in these days of rapidly increasing process and paperwork, application technologies appear to be good solutions for many.
In this discussion, technology was the answer and it opened a new world of rapid and effective management. Today there are several programs and services which are perfect for HOAs and the advancement of business productivity and transparency. The availability of inexpensive personal computer-based and mobile technologies has brought association management Back to the Future.
The following was prepared by a former board member and leader in technology transformation of HOAs. The story begins…
Continued on page 20
HOA Lamentation
The association had been running reasonably well over the years, not hugely efficient but good enough for the management of day-to-day activities. There was no orchestrated, proactive management strategy or push for operational efficiency. The association was doing okay but it could be doing exceptionally well.
There was a growing frustration among homeowners and board members, many of whom worked in the tech industry and modern business environments, that more contemporary operational management would move the association from “meh” to magnificent while providing better service, compliance and stabilization of dues with the modernization of decades old management systems. Accordingly, the board began a process of assessment, identification and prioritization of the management and compliance systems to determine the best investments into a more modern business environment for the HOA. The board wanted to bring the association back to the future of efficient management.
Opportunities for Improvement
An internal look of the systems and processes uncovered some flags of concern. A review noted that there was an overconcentration of work with two vendors. These two vendors did 71% of the business of the association. Unto itself, not necessarily a huge problem but probably not the best management practice. The greater concern was that the board had little to no performance oversight and there were no clear metrics for performance. Without metrics and the tracking of these, how would the association be able to evaluate performance. This combined with the concentration of vendors, created significant risk to the association.
In addition, residents talked about the waste created from work that was often redundant and time-consuming with little or no member involvement or feedback. Day to day workflow was exceedingly complex for simple and routine problems with information difficult to obtain. Regularly, resident requests would be met with a statement, “I’ll have to look into that and get back to you in a day or two.” Which only served to frustrate the community and cause a backlog of mundane work that could be instantaneous done if proper systems were in place.
Further, the complexity of the often-manual systems and the resulting lack of transparency, created a rift between the board and management. The system, although working, was perceived as ineffective for the modern needs of the association.
Membership Assessment
Leadership realized that the shortcomings of association operations must be overcome for it to thrive. An effort was put forth to assess what the community perceived as most urgent.
The association formally and informally surveyed the community to ascertain homeowners’ perceptions of the association. At pool parties and other informal gatherings, the board collected information from its members by asking key questions of them. It was easy to gather information about perceptions of the association operations from residents in informal settings such as pool parties and receptions. This formed the basis for a broader electronic surveying process.
The association formulated questions and used an electronic surveying tool, SurveyMonkey, to more formally collect data from all homeowners. Thus, the process of collecting information about members’ perception of operations and the activities of management was reasonably easy to conduct and not expensive.
The data collected provided the board with a legitimate foundation from which to identify and prioritize the most critical areas of need for the association. In the questioning, the board set out to determine the aggregate perception of the community quantified in what is known as the “net promoter score” of the association.
The net promoter score quantifies whether a person is likely to recommend the community to another, noncommunity member (promote the community). This process is typically used in brand management of products like Tesla or Apple, but the technique also worked well for the association. The unfortunate but honest outcome of the data collected was that the association had a lot of work to do to improve the promoter score.
Identification of Board Goals
Using the survey tool, the board was able to identify why it didn’t score as hoped. Problems were isolated, defined and then
solutions developed to remedy the deficiency starting with the areas of greatest perceived need. These included: 1) building trust, 2) better service, and 3) improved curb appeal.
The Board Focused on Perceived Need: Better Service with Greater Efficiency - Automate Tasks
The board reconsidered how the association was doing things and investigated the systems used to run the HOA operations. After review, the board automated the routine and simple processes as much as possible by using inexpensive and readily available software solutions designed for these purposes. Following are some examples of the automation processes.
Banking System
The association changed the manual banking system to an electronic, seamless process. This improved efficiency, security and member service. Checks are now deposited, tracked and images saved electronically – rapidly available to managers by simply clicking a button. Reconciling statements is fast and easy and the review of checks is instantaneous. Transactions can be approved simply and easily by the click of a button which helps to ease compliance issues and provides a record of the transaction.
Communication Processes
Getting the word out to members efficiently and effectively is critical for association management. The HOA had been using a legacy email system for more than twenty years. In
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Setting Evaluation Criteria
FOR THE HOA AND ITS STAFF
Peter Drucker
Homeowner Associations are organizations. As organizations they are governed by an elected volunteer board of directors whose primary duty is oversight of the association’s operations and ensuring that the governing documents of the association are followed and enforced. Often, the self-managed HOA will “delegate” many organizational responsibilities to a paid manager, or other staff. In either case, an important task of the board of directors will be setting evaluation criterion for itself, manager and staff.
Peter Drucker (1909-2005, Claremont Graduate University), best known as the ‘founder of modern management,” stated simply but eloquently of organizations, “what gets measured, gets managed.” Heeding those five words will change the trajectory of your HOA
and allow the board of directors to set effective evaluation criterion for itself, manager and staff.
So, how do we measure and what do we measure? One of my pet peeves is that boards of directors spend too much time discussing what the HOA should “do” and not enough time discussing what the HOA should “be”. Don’t misunderstand, there are a lot of things the HOA board has the power and duty to “do.” Your HOA’s Bylaws probably have a section under the “Board of Directors” entitled “Powers and Duties” that list many of the powers and duties of the board that allow it to effectively administer the affairs of the association. These powers and duties should be seen in the context of administrative oversight and can be used to create initial evaluation criterion to measure both board, manager and staff performance and compliance against these measurable activities. To be sure, your board may create additional measurable metrics for the HOA including compliance to policies, rules, regulations, short- and long-term strategic goals, budget, reserves and investment goals, as well as contacts for vendors, manger and staff.
Setting evaluation criterion for the HOA and staff is a critical task of a board whose focus is on good governance.
Depending on the number of employees and staff and the administrative complexity of your HOA, the board’s responsibility is to regularly evaluate itself and monitor the performance of its manager or key staff members. Evaluation criterion can be broad or specific and the board will need to consider this carefully to effectively monitor its own performance and the performance of the manager and staff.
As Peter Drucker states, setting evaluation criterion begins with something to “measure.” Something to measure, starts with boards of directors who embrace their responsibility to oversee the operations of the HOA and create thoughtful and meaningful goals and policies that enhance the quality of life and community experience for current and future members.
John Cligny, CAMEx, CCAM-HR, AMS, is the co-founder of Association Consulting Group and is a veteran portfolio manager and industry thought leader. John advises and educates HOA clients and management companies on a wide range of community management topics and provides expert testimony in litigation.
BOARD’S EVALUATION CRITERION MAY INCLUDE:
SELF-EVALUATION OF BOARD PERFORMANCE
• Is the board in compliance with its fiduciary duty? • How well is the board communicating the goals of the HOA, and its accomplishments and challenges to members? • Does the HOA have both a short-term and long-term strategic plan? • How well prepared are board members for board meetings? • Is the board supportive in receiving differing opinions from board members? • Does the board have a process for actively recruiting new board members? • Does the board have a process for orienting, educating and developing board members?
EVALUATION OF MANAGEMENT AND STAFF
• Is there a clear distinction between the role of the board and the role of the manager or staff? • Do contracts, employee agreements and job descriptions contain clear performance expectations and standards of measurement? • Are the manager or staff members in compliance with contracts, employee agreements and job descriptions? • Do the manager, employees and staff understand the HOAs goals and strategies? • Are the manager, employees and staff implementing board policies consistently and equally among all members? • Do the manager, employees and staff effectively communicate the goals of the HOA to members? • Do the manager, employees and staff encourage member comments and questions? • Is there a process for the board to hear feedback from the manager, employees, staff and members? • Are contracts, employee agreements and job descriptions reviewed and revised as the goals and strategies of the HOA are developed and revised?
