|Posted on March 30, 2013 at 10:45 AM|
The question I would like to pose to community association management companies is: "Why don't you interview potential client associations in order to determine whether the leadership culture of the community is willing to adapt to the leadership culture of the company before trying to sell them on your services?"
Many management companies just look at the numbers when marketing a potential client association. How can they be competitively priced while still making a profit and what ancillary services can they provide that may augment the potential revenue. It's all about the business, as much of it should be.
The problem with adopting a strictly business approach when marketing potential accounts is that every potential lead, referral and potential new account becomes fair game and is pursued. It doesn't matter what kind of leadership culture the community has, or wants, it only matters whether or not they can land the account and add them to their portfolio. Bigger is better. That approach is going to put them in a position to collect a lot of unhealthy, dysfunctional communities that really have no interest in community-building. If a community is dysfunctional and/or unhealthy there is usually an over-controlling Board, challenges with rules compliance, apathy and disinterest by owners in anything having to do with the community association, more assessment delinquencies than should be considered normal and lots of dog poop in the common areas...er...I guess that would fall under "challenges with rules compliance" as I already stated, it may be redundant, but it still holds true.
Collect a couple dozen of those dysfunctional community associations and pass them along to your best portfolio managers to handle and, in time, you will have a professionally frustrated, over-worked, under-appreciated management staff. A staff that is unable to make any significant improvements in those communities because they are too busy playing catch-up due to the amount of time and energy it takes to manage those unhealthy communities. The pride of many management companies is that "their" system will turn even the most dysfunctional of communities around. Hogwash. You can put lipstick on a pig, but it is still a pig. The bottom line is that the amount of time, energy and resources required are often far beyond the skill-set of their "system".
What makes this 'open-door' policy of marketing new accounts work is that they don't pay their managers by the hour. If they did then they would quickly discover just how much managing communities with no interest in community-building costs them. The fact remains, whether they are aware of it or not, chronically unhealthy community associations are a cancer upon their business.
How do many management companies deal with managing these kinds of communities?
1. They rotate managers on a fairly regular basis: just before burnout.
2. They compute the rate of professional burnout in their hiring practices and are constantly looking for new managers to replace those that leave the company.
3. They assign additional support staff and/or senior management to help out, thus further increasing the amount of time and energy needed to manage the account.
4. They keep their head in the sand, stand behind their professional pride, and refuse to admit there is a problem with the community. It must be the manager, who is then replaced...often.
Now, I firmly believe that ANY community association can be turned around and moved towards the direction of community health, but the time and resources needed for some of those community associations are far beyond the scope of any one portfolio manager, even with support help. In addition, the costs involved probably are not going to be covered by the community or the management company. You don't get what you don't pay for.
What makes more sense is for the best management companies to set very high, observable & measurable standards that community associations must meet before the community can be considered as a potential client. That's right, the community association must show itself to be fit enough to be considered as a client of the management company. The interview process is reversed. The Board of Directors doesn't interview the management company first, the management company interviews the Board of Directors. If the community association meets certain standards, then the management company should do everything in their power to sign them on the line that is dotted. Sure, the management company is going to lose out on quite a few potential accounts, but the ones they do get are going to turn a much higher return on investment, for the company and the management staff involved.
What are some of those standards you ask (I promise dog poop in the common area is not one of them, although....). Here's some ideas:
- Financial records are complete and balanced
- Reserves are fully funded
- Maintenance projects are ongoing and scheduled
- The Board of Directors is fluid with no one person holding the position of President for more than 3 years
- The Board is committed to communication tools (websites, newsletters, social media)
- The Board is committed to holding several social events per year
- The Board is committed to empower owners and pursue programs that train future leaders
- The Board is willing to join and participate in the local Community Association's Institute
- The Board wants more owners involved and actively encourages attendance and Open Forum participation at Board meetings
There could be many more (or less) standards that would need to be met, but if the management company really wants to be the best (and not just the biggest), then they have to give their management staff a real chance to succeed. The most obvious way to do that is to make sure that your client associations have a leadership culture that matches your own...otherwise it is going to be the other way around...think about it.
Michael Pierson is CEO/President of Community Association Publishing Services (CAPS). He is the author of “Taking Control: Time Management and Communication Tools for Community Association Management" and "Creating Community: The Art of Empowerment in Community Association Living."