Management companies are hired by boards to oversee operations because there are simply too many moving parts for volunteers to handle. To this end, it’s the board’s responsibility to do its due diligence and select the best fit and enter into contract; however, this is just the first step to ensuring successful operations. Without continued oversight and assessment, problems arise.

“In any business it’s important to provide employees with feedback, both positive and constructive,” says Andrew Raynor, president of Shawmut Property Management in North Andover, Massachusetts. “The company has an ultimate goal and reaching that goal is difficult without everyone pulling in the same direction.”

According to the Community Associations Institute (CAI), in 2010, there were 309,600 association communities, 24.8 million housing units and 62 million residents nationwide. Condominiums represent 38 to 42 percent of these statistics. Additionally, CAI estimates the number of community association managers to be approximately 60,000 and the number of community association management companies to be roughly 10,000. Thus, the competition is fierce, which places boards in the driver’s seat. Not only should the best company be selected but the manager assigned to the building graded on performance.

“From a property management perspective, an employee’s evaluation is done to determine how he or she is performing in relation to the overall scope of responsibility,” says Tim Arel, property manager for North Point Property Management, with offices in Amherst, New Hampshire and Andover, Massachusetts. “We are expected, at a minimum, to reach a baseline of performance for an association but the real benefit we bring is knowledge, experience and the ability to think outside of the box and bring new approaches.”

Assessment Best Practices

While there are differences in approach, almost all management companies have internal criteria for managers to follow. These in-house rules are then applied to each respective building. Often, a specific building or board will require amendments to standing regulations. Like any relationship, there are variables that make it unique, requiring a tailored approach.

“We have in-house goals and a performance evaluation that is sent to our clients,” says Raynor. “The board assessment tool includes benchmarks that relate directly to the contract and the agents’ performance of our agreement.”

What happens, though, when inadequacies are underscored and problems mount? For many boards, these red flags are disconcerting and detrimental. “Communication is king,” says Adam Kenney, regional manager for Peabody Properties, Inc. in Braintree, Massachusetts. “If you continually communicate with residents and board members, there are often no problems; it’s when communication breaks down that problems occur.”

While red flag indicators could be phone calls and emails that go unanswered, Kenney says that with transparent communication, these issues can easily be avoided or resolved. “I always have my managers and board members cc: me on all emails. This way, if it is a Friday and there is an issue at a building, we are on top of it because it might be time-sensitive and can’t wait until Monday.”

Additionally, Kenney says it is important to adhere to protocols and regulations. “Meeting minutes should be turned around quickly. Any financial or collection issues should be brought to the attention of the residents and the board on a monthly basis,” he continues. “Consistency and in-depth communication are the keys to a successful relationship.”

While board members change frequently, the governing documents should provide guidance and inform both board members and managers with regard to expectations, milestones and goals.

“Develop an action item list, as detailed as possible with the assistance of the manager. Be sure all tasks are within the scope of the management or employment agreement. Each month delegate tasks to the manager and track them on the action item list,” says Raynor. “Watch for dropped items and look for an explanation. Over time, performance trends will appear. Remember to keep this within the scope of your agreement. If the board begins to demand items that have nothing to do with the stated scope of work, it’s a recipe for problems.”

Arel agrees, adding, “When we take over an association, on the onset we do a review of their plan. With that information we can tell them where they are presently and offer options on how they can improve the business model,” he continues. “The first part of the process is evaluating a manager’s performance, and then we determine if objectives are being met. Second, we get the perception of the owners and board by detailed surveys we send out and then review.”

The survey process is a common but highly effective tool, adds Kenney. “On an annual basis we will put together a list of questions. We have the board approve the survey and then we distribute that survey to the resident population. We review responses in our corporate office. We constantly want information on what our employees are doing so we can deliver the best service,” says Kenney. “Perception is reality, so this tool is very important to us.”

Boards often will take a similar approach and develop surveys to determine if all goals are being met in the timeframe set forth.

Surveys generally include the following categories: financial/budget, administration, maintenance and customer service. Each of these categories has a subset of questions such as level of professionalism, frequency of visits to the property or the time it takes to return a call or accuracy of budget. Usually a grading system is applied from A to F.

George Einfeldt, LSM, PCAM, and William Trochim, Ph.D authored Surveys: A Guide for Community Associations, which offers guidance and sample questions. Even with a thorough survey in place, there exists a gray area as to what a board should do with this information. For example, do they approach the manager directly or go above his or her head and speak with a regional manager?

“If the board employs the manager directly, I would encourage them to handle it as any employer-to-employee relationship with all the same metrics. However, when evaluating the manager employed through their managing agent, the board should review the management contract and adhere to the goals and scope of work listed there,” says Raynor. “It’s important to base performance expectations on real and binding aspects of the management contract, not assumed duties and roles.”

When issues and problems arise, Arel adds that it is often best to speak first with the individual property manager. “You should always deal with the property manager first, as you want to keep continuity and this person will know the building and property best,” he continues. “They are the point of contact to the board and their job is to carry out what the boards ask. If that doesn’t work, the next step is to go to the agent’s manager.”

If a board begins to realize that problems are occurring without being resolved, they can reiterate requests or as Kenney notes, add supervisors to emails which provides another level of oversight. Despite best intentions and practices, sometimes issues can’t be resolved, and action is required.

“If the agent is the employee of the management company, make sure the principal of the firm is aware and has the opportunity to review performance with the board,” says Raynor. “If the principal isn’t engaged, doesn’t make an effort to improve or is out of touch and the performance is sub-par and within scope, the board needs to find another agent.”

Meeting Expectations

The relationship between a property manager and a board is intricate. The manager is there on behalf of the board and in turn expectations and oversight can become overarching with the board taking on too much responsibility. This may come in the form of providing incentives or, in some cases, disciplinary action both of which are questionable.

“I wouldn’t expect my clients to incentivize any of my employees; this should be handled by the management company. Management companies are a for-profit venture and employees that produce at a high level and in lockstep with company policy are highly incentivized,” says Raynor. Boards that employ individuals on their own are, in effect, taking on the role of a management company. “If you have a site staff as an employee and they are doing a great job, make sure you keep them happy. Your manager holds the keys to your community.”

With regard to the condominium’s governing documents, certain legalities present problems for board members and property managers alike. In this case, seeking professional oversight is recommended. “There can be huge gray areas, and as a management company we encourage our clients to seek legal guidance because there are various issues such as smoking or Fannie Mae and Freddie Mac implications—all these issues require an astute legal perspective,” says Kenney.

If a board has other issues, Arel, Kenney and Raynor all suggest investigating resources offered by the CAI, which has 60 chapters worldwide. The organization recently rolled out new online courses that address key topics. Additionally, Arel implores board members and managers alike to attend CAI’s annual boot camp. Last year the three-day event took place in Chicago. At a cost of roughly $600 per attendee, Arel said it is well worth the investment.

“It provides the nuts-and-bolts of running an association. Not only does it positively impact the board members who attend, but it also benefits the management company because it serves as a refresher and alerts us to new developments,” says Arel. “They are fairly well attended but they could be, and should be, better attended.”

W. B. King is a freelance writer and a frequent contributor to New England Condominium.