Have you ever heard of a motivational self-help book for Co-op and Condo Boards? Neither have we. This adaptation of Stephen R. Covey’s 1989 Free Press book “The 7 Habits of Highly Effective People” is a self-help book for Co-op and Condo Boards detailing how to run a more efficient building.
Being aware of why Co-ops and Condos are inefficient is fundamental to correcting the problem. Like many non-profits, the main reasons for inefficiently run organizations are as follows:
Boards manage their own buildings on a volunteer basis. Frequently employed as full-time workers themselves, as well as having family and social obligations, they often do not have the time to spend on educating themselves as to the particulars of a residential building and better board practices. However, many of them already have professional experience with good (some poor) organizational practices. In areas of expertise within their professional lives, they are more likely to be aware of the inherent problems in running a business, such as poor communication, lack of transparency, and the lack of employee engagement.
Recruiting and retaining the “right” board members is key to a well-run building.
Boards manage the building as a non-profit, which means ideally they collect just enough revenue to cover the building’s expenses. Non-profits, as a group, face the same or similar problems as those of co-op and condo associations. For instance, board members are often unqualified or under-educated on the topics pertinent to the organization, coupled with a lack of time, lack of interest, lack of engagement, etc. Unlike for-profit businesses, non-profits (as do government entities), just raise the income to cover their costs instead of finding alternative revenue streams or improving their efficiencies from within.
Buildings typically run as non-profits naturally have the inherent problems that often come with other non-profit organizations: no clear goal, no strategy, and not enough qualified board members. Mark A. Pfister, a certified Board Director and expert board coach who sits on multiple boards, recently wrote “The Nonprofit Board Dilemma.” The article addresses the ineffectiveness and lack of efficiency on non-profit boards and how to change that.
At The Folson Group, we worked with a building where a newly elected board member asked a long-time board member how much work it would entail. The long-time board member’s answer was “we’re a pretty laid-back board, and mostly sit around and don’t really do a lot.” This should not only raise flags but be unacceptable at face value. As a board member, you have volunteered to work on the behalf of shareholders to run an effective organization; in addition, you have a fiduciary duty to do so. As Mr. Pfister says “I have never seen a truly successful Board Director put in less than 200 hours per year per organization.”
Most Co-op & Condo Boards rely on outside vendors for advisement on running the building; some abdicate 100% of their judgment and responsibility to others.. This can sometimes create conflicts of interest, but most certainly piles on an extra layer of communication, which often leads to miscommunication. Think of the children’s game of “Telephone”- Have you ever tried whispering something in someone’s ear and see what happens as it is passed along down the line through multiple participants before coming full-circle?
In the case of Co-op and Condo Boards, more often than not they depend on their contracted professionals and processes, all which likely were put in place long before newer members, and in some cases the entire group, were elected to the board. These professionals include, but are not limited to, the managing agent, legal counsel, auditor, tax accountant, engineers, architects and various other industry consultants.
Since Boards are volunteers serving non-profit organizations, they are often more passive, or ‘dependent’ upon their contracted professionals than for-profit business owners may be. Creating processes and setting up expectations, requirements and performance measurements for those contracted professionals will improve the odds that the Co-op or Condo will succeed.
Stephen R. Covey’s first 3 habits discuss changing your mindset from being too dependent upon others to being completely independent and self-reliant. Stay tuned for our next blog covering Habit #1 addressing the importance of being proactive.