The Role of the Board Presented by Mike Baum
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- Lorena Stone
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1 The Role of the Presented by Mike Baum Who among you purchased your home because you wanted to serve on the of Directors of your community? Based upon the phone calls we sometimes receive, after a buyer moves into a Condo or Homeowners Association, some new buyers have little idea what an Association is, and what the responsibilities are of the Association. Why do we have to pay assessments? What are the common elements, etc.? In fact, we get a fair amount of calls from folks that had no idea the house they purchased was even in a common interest community, especially folks buying a single family home in a HOA. Beyond a doubt, one of the last items on the minds of the new homeowner is a desire to serve on the of their Association. Eventually they join the for one of two reasons - they are really mad about something that the or Management did or they have a true desire to help govern the Association and make it a better place to live in. Now you are on the of your Association. Why does the exist, especially if there is a management company? What are the s responsibilities? What power does the have (We don t need no stinking badges)? But think about it - what gives the the power to legally and rightfully impose a monetary fine on someone else? So, why does the exist? Simply put, the exists to represent the members of the Association. The is the voice of the owners. Ok, so the exists to represent the owners and be their elected voice, but what is the Role of the (today s topic) and what is the role of the member. John Carver (creator of Policy Based Governance the foundation of this presentation) said members are usually intelligent and experienced persons as individuals, yet most s (as groups) are mediocre. members are often little more than highpowered, well intentioned people engaged in low level activities. (Gillies 1992) This is not to demean the commitment, intent or energy of the typical member. These wellmeaning individuals have simply never been taught the role of the or member.
2 Why are most s mediocre, underperforming or dysfunctional? Simply put, because the role of the has never been defined. Some s fail to understand the proper role of the and Management and how best to operate as a team. Is the role of the to help and assist Management? Is the role of the to perform the work necessary to manage and administer the Association? Is the s role to be a rubber stamp? Peter Drucker (well known management expert and author) said in 1974 there is one thing most s have in common they do not function. Geneen in 1984 said ninety- five percent of s are not doing what they are legally, morally and ethically supposed to do and s tend to be, in fact, incompetent groups of competent individuals. Wow. Sorry if this is offensive in any way. That is not the intent. The intent is to get the message across that most s can operate at a much higher and more efficient level. We just do not make the time to discuss the proper Role of the for several reasons-chiefly because that is the way the has always been run. Some of the blame rests with management companies for not conducting a discussion on the Role of the with their clients So, let s now discuss the proper Role of the. We ll start with the basics. What is the authority of the? The is where all authority exists unless otherwise delegated. OK, the has all the authority. Now, how to govern..especially if there is a management company? This is the critical question of this discussion. If I reflect back on the Associations that did not renew with us-i have found the same common denominator in 9 out of 10 causes for separation. Simply-well intentioned s operate as a Working vs. a Governing. We separate because the lines of responsibility are blurred or do not exist, causing and Management to be in conflict. What a tragedy! Here we have a well-intentioned who wants to help and do all they can to have the best possible Association but winds up changing management companies on a routine basis. What we could accomplish together if we both were on the same page with responsibility. Two cooks cannot make an omelet. One will insist on water, the other milk. One likes mushrooms, the other does not. Eventually one of the cooks mentally checks out so as to avoid conflict. That cook is often the management company who will allow the members to run with things. (the has the authority-so why interfere and have conflict?) This approach is usually a disaster, as members often do not have the professional expertise that management does. In addition, decisions are made by the without the knowledge of management so the manager is in the dark. One day the asks, why do we pay Management if we are doing most of the work? Let s find someone cheaper.
3 This leads us to the topic of today s discussion - The Role of the. What is the proper role of the? In my opinion, the role of the is one that draws the intelligence and expertise of the individuals, allows them to properly represent the owners and maximizes the professional abilities of the paid staff-management. The approach I would like to present is referred to as Policy Based Governance (PBG) as conceived by John and Miriam Carver. In a nutshell PBG is a complete set of principles and theory on how the should function. According to Carver the best way for a to get its work done is by writing and enforcing policies. These policies include mission, strategic goals and results the Association is trying to achieve. In addition, the sets expectations and the responsibilities of Management. After the has developed a full set of policies, it is the Role of the to monitor that management is carrying out these policies. This allows the to free itself from the actual work and operational details of the Association so they may focus on mission, strategic goals and results. (see above) There are basically 5 ways s function.
4 FIVE WAYS TO FUNCTION Managing Working Governing Ratifying Failing Working Managing Governing Ratifying Failing No CEO or perhaps an acting director. New start-up or small organization May or may not be incorporated or have 501c3 status essentially doing the work of the CEO as a team heavily involved in the work Focus on day-today operations Immediate time horizon board is recruiting volunteers and raising funds Weak or immature director, needs help running the place Emergency situations, between CEOs members know a lot about the work Focus on administration and operations Assign tasks to CEO Hands on and proud of it Intermediate time horizon board is making decisions Capable and competent CEO, experienced staff know more than the board about the work Clear division of duties Focus on board work, concerned with values Future-oriented, long time horizon, operates on strategic level Hands on/hands off, delegates to CEO board is setting policy Hire a good CEO and stay out of his/her way Approves what the director brings Organization OK, but board in decline Focus on stability, status quo Hands off, getting lazy, out of touch, unaware Old and stale policies, little accountability No term limits, reunion of old friends board is rubber stamp Members resigning, can t fill all the positions, high turnover, organizational fragmentation Financial mess, consumed by cash flow pressures Relational strife, distrust among staff/board Looking to the past, way behind the staff Not strategic, crippled by firefighting Confused, aren t sure what to do board is ensuring survival 2003 James C. Galvin & Associates, Inc. Christian Management Report, February 2004 Inc.
5 Which style would you say your functioning as? The goal is to be a Governing. A Working is doomed to be underachieving, cause burnout among members and see management companies come and go, I hope this will stimulate you and your to consider what kind of you are currently operating as. All so often we get caught up in work and activity and keep plowing the same field over and over. For most s, I believe it is wise to consider what the Role of the actually is (via a retreat or workshop)- and then take steps to become a Governing as outlined by the principals of Policy Based Governance.
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