Is Your Board as Effective and Healthy as It Can Be?

Board-Assessment_420x290.jpgHow well is the board of your community association functioning? Are board members working collaboratively to meet the community’s interests? Do your meetings feel fluid and productive, and are your operations running smoothly?

Whether you are a board member who wants to ensure your board is doing everything it can to succeed or a resident who wants to get involved in the governing of your community, we have identified the best practices that can help you get the answers you need. Use these observations as an objective benchmark against which to measure your own board’s effectiveness in these 6 key areas, then click here to download our checklist, Board Self-Assessment Questionnaire: How Well Are We Doing Our Job?

Communication

One of the most telling signs of a board’s effectiveness is how well it communicates with residents. According to Roger Edwards, vice president for FirstService Residential, residents want their boards to be open about activities and issues that affect the community. “The overlying best-practice hot topic right now is transparency. Association members are expecting and demanding it more than ever.”

Kirk Kowieski, vice president at FirstService Residential agrees. “When it comes to communications from a board member to the homeowners, there’s no such thing as over communicating.”

Your residents may have different preferences in how they receive information, so it’s generally a good idea to use a mix of digital and traditional channels. Some options include email, a monthly newsletter, your community website, text messages, postal mail and bulletin board notices. “Have the ability and the technology to communicate with members in the methods they prefer,” Edwards suggests. For example, FirstService Residential Connect™ allows you to text or email all residents at once in an emergency or with other information that impacts the whole community.

It’s also important to make communication a two-way street. Boards should be open to feedback, through surveys, town halls and other means. Keep surveys short and establish the frequency at the outset. The more feedback residents can give, even without attending meetings, the more they will feel part of the community.

Finances

Transparency is equally important when it comes to finances. “Owners expect to have access to reconciled financials,” says Edwards. In addition, they need to understand what the numbers mean. “Interpreting your financials educates owners.” He recommends explaining expenses and line-item variances, articulating the community association’s cash flow and providing a cash flow projection for the year.

Another best practice is to review contracts annually during budget season and to renegotiate them or request bids for the upcoming year if necessary. “Look at every contract and ask, ‘Can we do better in terms of cost, or can we up the service?’” Edwards suggests. “Perform an analysis and have those conversations with your vendors.”

“Proactive boards sitdown and survey the community in the second half of the year and plan projects in accordance with their annual budget for the following year,” suggests Eric Kohorn, regional director at FirstService Residential. “If more money is needed, it's very easy to justify an increase in the budget to accommodate owner requests.”

Governance

Members of your board need to understand their roles and limitations, and that requires being familiar with your governing documents, as well as state and local laws that affect your community. “Boards really need to understand what their authority is,” explains Edwards. “There are very specific processes they have to abide by.”

Your board also needs to realize that there is a definite hierarchy to your governing documents. For example, covenants, conditions and restrictions (CC&Rs) trump bylaws and architectural guidelines. “You can find 99% of the answers in the documents, but your association attorney will need to give you the proper interpretation,” Kowieski says. “We provide board member training, but boards should do their own due diligence too.”

Leadership

Homeowners place their utmost trust and confidence in their board to protect the community’s property and money. This fiduciary duty is a primary board responsibility, but not everyone understands what that means.

“Board members need to really understand conflicts of interest, fiduciary responsibility and the importance of working for the good of the entire community,” says Kohorn. “They have to take the personal and emotional out of it. I always remind folks that the association is a corporation, and the board members are officers of the corporation. So it is a business, and the officers have to make business decisions.”

Edwin Lugo, vice president at FirstService Residential, recommends that boards work with their management team to identify their top 10 priorities within the first 2 months of taking their seats. “They should prioritize the top 3, setting budgets and target completion dates, then assign specific board members to lead these projects, working with their professional property management team,” he suggests. It is critical that board leaders and management work together to craft a vision for the community and make sure everyone is aligned on that vision.

As leaders, board members have three important roles:

  1. To be servant-leaders Serving the members of the community rather than their own needs, as well as empowering others to build strong relationships
  2. To be community builders Fostering mutual respect, establishing protocols for interactions among board members and with the community, developing a sound visioning process for the community and collaborating with local municipalities
  3. To be staff facilitators Seeing staff and vendors as partners in creating a successful community

Meetings

Here again, transparency is a best practice that plays a role in your effectiveness as a board. Make meetings as accessible as possible to homeowners by offering ways for them to attend via conference calls or webinars. Have board meetings at a set day and time every month and have an agenda clearly set for items that are ready for an action of some kind. Being prepared will help you conduct the business of the association more smoothly and quickly – no 3-hour meetings!

There are times when the board needs to meet for confidential reasons such as discussions of legal matters. Those executive sessions are separate from general board meetings and closed to residents.

Establishing a code of conduct is a best practice tool that can really help make your board meetings run more smoothly, too. For board members, this would include refraining from engaging in debates with homeowners, disclosing conflicts of interest and recusing yourself from any related votes to remove the perception of impropriety.

Reserves

Edwards stresses the importance of getting your reserve study updated regularly by a qualified specialist. Conduct a basic update yearly (with no site visit) and a more comprehensive update (with a site visit) every 3 years, depending on the size and complexity of your association. If you undertake any major capital improvements, plan on having a comprehensive update the following year as well.

How diligent you are about preventative maintenance will have a significant impact on the useful life of your components and, in turn, your future reserve requirements. “Remember that, like a budget, your reserve study is a guide. It’s not set in stone,” says Kowieski. “If a component has a longer useful life, you won’t necessarily have to replace it. Or you may find that you have to replace it sooner.”

Edwards also recommends evaluating the yield you are getting on your reserve funds. “At a minimum, you should do that every 6 months,” he says. “Every association we manage receives a list of our current banking partners and yields when we provide the monthly financial statements,” he says. “We disclose interest rates very transparently.”

By following these best practices, your board can ensure that your association remains a viable organization and that your community continues to be a place that residents are proud to call home.

Want to dig deeper to see how your board is doing? Download our complimentary checklist, Board Self-Assessment Questionnaire: How Well Are We Doing Our Job?