Is Your Board as Effective and Healthy as It Can Be?
How 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 fill out the form on the right 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’s southwest Florida region, 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, FirstService Residential vice president in Arizona agrees. “When it comes to communications that go out 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.
It’s also important to make communication a two-way street. “Boards should be open to feedback,” Kowieski points out. “One way to do this is with surveys.” He recommends keeping these short and establishing a cadence, perhaps sending them out monthly. “This lets homeowners know that the board wants to hear what they’re interested in,” he says, “so even if they can’t get to a board meeting, they can give feedback.”
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. “At least do an analysis and have those conversations with your vendors.”
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 you need to do your own due diligence, too.”
Leadership
Homeowners place their utmost trust and confidence in their board members to protect the community’s property and money. This fiduciary duty is a primary board responsibility, “but not everyone understands what that means. A key aspect is the relationship that board members have with homeowners,” Kowieski says. “It’s a duty to all, not just to one member or to a vocal minority.”
“You need to really understand conflicts of interest and fiduciary responsibility,” says Edwards. “You 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.”
Kowieski says that as leaders, board members have three important roles:
- To be servant-leaders Serving the members of the community rather than their own needs, as well as empowering others to build strong relationships
- 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
- 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. Edwards also suggests having board meetings at a set day and time every month. “You should also put together an agenda that is for things that are ready for an action,” he says. “Meetings are meant to conduct the business of the association. Avoid those 3-hour board meetings by limiting the agenda to really actionable items.”
Establishing a code of conduct is a best practice tool that Kowieski says 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
Both Edwards and Kowieski stress the importance of getting your reserve study updated regularly by a qualified specialist. Kowieski advises doing 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. “And don’t forget to include the cost of the reserve study when it’s time to do your budget,” he adds.
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.