Tuesday September 03, 2024
How well is your community association board functioning? Are board members working collaboratively to meet the community’s interests? Do your meetings feel fluid and productive? Are your operations running smoothly?
Whether you are new to your board or a seasoned board member who wants to ensure your board is doing everything it can do to succeed, we have identified the priorities that can help you get the answers you need. Use these priorities as a benchmark against which to measure your own board’s effectiveness in these 6 key areas, then download our interactive checklist, Board Self-Assessment: How Well Are We Doing Our Job?
Board Priority #1: Communication
One of the most telling signs of a board’s effectiveness is how well the board communicates with residents. According to Ivy Montero, vice president at FirstService Residential, it’s critical that boards establish a reputation of transparency with residents. “Time and time again, we see the importance of transparent communication. When boards are open and honest with the community, residents are more likely to trust the board’s decisions, knowing that they have the association’s best interest at heart.”
Katharine Effron, vice president at FirstService Residential Florida, agrees. “The residents have the right to know what’s going on in a community, and we have a duty to relay that message.”
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. “We must choose the right means of communication for the right message,” Effron said. “For instance, in an emergency, posting news on a message board isn’t ideal. Instead, use a messaging platform that can reach everyone quickly and effectively.” 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 important to make communication a two-way street. Boards should actively seek resident 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. Additionally, when you involve residents often, you’re less likely to receive pushback when implementing new policies.
Board Priority #2: Finances
Transparency is equally important when it comes to finances. “Your association should give owners access to reconciled financials,” said Matt Sluizer, director of client relations. “It’s a good idea to give them context into what the numbers mean, including expenses, line-item variances and cash flow projections for the year. Without that, they may not have the full picture or a clear understanding of the association’s financials.” He added, “However, remember that it’s not your job to know everything when it comes to complex association financials. Work closely with your management company, who should provide you with access to financial professionals and budget resources to help you develop a solid budget and optimize the financial health of the association.”
Boards should review contracts annually during budget season and, if necessary, renegotiate them or request bids for the upcoming year. Brent Reynolds, vice president at FirstService Residential, recommends that “Boards should evaluate their vendor contracts every year. A community’s needs can change from year to year. You might find a more cost-effective option if your needs are reduced, or you may find that you need to expand the services a vendor provides. Either way, you should request bids from a variety of qualified and vetted vendors for every service need, to make sure you’re always getting the right service level at the best prices.”
Board Priority #3: Governance
Members of your board must understand their roles and responsibilities – as well as their limitations. That requires being familiar with your governing documents, as well as state and local laws that affect your community. “As a volunteer board member, understanding what you can and cannot do should be your priority when you first join your association’s board of directors,” said Montero. “Abiding by these principles can protect you and your association from costly mistakes and even liability.”
Your board needs to realize that there is a definite hierarchy to your governing documents. For example, covenants, conditions and restrictions (CC&Rs) or Declarations of Condominium trump rules and regulations and architectural guidelines. “While you can review each of these documents on your own, work with your attorney to help you interpret and fully understand them,” Montero said. “FirstService Residential provides training to help boards understand these important documents, so that they can develop policies and make decisions with ease.”
Board Priority #4: 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.
“When you’re elected to a board of directors, you have a responsibility to make decisions in the best interest of the community as a whole – that means taking any personal interest out of it,” said Amy Sanchez, president at FirstService Residential . “It’s important to treat your association as a business, and that the board operates with that in mind. That translates into making decisions on a professional basis, not an emotional basis.”
Sanchez added that boards should lean into their management team to help them define a vision for the community and make sure everyone is aligned on that vision. “After that vision has been crystallized, the board should identify strategies and projects to help achieve that vision,” she said. “Your management partner can help you prioritize these strategies, setting budgets, determining deadlines and supporting board members to tackle those projects.”
As leaders, board members have three important roles:
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To be servant leaders: Serving the members of the community rather than their own needs, as well as empowering others to build strong relationships
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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
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To be staff facilitators: Creating partnerships with staff and vendors to create a successful community
Board Priority #5: Meetings
Here again, transparency is a priority 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 if they cannot in person. 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 more 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, understandably, not open to residents.
Establish a code of conduct to 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.
Board Priority #6: Reserves
It’s important to get your reserve study updated regularly by a qualified specialist. Consider a comprehensive study or update (with a site visit) every 3 years and conduct a basic update every year (a site visit shouldn’t be necessary), 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 preventive maintenance will have a significant impact on the useful life of your components and, in turn, your future reserve requirements. “Similar to your budget, your reserve study is more of a guide than a set of hard and fast rules,” said Maureen Connolly, Client Accounting Business Partner at FirstService Residential. “For example, a solid preventive maintenance may yield a longer useful lifespan than your reserve study predicts. Conversely, you may have to replace some components sooner than expected because of unexpected external factors, like wear and tear from a bad storm or hurricane.”
Connolly recommends evaluating the interests earned on your reserve funds to ensure you maintain healthy reserves. “We support our boards with a bi-annual assessment, providing banking solutions and yields with monthly financial statements.” The laws that govern association reserves may change rapidly as legislatures respond to changing market conditions. This article is not meant to be legal advice on how to fund and maintain your reserves. If you have questions about your association’s reserves, check with your professional property management partner and your association attorney. To learn more about the new requirements, visit our Legislative Updates page.
Boards should always consult their association attorney before considering tapping into reserve funds, to ensure compliance with the law.
How Can My Board Be Even More Effective?
By prioritizing these 6 areas, 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. Work with your management partner and fellow board members to assess where you are succeeding and where you have room to grow. For a quick check-up based on these 6 priorities, download our interactive checklist, Board Self-Assessment: How Well Are We Doing Our Job?