Choosing a New Management Company: Look for a Team Approach
Change is hard. Even when it’s welcomed, change comes with challenge. A big change, like changing your community association management company, is going to labor intensive and stressful, even under the best of circumstances. In the worst of them? It can go very bad, very quickly.
What should you look for in a prospective community association management company to help avoid a rough transition? How can your association avoid financial missteps and pitfalls when switching from one management company to another? Make sure that the management company you are considering has the resources you need in every aspect. Transitioning to a new company is simply too large a task for one manager to handle! A team approach is the best way for a professional community association management company to handle a transition.
Why a team of experts?
Transitioning to new management involves a lot of responsibilities, skills and deadlines, far too many for one person to handle with the accuracy that is required. A transition that isn’t handled correctly can lead to disgruntled residents and unhappy board members. Without a doubt, the best transitions are those handled by management companies that utilize a team approach when taking over from previous management.
What must be accomplished during a management transition?
During a transition, every facet of managing your community is taken away from the previous company and given to the new one. Bank accounts may be closed and reopened, financials have to be audited, vendor contracts reviewed and staff evaluated. Your business – the association – is being managed by a new entity that needs access to and information about every piece of that business. Accuracy and attention to detail are essential.
Some of the critical tasks that are involved in a transition:
- Open new bank accounts
- Meet, evaluate and train existing staff
- Hire and train new staff if needed
- Install new software systems and transfer data
- Meet with and update the board of directors
- Receive official documents from former management company
- Create a resident communication plan
- Inspect and assess the property and all of its physical assets and systems
- Ensure billing goes out on time and error-free
- Review HOA budget and make recommendations
- Review vendor contracts
- Examine insurance coverages and identify any gaps
What can go wrong during a management transition? A lot!
- Improper billing and assessment fees
- Lack of communication with residents, leading to complaints and rumors
- Fear among existing staff that they will lose their jobs
- Official documents get misplaced or lost
- Statements are not printed or sent out on time
- Different software leads to inaccuracies in financial records
- Financial mistakes
- Vendor contracting oversights
Imagine the relief your board would feel to have professional administrative, human resources, accounting and information technology specialists -- along with the new community manager -- working with the community, and prior management company, for weeks prior to the contract start date. With an entire team supporting the board, the probability of a seamless and problem-free transition rise dramatically.
As early as 60 days before the handover, the client transition team is already at work, studying, reviewing and making recommendations on every aspect of the community. The team that works on a community transition can consist of up to six professionals.
Transition teams often include the following roles:
- Transition Lead is the primary contact person for the board of directors and the residents, as well as the conduit for all members of the team. The lead meets frequently with the board, conducts a thorough review of the community, works with the current management company to gather information and documents, communicates with residents through the board, sets goals and timelines for accomplishing tasks, and much more.
- Human Resources Specialist – Existing staff within a community naturally wonder whether a new management company will keep them on board. An HR specialist will meet and evaluate each associate, answering any questions and explaining the transition process. The HR associate will then report to the board on staff to be retained, and others to be hired, as well as company policies on payroll, employee training and other procedures.
- Accounting Specialist – The responsibilities of the accounting specialist include reviewing the association’s budget, bookkeeping and all other financial matters to ensure they are error-free and within compliance of the association’s rules and applicable laws. This person is in a great position to start identifying areas where the board could earn better returns, optimize their operating budget, minimize risks and protect assets.
- Information Technology (IT) Specialist – A dedicated computer and information specialist will get the community’s computers and software up and running with a minimum of delay. FirstService Residential’s advanced proprietary community management software, FirstService Residential Connect™, is a best-in-class solution to share community information, facilitate communication among all parties, make payments and much more. The community will also have its own interactive web site for residents to use and enjoy.
- Corporate Support and Resources – All members of a community’s transition team have the full support of a corporate staff deeply experienced in the disciplines necessary for healthy community management.
Matthew Shalhoub is the regional operations manager at FirstService Residential. He talks about onboarding a community, under challenging circumstances, in 2016. The lifestyle community is home to a premier golf course. It includes 1,100 single family homes and townhomes, a fine dining restaurant, hiking trails, a clubhouse, fitness center, tennis courts and a billiards room. It was well-staffed before FirstService Residential took over managing it, with eight onsite employees. FirstService Residential brought in an experienced onsite director from Tennessee to manage the community, and brought in the entire transition team to help.
“All of the existing employees stayed through the transition and became FirstService Residential associates,” he explained. “So human resources didn’t have to find us people, but they did come in and take care of onsite orientation, benefits explanations and training.”
Shalhoub led the transition team as far as operations went. “We have a transition staff accountant who dives into the budget and financials to make sure that the accounting system is set up correctly. Our transition specialist will review all the governing documents and populate the InfoCenter database in FirstService Residential Connect, which is used by both the customer care center and resale services. All of that is done ahead so that we are up and running on day one,” he detailed.
Remember that premier golf course? Shalhoub’s team discovered that the residents of two nearby affiliated communities had the opportunity to pay dues and use the golf course and amenities at the association. Because previous management hadn’t kept accurate records, Shalhoub’s team had to untangle those financials, and when they did, they found that some people using the facilities were in arrears for 7 years or more! “That was unique,” Shalhoub laughed. “But there’s always something unique in each transition, whether it’s a lawsuit with a developer, interesting accounting or something else.”
The most incredible thing about this transition is that, despite the complexity, it was done in five weeks. FirstService Residential got a signed contract at the end of August, to take over the property on October 1! The team continued conversations with the onsite staff well past the October 1 handover to make sure that things were running smoothly. “We typically get more time than that,” Shalhoub said, “but we can handle any time frame we are given. We have good relationships with other management companies that allow us to get the information we need and get things done. As long as we stay in constant, transparent communication with the board, there are few problems.”
Transitioning from one property management company to another is a challenging and work-intensive venture, and a road that all communities go down eventually. It doesn’t have to be painful! Consider hiring a management company that provides a team of knowledgeable professionals to guide your board through the process of change.
To learn more about how a team approach can help your board transition from one management company to another, contact FirstService Residential, North America’s leading community association management company.