Board Education Breaking in a New Board Member

Board Education

It’s a common enough occurrence: Jane, who has served on your co-op’s board of directors since the Hoover Administration, makes a surprise announcement at the monthly meeting: she’s selling her apartment and retiring to Florida. This does not upset you much–Jane is something of a busybody–until you realize that she will have to be replaced.

There is an heir apparent: John, the tax attorney in 7B is elected. He’s a good man–equitable, intelligent, and trustworthy. But how will you get him up to speed? What duties can you reasonably expect him to perform? How can he possibly understand the dynamics of a group that’s been together so long? Is there a way he can better prepare himself for the task? In times of transition, it’s the responsibility of the sitting board members to do all they can to acclimate a new member to the group while keeping the building running smoothly.

Do Your Duty

The responsibilities of board members are broad and varied. The job description often includes overseeing the budget, liaising with the management company, interviewing potential owners and tenants, paying bills, supervising superintendents, and making sure the flowerbeds tended. Given the breadth and depth of their new job, board members should be brought along slowly–not thrown into the deep end of the pool all at once.

"More often than not, new board members are not given ‘officers positions’," says Donald Levy, director of management for Lawrence Properties in Manhattan. "They [just] function as board members, so they can get used to the dynamics and see how the relationships between the shareholders and managers work."

Ideally, Levy says a board should appoint a qualified shareholder to participate on a non-voting basis until the next board election. This gives the new person the opportunity to get a feel for the group before assuming larger responsibilities.

"Boards do not generally allow new members to participate in areas where there is potential legal exposure," [such as an interviewing/screening committee] Levy adds, "until they are comfortable with what can and can’t be discussed."

Committees are also a good way to involve shareholders who for reasons of travel or other commitments do not want to serve on the board, or to groom potential board members for vacancies. "Get people exposed for a year or two," suggests Norman Ellis, president and owner of real estate consultants Ellis Group Limited. "It’s a good way to bring people up through the ranks."

Often, committees are assigned based on individual talents and abilities. This could mean an accountant working on the finance committee, an attorney working on the legal committee, or a graphic designer working on the physical improvement committee. "People will bring the skills they acquire in life to the board," says Robert Marino, vice president and former president of the Columbus Commons Condominium on the Upper West Side.

Basic Training

Before assuming heavy responsibilities, new board members must be familiar with the building and the history of the co-op or condo. This involves a lot of homework.

"Review expiration dates of every contract there is," Ellis advises. "Make a calendar. Schedule your time." Ellis also stresses the importance of knowing when options expire and when the window for refinancing closes.

New board members should have discussions with managing agents, current members of the board, board members in other buildings, and other shareholders. They should look over the financials and the rent history of the building, paying close attention to expiration and renewal dates on important governing documents. Newcomers should also be worked into the e-mail loop–most correspondence between board members and management companies is done electronically these days–and they should be given access to two to three years’ worth of minutes from past board meetings. "Read the minutes," Marino says. "Study them, compile questions, try to spot trends."

Marino also advises the careful study of past and current monthly management statements. These contain all manner of vital information about the building, including budget variances, arrears, detailed financial breakdowns, and project updates.

New board members shouldn’t overlook other materials that have been distributed to the board: shareholder correspondence, proposals of repairs, and other miscellaneous documents.

Marino also suggests having the managing agent, superintendent, or board member give new board members a complete walk-through of the building. "This way, when people mention something about the building during the meeting, you don’t sit there with a quizzical look on your face."

And of course, new board members need to know the bylaws and house rules inside and out. This seems like an obvious place to start, but many board members do not take the time to properly digest the material.

You Don’t Know it All (Yet)

According to both Marino and Ellis, the number-one mistake new board members make is not learning the ropes before taking action. Inexperience shows when new board members attempt to change standard operating procedures and second-guess the managing agent on even the smallest decisions.

"The two most important things," says Ellis, "are don’t upset an apple cart that’s functioning well, and learn what’s normal in the building and in the industry."

New board members must trust the judgment and experience of longer-tenured board members. There is a natural pace to the meetings that should be adhered to. According to Marino, "Anyone who thinks you can get everything done at a meeting shouldn’t be on a board."

He says it is essential to keep up with goings-on in the intervals between meetings, to read distributed documents carefully, and not to waste time at meetings discussing topics best left for informal conversation later on. And although items like elevator repair contracts are not as sexy as, say, who gets approved to live in a vacant apartment, the more mundane topics must be addressed.

"When you come to affect change," Marino says, "the building must continue to function properly."

Micro-managing the professionals is also a frequent mistake made by novice board members. It is not advisable to out-engineer the engineer, or out-account the accountant, even if you happen to be an engineer or accountant in your professional life.

Marino, who has served on his board all ten years of its existence, tells a story about a new board member who thought he knew enough about boilers to reset the boiler in his building’s basement himself. Fortunately, no one was hurt, but his rashness increased the chance of an accident, an injury, or an equipment malfunction, and by tampering with the boilers, he voided the product warranties. "You’re not there to micro-manage," Marino explains. "You’re there to oversee."

The Hamlet Syndrome

The flip-side of the new board member who acts too rashly is one who acts too slowly–or not at all. "Don’t be afraid to make decisions," Ellis says. "Not everything has to go to the members."

Board members are representatives of the building. They need to be in touch with the shareholders enough to know what people want, but they also need to be courageous enough to act without consulting every last shareholder, including the guy in 11V who hasn’t left his apartment in 12 years. There is no reason to canvass the building to decide the best way to repair an elevator, or re-tar the roof.

Says Marino,"if you’ve done your homework, any mistakes that happen will be minor."

In the End

Being a board member is a difficult, often thankless job. You have to know when to ask for advice and when to act on your own, how to juggle multiple tasks, and how to function well with managing agents, shareholders, and your fellow board members. (And if you combine your pay for the work with a buck fifty, you can ride the subway).

But if Jane really does want to sell her place and move to Florida, don’t worry; with the right preparation, new board members can quickly become good board members.

As Marino says, "This is not rocket science."

Mr. Olear is a freelance writer living in Astoria, Queens.

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  • Thank You for an imporltant subject. I just was elected to the Board in Aventur, Florida. Each "Director" is assigned certain oversight, mine being security. Are there articles already written about the specifics of each Director's area of oversight? I am trying to educate myself in order to be a more effective director. You mentioned several areas and appreciate the article and the Cooperator. thank You, David