Condos and co-ops are unique in their management structure, of which there are two levels: the board of the association or corporation, which governs the community on behalf of the unit owners or shareholders, and a hired management agent, who conducts the day-to-day affairs of the property. Of course, some communities go their own way and choose to self-manage, but they are the exception to the rule—particularly in communities larger than 20 units.
The question is, in professionally managed multifamily communities, how much responsibility and authority does a board delegate to outside management, and how does that affect how a given community functions?
While each and every board is different and has its own style, managers report there is a ‘spectrum’ to board styles that ranges from minutely to barely involved. “There are two kinds of boards,” says Dan Wollman, CEO of management firm Gumley Haft. “They can be autocratic and dictatorial, or collaborative. In my experience, more are autocratic—and that has to do with the fact that most owners are ambivalent and apathetic. They don’t actually want to be on the board, which effectively leaves one or two active, engaged people on the board to run the building. This is very common. It’s simply the more pervasive style. Personally, I prefer a collaborative board, one that wants to be there. Collaboration allows for everyone to give an opinion and make a consensus decision, even if it’s not the one I personally recommend. I also like a ‘big-picture’ board—one that’s involved, but not bogged down with minutia. A board should never spend an hour discussing what type of cut flowers should be placed in the lobby. I want them to see where we are spending their money for a big project. It’s important that they see and feel where the money is spent. It gives them a far better perspective when they talk to shareholders—and that’s extremely valuable.”
Bryan Hughes, president for New England for FirstService Residential, says, “This can be difficult to generalize as each community, and each board, has a different flavor. They are made up of people, so each situation is different.” He divides his boards into three categories: too engaged, appropriately engaged, and disengaged.
“For management, disengaged boards may be easier to deal with on a day-to-day basis,” says Hughes, “but that isn’t necessarily a good thing. Although in those communities board micromanagement isn’t an issue, it’s often difficult to influence the board to make needful decisions. This demands extra time from the manager to educate and re-educate on circumstances and issues, and often manifests as deferred maintenance if the budget isn’t properly funded or the manager isn’t empowered to take care of the property.”