HOA management (BOD) is more than property management (CAM)

I continue to be baffled as to how real estate attorneys and property managers, unlicensed in most states, have been allowed by state legislatures to advise and dictate to HOA boards (BOD) on how to govern a community by an Association that  is very similar to a local government body.  Governing a community is more than managing a property in a subdivision.   

 Many other experts and authorities have attempted to explain this complex concept of “what is management”  — including the renowned Peter F. Drucker. (The Practice of Management and Management). My take is a simple, down-to-earth explanation as part of “Reorienting the BOD and its followers,” the first step in A Plan Toward the Restructuring the HOA Model of Governance. 

Management (noun) – Management is an entity — an organization whether a business, a nonprofit, an HOA, a charity, a club, a group, or a person. It applies to any person, or organization, or entity at all levels with respect to its level of authority and responsibilities — CEO, president, division director, department manager, supervisor, or committee chair. The difference in organizational type is related to their purpose and mission. Businesses  are to make a profit for their stockholders. Nonprofit membership organizations, like HOAs,  have a mission or goal as  laid out by the founders and initial directors that is designed to attract and maintain members — for $$$$$  — who identify with the mission.

Management (function) —  Management is a practice (as first described by Drucker in 1973). It’s an actual application by practitioners/managers — whatever the designation: manager, governor, administrator, board of directors, trustee, etc. — of the set of beliefs, principles, and values held by the organization. The quality and success of the management function is measured by its performance in attaining its mission, objectives, and goals. They may set by its constitution, charter, bylaws, Declaration of CC&Rs, or by department/section/committee descriptions.

Executive level management — at the state legislature through its lawmaking authority or at HOA board of directors level — has final and total responsibility for the successful performance of the organization and sets the mission, goals, conduct and operation of the entity. It has the duty to 1) set policy, plans, rules, regulations, controls, procedures, etc., and 2) organize and structure the entity. All in keeping with its powers under the legal documents and laws granting it the authority to so act.

The very first task for the BOD is to determine just what is the purpose of the entity, and what should it be. Once this reason for being has been determined and stated in terms that permit the evaluation of performance, a valid mission statement can be issued.  From the mission statement a single goal  or set of goals can be issued that permit a measurement of the entity’s performance.  Value statements can be adopted to guide the BOD and members with respect to acceptable means and methods for achieving the goals.

A mission  statement has to be operational; otherwise it’s just good intentions. A mission statement has to focus on what the institution really tries to do.” (Managing the Nonprofit Organization, Peter Drucker, 1990).

The mission statement by the HOA Management Case Study #1 subject, SCG for example, speaks  in the present tense using the word “IS,” making it more of a propaganda statement — it already exists or has already been accomplished — rather than a condition, an ideal,  to be achieved.  Consequently, SCG’s mission serves no value for the establishment of goals that can measure performance, leaving the HOA essentially without any direction.

* * * *

Cautionary note:

Management when it fails to abide by the authorizing documents and marketing materials that appeal to the wants, desires, and wishes of the members will result in members exiting  the organization, taking their future member donations, dues, fees, etc. with them. With businesses, except small, closely held businesses, exiting is a simple task of selling one’s stock and buying another.

HOAs are more like a small, closely held businesses where exiting is not a simple task primarily due to the need to find some other private buyer (investor) willing to ignore why you are leaving. The status and situation of members can be viewed as a form of indentured servitude: you can’t leave unless you have  money to leave (like having paid off your servitude obligation), or you die.

Consequently, management in membership nonprofit organizations, like local governments, must keep the members happy.  Any changes or  modifications to the purpose, or mission, or goals of the organization must consider  the effect on the members.  And must follow the law and the controlling documents – the CC&Rs in HOAs.  The BOD is not a free agent to do as  it pleases as if the HOA were its own private club.

Mgmt case study #1 – update2

Management Case Study #1 update2 — BOD good faith conduct

George K. Staropoli, December 31, 2021

MUST READ FOR CONCERNED MEMBERS

SCG BOARD UNEQUIVALLY DEMONSTRATED THAT IT’S A ROGUE BOD

SCG members, as a PUD, do not have title to any of the assets of the association. SCG, as represented by its board, owns title. Members have  beneficial interest, but not title to some $22 million in revenues, $21 million in reserve funds (cash equivalents), and $64 million in assets as reported on its IRS 990 filing for 2019.

The tone of  Thursday’s board CHAT meeting was clearly secretive for the Directors only and to say as little as possible for member consumption — on a “need to know basis” and the members didn’t need to know.  The president came across as the man-in-charge and making statements that ignored the statutes and governing documents; misstating that the CHAT was not a legal board meeting, just a chat amongst the directors, with a few acceptable attendees allowed to speak. 

Much to the arrogance and  naiveté of the president and the directors, I have had over 10 years dealing with Arizona legislature, proposing bills, and testifying for HOA reforms.  I played an important role in the establishment of OAH hearing HOA member complaints, vehemently opposed by CAI. The SCG “clique” has some 13 CAI members, former and current.

Read this important update that serves a warning to all those large active-adult or master planned HOAs that this could be happening to you.

Management Case Study #1 — BOD good faith conduct

George K. Staropoli

December 22, 2021

Pay no attention to the man behind the curtain”

(Wizard of OZ)

As applied to HOA-Land, the “man” is the BOD manipulating and controlling the images, propaganda, and marketing designed to placate the wants and desires of the members.

The task

For this case study, you have been engaged to advise the BOD as to its conduct in deciding these difficult and controversial  issues, and are free to comment on any or all aspects of the problem situation. What will you advise?  The  value of your recommendations lies in the quality of your supporting arguments.

Put your management/BD skills to work and join the study. It is very important for the learning process to share your recommendations with others here, and to accept their constructive criticism. You can reject, modify, or remove your recommendations. This approach sharpens your thinking and helps you make a more solid case for HOA reforms.

CAI attempts turning volunteers into HOA leaders

Tom Skiba, CEO of CAI, is concerned about the lack of member volunteers to lead their HOA in his Ungated post under the column, “News and Insights on community association living.”[1] As he argues for more volunteer leadership and activism, he doesn’t realize that he’s admitting to 45 years of failure to solve HOA problems.

That’s why, for more than 45 years, we have supported the belief that homeowner involvement is essential, and that education is a critical component to an association’s success. . . . At CAI, we know there is usually a correlation between the level of homeowner involvement and the long-term success of a community. . . . it’s the homeowner volunteer leaders who are accountable to their neighbors.

Skiba’s concern is understandable when, illustrative of the problem, a large, active adult resort style HOA has been facing failure and having difficulty attracting members to become active in management. And that’s after 3 years earlier an independent and professional strategic plan recommended an educational program to assist in obtaining members to serve in management.  It has been ignored.

CAI has introduced a program designed to educate volunteers to become effective and productive HOA leaders by taking its CAI Board Leader Certificate Course and obtaining the CAI Board Leader Certificate. It seems however, that Skiba is a little bit unsure of this program to create leaders from average people: “After completion of the course, students will acknowledge that they’ve read and understood three key CAI educational resources:” Why the acknowledgement? For what purpose? Is this an oversell of CAI’s attempt to bolster the ego and acceptance of board directors and officers as being “somebody” and an authority? “Community leaders who complete the CAI Board Leader Certificate will receive a certificate of completion and recognition on the CAI website”.

This course, recognizing that “leaders are responsible for setting policy and making decisions . . . . highlights what every board member needs to know to serve effectively,” contains 5 modules:

    • Module 1: Governing Documents and Roles & Responsibilities.
    • Module 2: Communications, Meetings and Volunteerism.
    • Module 3: Fundamentals of Financial Management.
    • Module 4: Professional Advisors and Service Providers.
    • Module 5: Association Rules and Conflict Resolution.

From what is available online, as indicated above, my thoughts are more of the same. There is nothing to make me believe that this course addresses questions of effective leadership. It appears to make use of the inbreeding and indoctrination by the CAI School of HOA Governance.[2] A doing it my way program without any discussion or presentation of effective local government management[3] or any general qualities of what makes a genuine leader.

Travis Bradbury explains leadership:

Leadership has nothing to do with titles. Leadership has nothing to do with personal attributes. Leadership isn’t management. Leadership isn’t something that anyone can give you—you have to earn it and claim it for yourself.[4]

In addressing the management of nonprofit organizations, eminent management consultant Peter F. Drucker wrote: “The first job of the leader is to think through and define the mission of the institution.” [5]

In the inbreeding atmosphere within HOAs where the volunteers are sought who are not disruptive — who do not dare criticize the BOD — Terrin Allen warns about YES men.

In my experience, most people get this way because they are responding to a culture or people in management who elicit and reward this type of behavior. . . . [in order to] survive on a dysfunctional leadership landscape where all the signals and messages confirm for them that dissent is bad and agreement is good.[6]

Summary

I appreciate Skiba’s concern for responsive HOA management, but CAI’s approach is severely lacking. There is the continued absence of democratic institutions and principles. that would send a message to those truly seeking to create a healthy and productive community; a true community not focused on property values and enforcement of the governing documents alone.

A healthy society and community must be supportive of their membership who still naively believe their HOA is a democracy in action and protective of their individual rights and freedoms. Where they truly have a voice and fair elections to make that happen. I offer an alternative legal model of HOA governance to accomplish this task. See HOAs are in need of a major restructuringg and sequel under Restructuring.

consulting SIG image1Notes

[1] Tom Skiba, “Effective leadership: How board leader education moves communities forward,” (March 5, 2020).</p>

[2] I collectively refer to CAI’s policies, best practices, guides, communications, seminars and certifications, and in its Manifesto as the CAI School of HOA Governance.

[3] Roger L. Kemp, “Forms of Governance,” Managing America’s Cities: A Handbook for Local Government Productivity, McFarland & Co., (2007).

[4] Travis Bradbury, “What Makes a Leader?”, Success.com (May 25, 2019).

[5] Peter F. Drucker, Managing the Nonprofit Organization: Principles and Practices, HarperCollins (1990).

[6] Terin Allen, Are You Creating ‘Yes Men’ And Hindering Your Own Leadership Success?”, Forbes.com (Nov. 10, 2018).