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Tuesday, November 3, 2009

The Essential Ingredient in Effective Management of Community Associations

            When there is war inside a community association there are usually several sides—the owners, the board of directors, management, and sometimes, lawyers. Each brings their unique perspective to the dispute, and each may distrust the views, or worse, the motives of the other. That they should all be working together to manage a project that is inherently unmanageable is beside the point—when there is a lack of trust cooperation goes by the boards and issues that should be open to easy solutions instead become a battleground. Why are we wasting good ink to discuss disputes that are often inconsequential in the scheme of things? Because lack of trust can paralyze a community association just when economics require unprecedented cooperation.
            Examples? Board members who are convinced (by themselves or others) that they must follow the dictates of a statute may pursue enforcement measures that are too rigid for the situation. Owners who lack an understanding of the history of an association, its economic condition, or the legal authority under which it operates may believe that rules can be ignored. Attorneys who lack sensitivity to the emotional side of a dispute among board members may try to resolve the issue with formality when flexibility and consideration of human nature is required. Owners with short-term interests may reject the needs of longer-term residents. Managers who lack the confidence to confront wayward board behavior with strong leadership may fear losing favor and perhaps the account.
            There are hundreds of other sources of friction within a community association, but all of the foregoing have one thing in common—a breakdown in trust among the principal players. This can happen in various ways. A clash of egos; lack of education or experience; a history of conflicts among individuals or between individuals and the board of directors; personal “vendettas;” and outsized expectations. In each case, the conflict often has its roots, not in the practical reality of the issues at hand, but rather in the unwillingness of one party to trust the motives of another. “Why” someone has taken a particular position often becomes more important than what is actually at stake. A suspicion of motives can distract the search for truth.  So how do we instill trust? Let’s look at each of the principal players.
1. The Board of Directors. The board of directors of a typical community association is composed of volunteers. They have a big responsibility and it is no wonder that responsibility weighs heavily on them. Most of the directors we know are conscientious, self-sacrificing individuals who sincerely want “to do the right thing.” Many have business training that equips them with experience and knowledge vital to their management role. But associations are not exactly like businesses. There is a big political factor at play as well. Owners make demands, fail to obey the rules, or are simply apathetic. Any or all of this can frustrate a well-meaning board. Sometimes it may be more convenient to simply hide behind the rules rather than try to deal with human nature. The advice of managers or attorneys will typically be to follow the statute or the governing documents because that’s the most logical (and lawful) thing to do. But the right path may not always be to just follow the rules. The right path may also require a human touch, flexibility, and a willingness to explore creative solutions that create relationships. And develop trust.
2. Owners. Many owners have little inclination to understand the operations of their community association. They are busy people, with work and family concerns, and their homeowner’s association is way down the list. Apathy reigns supreme. That is, until something effects them personally. A proposed increase in assessments. Closing the pool in the winter. Enforcement of parking restrictions. A roof leak. When their lives are negatively impacted owners are sometimes quick to assume that someone screwed up. Their lack of involvement in the day-to-day operations, their infrequent attendance at meetings, their failure to read bulletins or newsletters has isolated them from their board and management. Isolation breeds mistrust.
3. Management. Managers are rightfully cautious. Like board members, they have a big responsibility. They are paid to insure that the association is maintained properly, respects the governing documents, and makes sound business decisions. Directors may assume that a cautious manager lacks the willingness to manage aggressively. On the other hand, if the manager comes on too strong, the board may interpret that as recklessness, or worse, that the manager is usurping board authority. Any of these doubts will sew seeds of mistrust, and when we don’t trust someone, their motives become our primary focus rather than their performance. 
4. Attorneys. Lawyers are employed to give legal advice and in the case of a community association that usually means interpreting the governing documents or state law. Often the board members have different assumptions or wish a different outcome.  It may be tempting to try and satisfy everyone, but posturing or wavering to make the client happy is a fool’s errand. A lawyer who has the courage of his or her convictions is actually more likely to gain the client’s trust. Because of the political nature of a community association client, a lawyer can’t just know the law--he or she has to be trusted, by members and the board, to be effective. 
       Here are a few guidelines on gaining and maintaining trust in the management of community associations:
1. Lay your cards on the table. No hidden motives. Be upfront with your reasons for taking a particular position. Explain them logically with careful adherence to the facts. Glossing over the facts or altering them to suit your purpose will give others reasons not to trust you. As a board member or manager, make sure you understand the facts and whatever professional advice you have been given and that your position squares with both. As an owner, be sure that you have all of the information you need to understand the dispute and the rules that govern it. Be clear with everyone as to why you are advocating your position.
2. Keep your emotions in check. Stay rational. It’s hard to trust someone who lets his or her emotions control them.  Board members are often targets of abuse or mis-statements by owners. Owners may feel powerless when dealing with the association. Managers are often caught in the middle. Those situations are frustrating and can open the door to emotional rather than rational thoughts and actions, usually at precisely the time when calm deliberation is required.
3. Communicate well and often. As stated above, be open. Regardless of whether you are a board member, a manager, or an owner, open dialogue will dispel suspicion and engender greater trust. Attorneys must not be afraid to share the basis for their opinions with their clients. Regular reporting, including face to face meetings, will keep clients in the loop and keep them on your side.
4. Be willing to compromise.  Flexibility with enforcement of the rules; creativity when applying them; and always maintaining a sympathetic ear toward possible compromise will be your greatest allies in a world where rigidity and formality seem to be taking over. This is especially true when the stakes are not high. Rule enforcement for the sake of enforcement alone will most certainly erode the members’ trust in the board and management. Likewise, frequent owner complaints about matters that have few real consequences are guaranteed to cost the member respect and trust in the eyes of the board of directors. Let the small things go.
5. Be as good as your word. If you promise to do something, do it. Directors who offer to investigate an issue to satisfy a member can do no worse in the trust department than failing or forgetting to follow through on the promise. Managers who, when asked to explain say, an invoice or an accounting and then ignore the request or (and this is much worse) provide an explanation that is not based in fact, will lose the trust of the members quickly. An attorney who takes refuge in legalese or who tries to overwhelm his or her audience as a means of winning a debate will lose more than just the debate—whatever trust they had will evaporate and their future effectiveness will be compromised.
6. Don’t let suspicions distract you. When we become suspicious, and we begin to doubt another’s motives, we lose our normal rational perspective because our suspicions distract us. A low ratio of emotion to rationality is critical to negotiating disputes. In fact, an open admission of your own motives may instill trust in the opposition because suspicion is exchanged for understanding. It may not resolve the dispute, but it can serve to open meaningful dialogue.     
            Trust garnered over a decade or more can be lost in a moment over some hasty comment, a transparent motive, a departure from the truth, or an emotional outburst. Regaining that trust may take years, or it may never happen. Community associations rely on contracts and statutes for their authority, but their leaders need trust for legitimacy. The law dictates the rules but cannot dictate trust.