10 Things to Consider When Selecting New Management

Sometimes it is time to make a change.  This could be because the board isn’t happy with the services being provided by the management company or it might be that the board is doing everything themselves (with our without management).  So how to find a community manager and firm to run your community?

I recommend that boards start by considering companies that are members of the two professional organizations in Oregon (and southwest Washington):

CAI-Oregon:  http://www.caioregon.org/link/linkshow.asp?link_id=232780
OWCAM:  http://www.owcam.org/

While belonging to these organizations does not necessarily mean that these companies are better than others, it does mean that they are interested in continuing education and the professionalism of our industry.

In addition to looking for those affiliations, I recommend that boards also consider doing some or all of the following:

Interview both the firm AND the community manager who will be responsible for your community.  I am always surprised when a client signs on without talking to me first.  The manager is the person that the board will be dealing with, perhaps exclusively, for the foreseeable future.  This means that it is critical for the board to understand the manager’s philosophy and style of management as well as feel comfortable with the person and how he/she presents him/herself.  If the board likes a management company but isn’t sure the manager offered is a good fit, you should feel perfectly free to ask to meet with another manager.

Ask about the manager’s professional designations and continuing education.  This can be community management specific or not, but part of what a community manager has to do is continually educate him- or herself on the changes to the law and in practice that may affect the communities in his/her care.  A community manager should be interested in educational opportunities that will help grow his/her experiences and professionalism and should want the boards to educate themselves as well.

Inquire about staffing and work-flow.  Whether a management company is small or large, there should be a specific way that things are handled in all but a very few unusual situations.  What are owners expected to do to report a problem?  Should they e-mail or call?  Who does the triage for these calls/e-mails?  What kind of a response is received in return (especially in the case of voice mail message or e-mail) and in what time-frame?  Does the manager have an assistant and if so what things should the board expect from the assistant instead of the manager?  If the assistant is responsible for most of the work for the community, who is overseeing those tasks?  While the manager (and ultimately the owner of the company) is responsible for ensuring clients are taken care of, understanding who is doing what can be very useful, especially to the board, when questions or issues arrise.  This can also give you an idea of the current workload of the staff, which of course will help you understand how much time they may be able to devote to your community.

Determine the average number of client meetings the manager attends per month.  Most boards know to ask the manager the number of communities they currently manage.  While this gives an idea of the manager’s workload, I think the number of meetings is more telling about how busy the manager is.  A manager who already has six or more meetings with other clients per month is likely to be pretty heavily committed, especially if these are evening meetings, and may not have sufficient time to devote to your community.  This depends on the manager, of course, and should not be a deal-breaker in and of itself.

Ask for samples of their work.  Boards should have an opportunity to see what the management company can produce.  Copies of letters, newsletters, budgets, financials, and other company-produced documents (with all proprietary or confidential information excised, of course) should be made available to the board for your consideration.  It is not enough for a management company to be able to speak competently; it is critical that they can also clearly and effectively communicate in writing.

Visit the management offices, preferably unannounced.  Get a tour of the whole space and see the state of the filing room, reception desk, managers’ offices, etc.  While this does not conclusively tell you whether or not it’s a good management company, it can certainly give you an idea of how busy everyone is and whether or not there is sufficient staff to meet your community’s needs.

Have the manager demonstrate his/her competency.  Give them a hypothetical rules enforcement issue and ask them to walk you through the steps of compliance.  Or provide them with one month’s financials (with the confidential or proprietary bits marked out) and have him/her point out and explain potential reasons for any concerns or deviations from the norm.  In either of these situations, a good manager should be able to provide you with concrete steps or concerns, even without knowing much about your community.  Even better, ask them to do both or more!

Ask questions about the contract and its exclusions.  One thing I am constantly surprised by is board members that haven’t looked at the management contract or don’t understand the provisions in it.  The contract (and any exhibits) should be reviewed thoroughly (and the association’s attorney should be paid to look them over) and the board should not only ask about any provisions or clauses that are unclear but should request additional written information for anything that is unclear.  I also think it’s important for the board to consider whether the contract is based on an allocation of hours versus completion of tasks.  Either can work out to the benefit of the community, but these contracts are very different in nature and so need to be thoroughly understood.  And the exclusions to the contract are also very important to discover.  Many communities now are going through construction defect litigation/remediation/special assessments, and most (if not all) management companies charge extra for this, so if this is something you’re facing (or shortly will be), the board needs to have a clear understanding of those extra (out of contract) costs.

Have the potential manager and management company representative attend a board meeting.  This gives interested owners an opportunity to ask questions and provide feedback to the board.  It also provides owners with a level of buy in and avoids some of the concerns owners may otherwise feel at suddenly discovering the old management company is out and a new one is in.

Ask around.  Many boards feel that they need to ask for references for the management company and manager, but I personally think this isn’t very useful.  What management company or manager is going to have you call someone who says anything but glowing things about them?  No one.  So instead what I recommend is that the board ask the professionals it already has, knows and trusts.  Who is that?  Well, it could be your landscaping firm (the supervisor or owner of the company), the attorney who handles your collections or general counsel, the insurance agent, or maybe even the CPA.  Our industry (especially in the Portland/Metro area) is small and connected.  If you’re using professionals within the industry, which the board absolutely should be, then chances are your professional will know the manager or the company (or both) and those professionals are more likely to give you their honest opinion and what they know or have heard.

Although there is no guarantee of a perfect fit, following these suggestions should help boards find and engage a community manager and firm that they can have a long and positive relationship with.