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Boards Going Rogue

Most boards get along famously.

“Ninety percent of boards run very, very well,” says James Donnelly, CEO and the president of Castle Management in Plantation. “Conflicts arise in, by far, the minority of situations.”

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A potential driver of the “rogue board” phenomenon is the evolution of the job description. This is not your father’s board. “The management business has become much more sophisticated,” observes Paul Patti, president of Hawk-Eye Management in Boca Raton. “Two decades ago, a property manager did the financials, and they did what they called a walk-through or drive-through of the property, and that was all that was expected. We’re now in a situation where a lot of our board members are a lot more sophisticated. A lot of them are CEOs or ex-CEOs of companies, which in many cases is a positive thing, but it can become very difficult because they can become a little dictatorial.”

“We change boards sometimes every year. That means new people come in, and you’ve got to adapt and you’ve got to train them,” says Paul Patti, president of Hawk-Eye Management in Boca Raton. “One of the most significant things we’ve done recently is to start holding classes for our board members where we describe the business. We’re working to get together some experts to hold a seminar for all of our board members to educate them on what it takes to do the job. It’s more than just coming out once a month and sitting there.” When a new board member understands the details—and limitations—of their duties from the get-go, the potential to “go rogue” is significantly reduced, say the pros.

“Often, people get on boards because they have certain agenda items they want to take care of, or feel are important…to the board, or to them personally,” says Tim O’Keefe, president of the South Florida region of FirstService Residential, one of the nation’s largest property management firms. “And it’s like anything else in life: how do you get along with others and how do you work well with others? And not everybody is good at doing that.”

Another issue is when boards take on property management. Without clear delineation of duties, it can quickly become a case of too many cooks spoiling the broth. “Most associations have a property manager, and most management contracts stipulate that the board shall designate one voice for direction,” Donnelly says. “Because some of the ways problems manifest is that they have multiple board members directing management and staff on what to do, and that’s a recipe for disaster.”

That association then might begin to complain when things aren’t going so smoothly. What’s to be done when you’ve installed a Napoleon as the board president? “When people complain about a board of directors, I remind them that the owners voted them in, so, for the most part, there’s one chance per year to correct the problem,” Donnelly says. “Most documents have a recall provision. Often, if you can get ten percent of owners to agree to recall a certain director, it then goes to the board for certification, and there’s a vote. Florida statutes are fairly expansive and do include language about recalls, as do almost all documents.”


 

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