One of the toughest jobs a board of directors can face is interviewing for a new community association management company. By their very design, homeowner association boards are comprised of homeowners from all walks of life, which means the expertise, experience, and talents of the volunteers serving on a board can vary widely. Many board members have never interviewed anyone for work, and have no idea what questions to ask or how the interview should be structured. Before a board decides to assign a board member to call management companies and ask for bids and interviews, here are a few helpful tips for making the process and the choice the ideal one for your homeowner association, from a veteran of over 20 years of the management side of board member interviews.
- Create an ‘RFP’: The Board should take the time to create an ‘RFP’, or ‘request for proposal’. This will help you to work out ahead of time just what is going to be expected from the manager and management firm, and managing expectations is critical to creating a good working relationship. Do you need a full-time, on-site manager? Should the management firm expect to be performing bookkeeping services as well as administrative duties? What is it about your current management scheme that is lacking or could be improved?
- Pre-screen companies for expertise: The proper management of your homeowners association can have a profound impact on the value of your home and your community. This means choosing a management company out of the phonebook might be ill-advised. Contact the local chapter of the Community Associations Institute (www.caionline.org) or other professional homeowner association industry organizations in your area for a list of members. Ask other professionals (attorneys, accountants, landscape contractors) for recommendations. Reputable management companies invest in and provide education, technology and expertise in community management – that out-of-work real estate broker might have little specific expertise concerning homeowner associations.
- Have a plan: decide what sort of format you’d like to use to conduct the interviews, and which questions to ask ahead of time. You might have the treasurer ask questions concerning the company’s bookkeeping practices, and the secretary will ask about record-keeping. There are resources available for organizing management interviews through the Community Associations Institute and the Executive Council of Homeowners.
- Allow enough time: having participated in a number of management company interviews, I can attest to the fact that more often than not, boards do not allow enough time between interviews. This means interviewees have to rush through their presentations and that boards are often more focused on asking their questions than hearing the answers. Although it’s understandable that Bboard members don’t wish to spend hours and hours in interviews, it is difficult to get a real feel for a company’s history, abilities and management philosophy in a quick twenty-minute interview. Allow at least forty-five minutes for each company or individual’s interview.
- Be frank: let the interviewee know what is going on in your homeowners association that might have an impact on managing your community. For example, are your reserves so low you might need a special assessment? Is there something going on in your community that the manager might have to deal with (crime, political in-fighting, etc.)? These issues can have quite an impact on any manager’s success with your association.
- Ask about insurance: although managers should be indemnified by the association, they should also carry enough errors and omissions, liability and fidelity bond insurance to assure you that, for whatever reason may arise, the manager and/or management company has sufficient coverage for an error or omission that may occur.
- Follow-up on references: be sure to call around and find out if the company’s references are favorable, and ask questions about topics important to you, i.e. “Do they do a good job of giving advice?”, or “Does your manager communicate well with the Board?” “Is there anything you’d like the manager to do better?”
- Check on licenses and certifications: make sure that licenses are up to date and that claimed professional certifications and designations are still in force.
- Don’t let cost be the only consideration: we often ‘get what we pay for’; the cheapest is not always the best, and not actually always the cheapest. As the economy tightens and cost considerations are paramount, think about how much impact an inexperienced, poorly organized manager or inept management company could cost your association. Find out if they have cost-saving programs (group insurance, low-cost web sites), or if they can get better pricing on goods and services because of economies of scale and long-established relationships, and factor in this information when comparing costs.
- Let the interviewees know how they fared: don’t just leave the manager or company hanging – call or write with a thank-you, and let them know your final decision. If you would, also provide feedback so that they can learn from it for the next time. You never know – I’ve been called back on more than one occasion when a Board’s choice didn’t work out, and my interest in providing a new quote is always affected by how the Board handled this part of the process.
As a fiduciary, hiring competent management is one of the most important jobs you have as a board member, and one you can’t really delegate. But if you do it properly, you will find the manager/management company that makes your job as a board member easier, and reflects well on you and your community.
This article is provided by Massingham & Associates Management, Inc.