Several years ago I authored an article, When Worlds Collide, which outlined how Board members are often out of touch when it comes to the compensation and replacement value of an onsite manager.  In short, Board members use what I call “The Association Metric” in determining remuneration, as opposed to the “Executive Replacement Metric,” which is what the market uses.

The Association’s Metric is almost solely based on the Association’s current and past experiences with onsite managers; it is colloquial and subjective and usually is based on: a) What we now remunerate our manager; b) What ‘type’ of manager we currently have; c) Other factors that affect the thought processes of the Board and; d)anecdotal information.

The Executive Replacement Metric is reflective of the current state of the community management industry regionally and nationally, based upon what is available and for what price.  It refers to replacing a current on site manager with an experienced professional, capable of stepping in and administrating the community immediately; a manager with industry designations and who is knowledgeable about all facets of community association management.

What I failed to include in that latter definition is the reputation of the association and how that affects the quality and quantity of qualified candidates for the job.  Interestingly enough, “association reputation”  brings to light a conversation I had with a large-scale client about the reality of obtaining and retaining a qualified General Manager for their very complicated community. Per their request, I put the salary, reputation, skill-set, and labor pool challenges in writing, answering each of the questions posed to me. You may find it useful.

 

Dear Board,

Your community has a reputation of being a very, very difficult place in which to work and maintain any sort of job longevity. It is known for having years of dysfunction within  the Board of Directors and many years of a small yet vociferous “anti-whatever” group of residents. This dysfunction has been proven out time and time again through manager turnover, all of their experiences, and indeed the experiences of the association’s current and former Board and committee members. This dysfunction is not a secret, and has been broadcast out over the internet in the form of a very negative website operated by a resident which even if taken down can still be found, believe me, somewhere in an internet cache.

Anyone in the industry with the appropriate skill-set will be able to find out, in short order, the number of managers your community has had in the past 10 years and they are only 1-2 degrees of separation from just about any one of those people, as they all attend the same functions and belong to the same organizations.   The high executive turnover of your association drives up the rate of compensation for an experienced GM with a strong employment track record, as they know their life will be limited at the association. It also drives away many qualified candidates. This is a very small industry, not just in your location or state, but nationally. In short, you are paying a “risk tax.” Your association is viewed, rightly, as very risky for any candidate.

The community management industry is just about at full employment. People are not moving around unless their current employment situation is untenable. They certainly are not changing jobs for a lateral compensation package, nor even a 10% increase, or even a 20% increase in some cases.  All this assumes the position is paying market rate. Most salient, management executives are very reluctant to jump from the frying pan to the fire, so to speak, in such a continually uncertain economy.

The association has spent untold thousands – tens of thousands – in turnover costs in the past decade. If “turnover costs” was a line item on your financial statement, I think the Board and the membership would be shocked  at the number. Something to think about as you search for yet another manager.

The Association can find someone, again, for a below-market (and skill-set) rate.  But  the door will be a rotating one as it has been these past several years. Professionally, I don’t recommend this course of action, and it’s not a service I am particularly willing to perform as its success would be dubious at best.

In summary, all Boards suffering from self-inflicted dysfunction should make a conscious decision leave that dysfunction behind, or leave the Board to others. Set a course to embrace the business mindset, form cogent policy, let staff carry out that policy and judge staff by the results and stay out of the weeds.  If this Board doesn’t get out of the business of micromanaging and what appears to be by all accounts a negative and detrimental style of governance, the association will continue on its long, downward spiral in terms of administration. And that certainly is the choice of the Board. As I always say, you can paint the trees purple and plant them upside down if you wish; it’s your community.  But it’s not something I would recommend

 

Sincerely,

Julie Adamen
President Adamen Inc.

 

Did that Association remain my client? They did. The road before them wasn’t easy, and it didn’t take a nice, linear line upward; but taking the first step in recognizing they have a problem is, as they say, half the battle.

 

c.  2014 Adamen Inc. all rights reserved

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