Governance Roles and Responsibilities
By: Helsing Admin
[NOTE: This article is Part II in a series where each article builds on the previous articles. We recommend you read Part I first.]
The board of any non-profit is the voice of the owners (shareholders) of the corporation. In the case of Homeowners Associations (HOAs) that means the Board is the voice of the homeowners. It is committed to represent the interest of those owners, and not the interests of others (tenants, vendors, outside agencies). Notice that I have used the word board, and not the words “board members”. That is because the board as a body has authority, but the board members themselves have no authority unless the board (through a resolution) has delegated specific authority to one or more members. Management derives its authority from the board, and may in turn delegate it to the staff.
The Board and Management have two distinct separate roles. The Board, on behalf of the members, is responsible for defining and ensuring effective association performance. Management’s role is to implement those policies and deliver the expected related results.
The California Association of Community Managers (CACM) suggests the following responsibilities as a way to distinguish the Board of Directors from the Manager. Boards can consider these a good starting point and add others as they deem appropriate.
Board of Directors responsibilities:
– Comply with the governing documents
– Ensure written governing policies are in place
– Serve as the connection or link between homeowners/members and the management organization
– Make decisions as a group
– Delegate to the manager in a way that maximizes the association’s productivity and “return on investment” to homeowners
– Provide the manager with clarity of roles and expectations
– Empower the community manager to execute the management plan within clearly defined parameters and without micro-management oversight
– Ensure the manager’s performance meets the standards set forth in the board’s policies
Community Manager responsibilities:
– Comply with the governing documents
– Make decisions within the parameters of the board policies and delegate as needed to staff members
– Monitor and ensure the productivity of the management staff and/or vendors
– Help the board make informed decisions, especially about the operational implications and consequences of board decisions under consideration
– Demonstrate and substantiate when the board’s standards are being met; engage in constructive disclosure and dialogue when standards are not met.
The one entity we have not talked about yet are committees. Committees fit into this hierarchy depending on the entity with the responsibility the committee is supporting. Simply put, there can be Board Committees assisting the Board in its responsibilities, and there can be management committees supporting management in its responsibilities. For most homeowners associations, this requires a real paradigm shift. Giving a couple of examples, if enforcing the parking rules is a responsibility of management (this would be typical), and part of the strategy management decides to implement (Note: management decides – not the Board) – then the parking committee would be a management committee. Hopefully, some eyebrows just went up there – management is making decisions without the board on how to implement a policy! Believe it or not, management is probably doing this now – but if as a Board member you think they should not be then read further… this is part of the paradigm shift we are looking for.
What if the Board wants to consider adopting new policies concerning parking? It certainly can, and should listen to management advice on what may or may not work for that community. However, in many committees this decision is a political one where the board needs much input from the homeowners themselves. Should the Board decide to have assistance in forming new policies, and they decide to do so through the use of a committee, that would be a board committee and that committee would report to the Board. So, committees fit in the hierarchy depending on how the board divides responsibilities between itself and management.
Making sure that we have not lost the primary premise, let me stress that “on behalf of the ownership, the board has total authority over the organization and total accountability for the organization. However, the Board is almost always forced to rely on others to carry out the work, that is, to exercise most of the authority and to fulfill most of the accountability. This dependence on others requires the board to give careful attention to the principles of sound delegation.”[ii]
Policy Governance® recommends Boards use a single point of delegation and hold that position accountable for meeting all the Board’s expectations for organizational performance. This can be a CEO, an executive director, or any other title – but in the HOA world it is typically the community manager. That community manager may be a single individual in the case of large communities, or a management firm as is typical of smaller associations (under 1,500 homes). However, if the board is going to hold management accountable, it is also important that boards also delegate all the authority that extensive accountability deserves. This is typically where the breakdown with most HOA boards occurs. The Board never gets the training, nor does it take the time, to set up clear lines of delegation and then to resource those to which they have delegated. There tends to be a huge blurring of Board and management responsibilities, and the day-to-day interface tends to settle in based on personalities and not systemic needs and function.
Boards all feel that they have methods on hand to determine management accountability. Traditional management has boards approving staff plans, approving budgets, approving management recommendations. Don’t these activities and the resulting documentation become clear board instructions? They absolutely do not. How about the clear assignment of expectations? In conventional situations this seemingly simple operation is compromised by delegating the same responsibilities more than once or to multiple people. Does the board ever stop to think, for example, that every time it appoints a “budget committee” to prepare a draft budget it has double assigned authority and responsibility? The same is true of landscape committees, parking committees – you name it.
Basically, this traditional method of association operations and board/management interface is inefficient and holds no one adequately accountable. The trick then, is to devise a method to ensure accountability and responsibility in clear and measurable fashion so that the organization can operate effectively and efficiently.
In Part III we move on to develop a framework to move toward this goal of Policy Governance® and its resulting benefits.
The Policy Governance Series draws heavily on John Carver’s service marked endeavors and much of the Homeowner’s Association model relies on and is reproduced with permission from The California Association of Community managers (CACM)
Articles are for advertising and general information by The Helsing Group, Inc. They are not intended to provide legal advice, but rather reflect our opinions as Community Association managers and Consultants. Readers should not act on issues raised in our newsletters or websites without consulting legal counsel.
Copyright 2012
The Helsing Group, Inc.
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