…and the fundamental foundation for a properly functioning organization.
By Helsing Admin
It is the Board’s job to establish HOA policies that set standards for the association. Often, Boards are not sure what that means, and unfortunately, this very critical responsibility that forms the foundation for a well-functioning association is missing. Without this basis, there are no expectations, and ultimately all involved become frustrated – Board members, homeowners, vendors, and management. Establishing a solid set of policies and standards defines the Board’s expectations. They are the “WHAT” of the “WHO, WHAT, WHEN, WHY, WHERE, and HOW” that drives the association’s processes.
If you have a solid set of standards you would probably know it, because they would be published. It would be an exhaustive list (at least 30 to 100 standards and policies), generally grouped by category, that would have items similar to the following:
3.0 Risk management
3.1 The association will carry property insurance that guarantees full replacement value
3.2 The association will ensure management carries professional liability insurance
5.0 Maintenance and Operations
5.1.1 Bark will be replaced when there is a 15% loss of coverage
5.1.2 Dead plants will be replaced within 30 days
A look at a meeting agenda is all it takes to determine if the Board of Directors has established and is enforcing its policies and standards, or is simply wandering around in the dark trying to do their best – but frustrated and ineffective.
A Board that has done, and is continuing to do its job has the following sort of issues on the agenda:
– Establish new policy – Bark will be replaced when 20% of coverage is missing.
– Reconsider policy concerning property insurance. Current policy is to carry $17 million dollars with $100,000 deductible. – Consider insuring to full replacement value and $250,000 deductible.
– Compare policies 3.5 through 4.3 for compliance.
A Board that has no HOA policies and standards tends to have the following types of issues on the agenda:
– Approve purchasing new mats for the fitness room.
– Discuss why the entry gate breaks so often – management to present possible solutions.
– Answer homeowner concerns regarding a number of burned-out lights.
Note that in the first example, the Board is setting and adjusting expectations – and measuring current performance of the association and its vendors against those standards. In the second example, the Board is reacting to current conditions and trying to make things better. However, if there were HOA policies in place and a system to implement those policies, those topics in the second (and all too often typical) agenda would never rise to the level of Board consideration.
As part of establishing the standards (the “WHAT”) – the issue of “WHY” is also addressed; and in some but not all cases, so is the “WHEN” and the “WHERE”.
Once the policies and standards have been set, the next critical step is to deal with the “WHO” of the “WHO, WHAT, WHEN, WHY, WHERE, and HOW” process. Someone has to be responsible for each standard, and accountable to the Board for ensuring that standard is met. They also need the flexibility and resources to accomplish the “HOW” – and if the standard does not set the “WHEN and WHERE”, that is also delegated to whomever the Board is holding accountable.
As an example, the Board might have a policy that says “All contracts will be reviewed by the association’s attorney”. In establishing that policy (or a lesser policy concerning contract review) the Board must wrestle with the risk involved by not having the attorney review and the cost involved. That will drive them to a decision and the reason they reached that policy can be explained. The WHAT, WHY, and WHEN are solved. The “WHO” is going to make sure that happens (typically management) is determined. Now, in the future, there needs to be no further discussion on this issue – the manager knows the Board’s expectations and the Board can hold management to the standard.
As a second example, the Board has as one of its HOA policies that “Dead plants will be replaced within three weeks” (or some other standard the Board decides). In wrestling with that issue the WHAT and WHY are covered and this Board, future Boards, the landscape committee – in fact even the entire membership can understand why. It also helps drive the budget – if the Board does not want to be that proactive they save money – but they also have a poorer looking landscape, which affects property values. However, the decision is being made in a businesslike manner. The alternative, of course, is to not adopt a standard, and then neither the landscaper, the landscape committee, or the homeowner have the same expectations. Homeowners want the dead plants replaced immediately (so they are frustrated), the landscaper is submitting bids for replacement (which takes time), the Board is dealing monthly with the issue and the dissatisfaction.
Once the standard is established it can be built into the landscaper’s contract. Decision-making concerning how to address cost or conflict can be delegated to the landscape committee (for example, a Board resolution that supports the goal like “The landscape committee can approve all plant replacement costs as long as they stay within budget”. Now the issue of whether or not to replace the dead plants – and how much to pay – should never come to the Board’s agenda. If anything comes to the Board’s agenda it would be a report from the landscape committee or landscaper (when asked for) that shows the standard is being met. Alternatively, the Board may have on its agenda the need to replace the landscaper, the committee, or both – or to decide if the standard is too tight and needs to be adjusted. The point is – the Board is dealing with policy, setting standards, and evaluating performance. Others are responsive to the Board for meeting the standards.
The result of this process is absolutely critical to a happy community, effective operations, and aligned expectations. If the Board is not dealing with setting standards and expectations, then the timely accomplishment of issues, adequate risk management, and smooth operations are not likely to happen. There will only be a never-ending cycle of addressing issues, slow resolution of those issues, and frustration. Is your Board doing its job – or does it think its job is to micromanage every detail of the association?
The Helsing Group, Inc.
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