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Policy Governance®: The Benefits from a Manager’s Perspective
By Sandra K. Denton, CMCA, LSM, PCAM
Do the members of your board lack the time to focus on the future of the community because they are buried in the day-to-day operations? Does your board regularly ask you to handle a matter but then become involved in the details of the decision or ultimately redo it? These are typical situations we face as managers for community associations boards.
John Carver’s Policy Governance® model can help your community in many ways. When an association operates using this model, you will find that the benefits are enjoyed by the
membership, the board, volunteers, and the manager.
This model has four components:
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Ends. The board defines which results are to be achieved for the membership – what good, for whom, at what cost. Written with a long-term perspective, they will embody most of the board’s long-range planning. The Ends are the “what,” not the “how.”
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Executive Limitations. The board establishes boundaries of acceptability within which management methods and activities must remain. These are limiting policies (i.e. what management can NOT do). These policies are the “how” (or how not to do) for staff (management) means.
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Board-Management Linkage. The board clarifies how it delegates authority to management and how it will evaluate management on the provisions of Ends and Executive Limitations.
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Governance Process. The board determines its philosophy, its own board rules and the specifics of its job, including linkage with the membership.
The four components address the ten principles of Policy Governance:
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The trust is in trusteeship.
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The board speaks with one voice or not at all.
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Board decisions should predominantly be policy decisions.
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Boards should formulate policy by determining the broadest values before progressing to more narrow ones.
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A board should define and delegate, rather than react and ratify.
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Ends determination is the pivotal duty of governance.
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The board’s best control over staff means is to limit, not prescribe.
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A board must explicitly design its own products and process.
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A board must forge a linkage with management that Is both empowering and safe.
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Performance of the CEO must be monitored rigorously, but only against policy criteria.
Everyone Benefits
The association benefits as a result of the board establishing a direction for the organization (Ends) with member input. Additionally, part of adopting this model is a comprehensive set of policies that offer the membership a clear understanding of how the board and management function. And, with the model in place, the board has the time to focus on the future and should be interacting with the membership in a more proactive way.
The board benefits by being positioned to focus on the long term impacts – ENDS – to the community without being buried in the day to day operational decisions (staff means). Board meetings are now primarily discussing the future “whats” and not being buried in how something was or wasn’t done. The method they monitor management changes, and they will need some time getting used to a new way of doing business; however, the model ultimately provides a mechanism for the board to hold management much more accountable.
Benefits of this model to the volunteers are certainly the same as the membership; however, working with the board and management, they gain a clearer picture of the direction of the association. Unless the association has already made it very clear, they generally are clearer about their specific job and who they should go to about any given project or issue their committees may be undertaking.
As management, we benefit in a number of ways. The roles between the board and management are clearly defined as well as volunteers; the board has provided direction (Ends); and we are positioned to use all of our professional tools and knowledge to bring the best to the community(ies) we are serving.
Often our biggest challenge is ensuring all parties are clear on who is responsible for what and who has authority for what. Ever had a committee go down a path they chose, different from the board’s? The model brings all of the different groups together to achieve the same Ends while defining whose job it is. It is either a board “job” (developing Ends, setting policy), or it is Staff “means” (getting it done).
Eliminate the Grey Areas
Each volunteer group is either helping the board do its job or helping the management do its job, not going down the group's own path. In our traditional governance method, it is often grey who the volunteer groups report to in reality. If a committee “reports to the board” but is helping management, that gives management less accountability, according to Carver’s theory.
If the budget didn’t get done on time, can’t we blame it on the Budget Committee instead of ourselves? Under the model, the Budget Committee would report to management and if the budget isn’t done on time, it is management’s fault, not the committee’s!
Depending on how a board writes the Executive Limitations policies, management may have discretion on whether to involve volunteers in certain functions. As managers, we know the benefit involving the membership/volunteers can have, so I don’t believe this model puts volunteers at risk of no longer being involved. However, we are often in a better position to channel their skills in a direction of value.
As a manager under this model, your job is to focus on achieving the Ends and not violating Executive Limitations. The board has to establish the Ends (somewhat like the “mission statement”). But in our traditional model, boards often don’t have time to do this with their limited available time to volunteer; therefore, it doesn’t get done. With the monitoring report system in this model, the board will be focused on the future. And managers have a much easier time working with a board that has provided them with direction than one that changes direction every meeting!
The model gives a manager more authority but also more accountability. The combination in most cases is very fulfilling professionally. You know what the boundaries are within which to work (Ends tells you what to do and Executive Limitations tells you how not to do it), but in most instances you are given a little more “creative” freedom. We are professionals with skills that sometimes our boards do not let us use. This model allows us to use our skills while respecting the board’s direction.
The reporting a manager will do under the model is definitely different from our typical management reports, so there is a learning curve in creating this new structure. However, as these new reports are developed they should take the place of many of the reports currently being provided. The data will probably be different, as the focus is on achieving the boards’ Ends (i.e. how have you accomplished their goals, not what you are doing to get it done) and not violating Executive Limitations (providing documentation that you haven’t broken the “rules”).
Part of the implementation of Policy Governance, includes a schedule for reporting on the various policies, so each board meeting typically will have some type of monitoring report on the agenda. As a manager, I found that these reports were also a useful tool for me in managing the day-to-day affairs of the organization and definitely helped improve internal controls. Ultimately, these reports also act as an evaluation tool – each report you provide either provides evidence of achieving the board’s Ends or evidence that you did not violate Executive Limitations. A summary of these reports at the end of year is beneficial for contract renewal!
Over time, many of us have helped the board implement policies that help the membership, protect the corporation and improve service. However this model has the opportunity to help in a broader sense: to get the board positioned to be preparing for the future and allow the manager to do what we do best—manage.
Sandy Denton, CMCA, LSM, PCAM, is currently General Manager for Sienna Plantation Residential Association and Property Owners Associations in Missouri City, Texas (southwest of Houston). Sienna is a very large-scale master planned community under development with a projected build out of over 7,000 households. Additionally, she provides consulting services to associations relating to various topics, including governance improvement. She has been managing large scale associations for 18 years, is currently Chair of CAI’s Large Scale Committee and co-chair of Texas Legislative Action Committee. She previously served as CAI’s National President and a member of the Board of Trustees.
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Good Question: Do Architecutural Violations Matter If Nobody Complains?
By Barbara Saxton, CMCA, AMS, PCAM
Q - I have lived in a few HOAs and have been the Chair on Architectural Control Committees and the President of the Board of Directors. It seems so many CC&Rs say the homeowner has to file a signed report on a neighbor who is violating a condition or restriction. What if no one ever files a complaint? Does that violation go on forever? What if one person gets a complaint and makes the correction, but another never is complained about. Does the second person get away with the violation? This seems to be a dilemma in HOA's where the BOD doesn't take on such responsibilities directly.
A – Is this a trick question, like, if a tree falls in the forest and no one hears it does it make a sound?
Let’s remember that rules exist for three reasons: harmony, safety, and/or aesthetics. If the violation doesn’t cross any of those categories, in my opinion, it isn’t really a violation. If a violation exists and no one knows about it, I think the issue is moot. Mind you, I’m not referring to a violation that isn’t spotted because people are not doing their job (i.e., site inspections). For instance, if pets of any kind are not permitted, and a homeowner has a cat that never goes out and no one ever hears or smells it, that’s a violation that can exist without ever being cited. In the same association, however, can reside a cat that makes daily forays into neighboring yards. Most likely, someone is going to complain, in writing or otherwise. That homeowner may very well be fined for the violation.
While many CC&Rs do indeed require that a complaint be made in writing and signed by the complainant, some don’t; regardless, this is a good practice. Requiring written and signed complaints can be valuable if a hearing needs to be held. They also serve to derail accusations of harassment (although some harassers are not above putting their pet peeves in writing ad infinitum), or bias on the part of the management company (or whoever is sending out the violation letters). Requiring that complaints be in writing and signed often serves to discourage homeowners from ratting out their neighbors simply out of vindictiveness or other petty reason. It’s important to assure homeowners that their name will not be initially used in citing the violation, but if it comes to a hearing, they may be asked to testify, and their letter must be made available to the defendant.
Remember that if a violation is visible, anyone can cite it, including a board member or manager. It’s important to cite all known violations, without exception. To do otherwise is to create an appearance of favoritism. And allowing a known violation to exist for an extended period of time may have the end result of an Association losing the ability to enforce a rule or guideline. (That being said, a violation may exist for a long time without being cited simply because it is in an obscure or obstructed area, not readily visible.) The important thing is to be consistent and fair in enforcement.
Barbara Saxton is a regional manager with The Galman Group Inc., in Jenkintown, Pennsylvania. If you have a good question about community association management, she might have the answer. Send questions c/o Terry White.
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AARP Issues Bill of Rights for Homeowners in Associations
AARP, the powerful organization with more than 35 million members over age 50, has begun throwing its muscle into efforts to shape the legislative and regulatory climate concerning community associations. In 2003, 46 percent of owners in single-family homeowner associations were over the age of 50, as were 56 percent of owners in condominium/coop communities, according to AARP Public Policy Institute Analysis.
Association managers should familiarize themselves with AARP’s Bill of Rights for Homeowners in Associations, which outlines a set of ten principles and model statutory language. Having distributed this document to all 50 of its state offices, AARP encourages states to follow the document when developing laws and regulatory procedures for common-interest communities.
Additionally, AARP suggests associations themselves use these principles and the concepts in the model statute explanatory discussions when developing or modifying their own governing documents. The issues addressed are applicable to all forms of common-interest communities, according to AARP.
AARP’s Bill of Rights for Homeowners in Associations, issued last July, includes:
I: The Right to Security against Foreclosure
An association shall not foreclose against a homeowner except for significant unpaid assessments, and any such foreclosure shall require judicial review to ensure fairness.
II: The Right to Resolve Disputes without Litigation
Homeowners and associations will have available alternative dispute resolution, although both parties preserve the right to litigate.
III: The Right to Fairness in Litigation
Where there is litigation between an association and a homeowner, and the homeowner prevails, the association shall pay attorney fees to a reasonable level.
IV: The Right to Be Told of All Rules and Charges
Homeowners shall be told--before buying--of the association’s broad powers, and the association may not exercise any power not clearly disclosed to the homeowner if the power unreasonably interferes with homeownership.
V: The Right to Stability in Rules and Charges
Homeowners shall have rights to vote to create, amend, or terminate deed restrictions and other important documents. Where an association’s directors have power to change operating rules, the homeowners shall have notice and an opportunity, by majority vote, to override new rules and charges.
VI: The Right to Individual Autonomy
Homeowners shall not surrender any essential rights of individual autonomy because they live in a common-interest community. Homeowners shall have the right to peaceful advocacy during elections and other votes as well as use of common areas.
VII: The Right to Oversight of Associations and Directors
Homeowners shall have reasonable access to records and meetings, as well as specified abilities to call special meetings, to obtain oversight of elections and other votes, and to recall directors.
VIII: The Right to Vote and Run for Office
Homeowners shall have well-defined voting rights, including secret ballots, and no director shall have a conflict of interest.
IX: The Right to Reasonable Associations and Directors
Associations, their directors and other agents, shall act reasonably in exercising their power over homeowners.
X: The Right to an Ombudsperson for Homeowners
Homeowners shall have fair interpretation of their rights through the state Office of Ombudsperson for Homeowners. The ombudsperson will enable state oversight where needed, and increases available information for all concerned.
AARP also issued a 71-page report by David A. Kahne, a Texas attorney who has represented homeowners in a variety of cases and actively promoted the rights of homeowners in the Texas State Legislature. The full report may be downloaded from the AARP Public Policy Institute Web site. NBC-CAM will continue to monitor this issue and report significant developments in Upward Directions.
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Taming the Paper Monster
Are your association’s offices being taken over by scraps of paper with messages you can never seem to find when you need them and filing cabinets stuffed to the brink of exploding? If so, you should consider striving for a paperless office.
Bear in mind, you will probably never attain that goal. You still need hard copies of some documents for legal or regulatory reasons. Nevertheless, you should try to cut that paper monster down to size.
Start by using scanners instead of copying machines whenever possible, transmitting electronic faxes instead of paper faxes, storing information electronically instead of in filing cabinets, and sending major documents as e-mail attachments or on CDs instead of in bound folders. By sending this newsletter to you via e-mail, for example, NBC-CAM holds down clutter in hundreds of offices—and maybe saves a tree or two along the way.
If you prefer the portability of paper, why not print out your newsletter or other document on the back side of documents you otherwise would have pitched? And then recycle the paper when you’ve finished reading the newsletter.
Whether you receive the documents electronically or scan them yourself, save them as searchable PDF files that lock documents into records that cannot be altered. You will be able to run flexible searches and find information within seconds rather than spending hours thumbing through files.
For some documents, you may need Optical Character Recognition (OCR) software, which extracts text from images and interprets tables while retaining their original cell structure. Often, viable OCR software comes with the scanner.
Once you have the documents filed, you will also be able to access them if you are away from your office. Plus, you can quickly share the information with others, including vendors, property owners and government officials.
Always remember to back up important files. Saving duplicate files on your hard drive is not good enough, though. If your hard drive crashes, you stand to lose all files. Among backup solutions are second hard drives, DVD-ROMs or other removable storage media. You also may save to the Internet and off-site locations to minimize the risk of data loss from a computer failure.
How much space can you save? Consider that a 250 gigabyte hard drive can store 5.8 million pages; a 4.7 gigabyte DVD-ROM, 105,000 pages; and a 700 megabyte CD-ROM, 16,000 pages.
The savings resulting from a switch to less paper extends well beyond the value of the office space you regain by eliminating massive filing systems. Your association will also notice a substantial reduction in the cost of printing, mailing, and shipping.
If you do not feel up to the task, your association may want to consider hiring the services of an independent consultant or firm to help get you set up. It might be one of the best investments your association ever makes.
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NBC-CAM News
NBC-CAM Leadership
NBC-CAM is proud to welcome Dennis Abbott, CMCA, AMS, PCAM, to the Board of Commissioners. The CEO of Abbott Enterprises, Inc., Charlotte, North Carolina, he recently finished his term as President of the North Carolina Chapter. He has served on the Community Association Management Advisory Council for the North Carolina Real Estate Commission and on the Board of the Association of Professional Community Managers (APCM). He Chairs CAI’s CEO-MC Retreat.
The newly appointed officers are:
Chair
Patricia Wasson, CMCA, PCAM
Town Manager
Celebration of Florida
Vice-Chair
Rob Felix, CMCA, LSM, PCAM, RS
Association Reserves
Secretary/Treasurer
Ellen Hirsch de Haan, Attorney at Law
Becker & Poliakoff, P.A.
Florida CAM (Community Association Manager) Council Appointments
At its meeting in early February, the Florida CAM Council appointed a new Chair and Vice-Chair.The Chair is Chris Brown, LCAM, CMCA, AMS, PCAM. Chris is CEO of C&S Condo Management Services, AAMC, Bradenton, Florida. The Vice-Chair is Kelly Moran, LCAM, CMCA, AMS, PCAM. Kelly is Senior Vice President with Rampart Properties, Inc., Tampa, Florida. Congratulations to Chris and Kelly!
NBC-CAM continues to work with the State of Florida’s CAM Council and Department of Business and Professional Regulations to ensure the continuance of the Florida CAM Licensure Program, whether it remains administered by the State or becomes privately administered.
CMCA® Examination Now Available Every Month, Except June and December – Encourage Your Colleagues to Take the Examination Today!
To meet the increasing demand, the CMCA examination will be offered every month of the year, except June and December. The new format will allow candidates to take the CMCA examination via paper and pencil in the months of March or September, and at CAI’s National Conference. The CBT (computer based testing) examination format will now be opened for two month testing cycles for each candidate as follows:January/February, April/May, July/August and October/November.
NBC-CAM is proud to announce the addition of examination opportunities for professionals interested in sitting for the examination. Please share the information with your colleagues interested in sitting for the examination.
Board Certified
Congratulations to our newest CMCAs! Over the past several months, NBC-CAM recognized professionals who completed the requirements to become Certified Managers of Community Associations. The CMCA credential demonstrates that these managers have passed NBC-CAM’s national exam and met requirements for managing condominium, cooperative, and homeowner associations.
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