A management software company (Appfolio) conducted a survey of boards, and they found that 67% of boards would not recommend their current management. Interesting, only 10% of those same boards were actively considering changing companies. That means, most boards, 57%, are sticking with the “devil they know”. They are not satisfied with the service provided by their management company but aren’t willing to find better. There could be a few reasons for this:
- This company is not good, but better than the last one. They may have switched to this management company after a terrible experience with another. The current service is bad, but better than they previous company. Sometimes, happiness is relative, and this company, although bad, is an improvement over the previous one.
- This is just par for the course for this industry. This is as good as it gets. There just isn’t an association management company that provides superior customer service. They are all indifferent to providing superior service and they all have the same business model. The management companies always promise great service when you signed the contract, but it is clear to you that they have understaffed and overworked Community Managers
- The service is bad, but tolerable. The service is bad, communication poor and the fees seemingly high, but you can live with it. You have been promised things will improve, and if they don’t, you may consider finding a new company, but you have decided to give them time to improve. The service is not great, but the next company could be worse. This may be your third or fourth management company during your tenure as a board member.
- Because of the time, effort and inconvenience of changing companies, you are willing settle for mediocre service. The process of changing companies: changing banks, owners having to set up new payment links, vendors getting on boarded, and the new company learning the idiosyncrasies of your association, is arduous and the equivalent of causing business brain damage. Let’s live with this devil.
Some boards refuse to live with that devil and decide to find a better management company. What are the final straws that drive a board to find new management?
- Gross Negligence and/or Fraud. If there is not just routinely bad service, but instead negligence, or worse, financial fraud, you must find a new company. Gross negligence is providing the wrong direction or guidance, allowing critical dates to be missed such as filing taxes or completing the Secretary of State certificate, or even more alarming, allowing insurance to lapse or not checking the insurance of vendors. Any of these actions puts the association at high risk.
- Back Office Incompetence. We have heard from disgruntled boards instances where the management company did not provide accurate financials for months, did not process vendor invoices promptly or failed to file liens on severely delinquent owners. Even if the Community Manager does not communicate effectively with the board and owners, the board should expect the back office and operations to be competent.
- Non-Compliance with Davis-Stirling. It is imperative to follow the Davis-Stirling statutes because failure to do so jeopardizes any action taken by the board. If the election is not valid, or a meeting properly noticed, or minutes not recorded as required, an owner could sue the board or choose not to abide by their decisions.
- Insufferable Service. You may be able to tolerate poor service, but when poor service becomes downright awful, you need to make a change. There is no excuse for missing meetings, not conducting on site visits or not responding at all to owner and board inquiries. You don’t have to feel neglected by the management company, there is better out there.
- You Are the Manager. We hear often that with some companies; a board member is doing the work of the management company. They coordinate vendors, find owner violations, check the work of their vendors, interact with upset owners and for all intents and purposes, they are managing the community. You are paying the management company to fulfill the duties outlined in the management contract. You are an unpaid volunteer and should be serving as the Community Manager.
- Paying Too Much (for Too Little). Some boards don’t read the management agreement well and are surprised when the monthly management invoice arrives with not only the management fee, but also another 15-line items. The management fee may be less than all the other fees combined. Not only are you charged for paper, print, mailing, envelopes and office supplies; you are charged when they talk to attorneys, vendors and other departments. You will pay a management fee for professional management; just make sure it is reasonable.
- You Find Better Management Services. The companies whom we refer are some of the best in the business. They have certifications and have been in the business for at least 10 years. They manage at least 30 associations, so they have the necessary resources to manage your account, but fewer than 1,000, so they can provide superior customer service. You don’t have to settle for the devil you know when there are better management services for you.
Undeniably, changing management companies takes time and some owners hate any type of change. But you as board members should never settle for inferior service or incompetence. Change may be unsettling to some, but well worth it in the long run.
