Is Your Board Running at Its Best?

How effectively is the board of your community association operating? Are board members collaborating successfully to serve the community's interests? Are your meetings productive, and is the day-to-day running of operations smooth?

Whether you're a board member committed to ensuring success or a resident looking to participate in community governance, several best practices can guide you in assessing your board's performance in six crucial areas.

Communication

The effectiveness of a board is often reflected in how well it communicates with residents. Transparency is the current essential standard, with association members increasingly expecting openness about activities and issues impacting the community. Over-communication is not seen as a problem when relaying information from board members to homeowners.

Community members may prefer different communication methods, so it's beneficial to use both digital and traditional channels. Options might include email, newsletters, website updates, text messages, postal mail, and bulletin board notices. It's important to have the technology and capability to communicate in various ways as per member preferences.

Communication shouldn't be one-sided; feedback from residents is equally vital. Short surveys distributed regularly can help gather input even from those unable to attend meetings, reinforcing the notion that the board values residents' interests.

Finances

Financial transparency is crucial. Members should be able to access reconciled financials and understand them. Educating owners about financial details is essential. This includes explaining expenses, variances, and cash flow projections for the year.

A good practice involves reviewing contracts annually during budget discussions. Assess whether better deals can be negotiated or if services can be improved. Having discussions with vendors about these analyses is recommended.

Governance

Board members must understand the scope of their authority, which involves being familiar with governing documents and relevant laws. It's imperative to know the hierarchy of these documents, where covenants, conditions, and restrictions have precedent over bylaws and guidelines. Often, most answers can be found in these documents, but consulting with an association attorney when necessary is advisable.

Leadership

Homeowners trust their board members to safeguard the community’s assets and finances. This fiduciary duty is critical, emphasizing the need for board members to maintain equitable relationships with homeowners. The duty extends to the entire community, not just select individuals or groups.

Understanding conflicts of interest and fiduciary responsibilities is vital. Decisions should be free from personal and emotional biases. The community association operates like a corporation, and board members are its officers, responsible for making sound business decisions.

Board members should embrace three key roles:

*1. Serve as servant-leaders* by prioritizing community needs over personal interests and fostering strong relationships.

*2. Build the community* by encouraging mutual respect, establishing interaction protocols, developing a shared vision, and collaborating with local authorities.

*3. Facilitate staff* by viewing staff and vendors as integral partners in achieving community success.

Meetings

Transparency also plays a significant role in meeting effectiveness. Ensure meetings are accessible, perhaps through conference calls or webinars. Holding meetings at a consistent date and time each month can help. Meetings should be focused on actionable items to avoid unnecessarily long discussions.

A code of conduct for board meetings can greatly enhance their efficiency. This would involve discouraging debates with homeowners, transparently disclosing conflicts of interest, and recusing oneself from related votes to maintain ethical standards.

Reserves

Regular updates of the reserve study are vital. A basic update should be done annually, with more thorough updates every three years, taking into account major capital improvements. Budgeting for the cost of these updates is essential.

Preventative maintenance can significantly influence the lifespan of components and future reserve requirements. Much like a budget, a reserve study should serve as a guide rather than a fixed plan. Real-world adjustments may extend a component's life or necessitate earlier replacement.

Evaluating the returns on reserve funds should happen every six months. Transparency in interest rates and financial statements is crucial, providing community associations with the necessary information to make informed financial decisions.

By implementing these practices, boards can ensure their associations remain viable and foster a community residents are proud to call home.