Vox Populi

Last week I read David and Goliath by Malcolm Gladwell. Fascinating collection of stories to support the premise that sometimes impressions are dead wrong. I rather appreciated the U-shaped curve theory which implies that sometimes too much leads to too little.

This week I am reading the Lords of Finance, which is about the world banking system at the start of World War I and the financial crisis which ensued.

I didn’t really have a theme when I picked the books but it is interesting how they both tie together. Often, little things and their unintended consequences, cause massive turmoil, which in turn lead to misstatements and half-truths, which lead to a crisis in confidence. And, it is the crisis in confidence which make the problems linger.

Which is pretty much where several of our clients sit today.

Often, the hardest thing for a board to do is stop talking and getting involved. We understand, no one likes bureaucracy and condominium management is the epitome of it. Unit owners believe in Vox Populi, Vox Dei and think that one of their own is far more trustworthy than the organization’s paid professionals.

But what if that isn’t true? How can a condo association, or any organization for that matter, work on solutions when those elected to the board play fast and loose with the truth?

Yesterday’s blog was about a decision made by a board when it was trying to explain the costs of a special assessment. I changed the details but the issue is real. The board, in their quest to get support for their desire to only have targeted repairs done, misrepresented the financial picture. They left out the requirement from the reserve specialist to increase the reserve contribution. So, of course, $2 million seems right! But, when you factor in the additional cash flow requirements, then suddenly that $2 Million is $7 Million and that is far more than the costs anticipated to take care of everything. The board, and it pains me to say this, lied. And in the process, made management out to be only concerned with the fact that we would be compensated for doing the additional work in support of the full project – without stating we would be paid the same amount under a targeted approach. And possibly even more as we waded through change order after change order.

And then we have the officer in another association who decided that he, and and alone, should run his condo association. And when finally called out on it, he went “to the people” and pleaded his case that the professionals only wanted to do this because we enjoyed billing them. That he, and he alone, can solve the condo’s problems as long as his friends and neighbors support him.

I am not trying to single out bad actors and complain. I wish I could tell you that these two are abnormalities, but the truth is, they exist in every association. I was speaking with an attorney and jokingly said I wish the next referral the firm made was for a well-governed association and they replied A) what’s the fun in that and B) even well-governed associations eventually go south.

My point today is that sitting on a board is a great opportunity but it does carry a responsibility. As a director, you must follow your bylaws and you must always be honest with the members. Sometimes painful decisions are necessary and creating scapegoats might feel good, but in truth causes far more damage than it solves. No one wants special assessments, no one wants legal troubles. But you owe the members the real truth that sometimes, life itself is trouble. To paraphrase the law firm, A) what’s the fun of a trouble-free life and B) even trouble-free lives eventually go south.

Take the concept of the U-shaped return to heart. Sometimes more is less. More meetings actually leads to less trust. More member-management leads to greater problems. More misrepresentations lead to less member involvement. And whatever you do, don’t try to weasel your way out of addressing the underlying problem. You might get lucky once but the odds are against you successfully avoiding responsibility over the long-term and the problems your organization faces will get worse the longer you avoid them.

C.O.R.E. Services provides operating, financial, and accounting management for condominium projects who need and want superior holistic service in meeting today’s complex condo associations. If you have questions or concerns or would like more information about how CORE can be of service to you, feel free to email us anytime.

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