Continuity & Transfer of Power Getting New Boards & Board Members Up to Speed

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Among the keys to successful governance of residential communities is continuity.  The most basic of democratically elected units, condo and HOA boards are the custodians of their community’s welfare, success, and continued operation.  Over time, the experience and insight accrued by board members, directors, or trustees are the compass and rudder that steer and stabilize the community. 

That being said, as board service is a volunteer opportunity, board members do not serve indefinitely—or at least, they shouldn’t. Ideally, communities hold elections at regular intervals, resulting in some board members being replaced through attrition or by resident vote, while others remain on the board to maintain the aforementioned continuity and institutional memory. 

In some rare cases, an entire board may be replaced in a single election. In either scenario, successful integration of new board members—or even whole boards—is crucial for the continued health of the community.

The Peaceful Transfer of Power

“It’s always good to have new blood,” says Richard Brooks, a partner at Marcus, Errico, Emmer, & Brooks, a law firm located in Braintree, Massachusetts. “But the history of a property and knowing that history firsthand is also important. That’s what you lose when replacing board members. New board members don’t have that firsthand experience, though over time they will develop it. Not knowing the history of the property, especially the mechanicals, warranties, service contracts, etc., can become a real problem. This problem is easily solved by having staggered terms. The worst potential situation is when a community sweeps out an entire board, manager, etc. because they want a fresh start—but the new trustees don’t know anything about the property and its history.”

“Each new board member comes into their role with the best of intentions,” says Jaime Sikorski, a vice president with AKAM Management located in New York and Florida. “Each has a unique skill set and their own perception of how the property has been run in the past. Less-experienced members often are less versed in board procedures and responsibilities, which may derail their immediate progress in acclimating to board service. When assuming responsibility from an effective board, the transition is often smoother, with goal-setting focused on future sustainability and standard of living improvements. On the other hand, when new board members step into the role after their predecessors have suffered imbalance, triage is often needed to repair the actions taken by the former board—as well as residents’ perception of them. 

“Regardless of the nature of the situation a new board inherits,” Sikorski continues, “it’s important for them to take the initial steps to learn each other’s strengths and priorities, and to set a cohesive list of both short-term and long-term goals.”

Long-standing members of a board who remain in their role amid an influx of new board members may have issues giving up control and power, says Diana Stegeman, a community manager with Heritage Management Group, based in Las Vegas.  “And conflict can arise if new members don’t agree with how the previous board did things,” she continues. “They may have a hard time adapting to the former board’s rules and criteria. It can be hard for new members to fit in.  There’s also the question of new technologies and how they’re used, and learning how to use them effectively. Both old and new board members may have problems with that.”

Training Day

Early intervention in the form of training is the most effective way to bring new board members—or even a whole new board—up to speed and keep things running smoothly. According to Stegeman, “It’s very common to have a whole new board take control in the Las Vegas market. Members quit, and terms expire. Everyone is new on the board, and no one has prior experience. In these cases, we encourage the new board members to take free classes for board member education—but that decision is for the individual board members to make.  Some want to participate, and others get offended that you mentioned it.”

“The key is training,” says Chris Popoli, regional property manager with Denali Management in New Jersey. “We offer this to all of our boards and board members, whether newly elected or returning. As a volunteer position, board service is a lot of work, and requires a real devotion to the community. All board members have a fiduciary responsibility to follow their own governing documents, as well as local, state, and even federal laws. They have a responsibility to run their community like a business and approach every decision based on that premise. Therefore, training board members is very important and something to take very seriously. An educated and trained board makes everyone’s job much easier and allows for smooth transactions between the board and their property manager. If you have the proper processes and procedures in place, and training available for your boards, then the transition should be very easy.”

If a community has a manager, that person can and should provide information to new board members about expectations of the role, as well as some basic legal, management, and structural terminology, so they understand what is being discussed in meetings and board correspondence. Most management pros agree that it’s also good to have a written code of conduct for new board members spelling out the rules, goals, and responsibilities, as well as how to interact with management and other board members and residents.

Staggered Terms

One effective way to maintain continuity on your board is to stagger board terms.  In other words, don’t elect all board members in the same year and for the same term length. If you have seven board members, for instance, create a three-year cycle where two members run for election in year one, two in year two, and three in year three. This will provide that there is always someone on the board with at least a year of experience in the position.

“Staggered terms for board members are normal for board service in Nevada,” says Stegeman.  “The normal term is two to three years. Recently we had a five-person board where two members quit at the same time because of family issues.  Leaving the board is usually about a personal or family conflict and time involved.  The board member will realize they don’t have the time.  Board members rarely leave because of a conflict within the board.”

“Staggered terms help because there’s always someone who knows the history of the property on the board,” says Brooks. “It’s like the U.S. Senate. The terms of the senators are staggered with roughly one third of senators up for reelection every two years during their six-year terms. Some stay in office and share their experience. Staggering terms provides continuity and historical knowledge. For condo and HOA boards, we generally recommend that terms should be three years and be staggered by thirds—that way, two-thirds of board members have knowledge at all times. We try to change documents for clients for this when necessary.”

Sikorski concurs. “Staggered terms provide for a running knowledge of board actions, goals, and intentions,” he says. “Often, it helps to reduce a radical, changing-of-the-guard impact, which can be jarring for owners and shareholders. It can also provide an influx of new ideas and priorities. Some properties’ governing documents allow for varying term lengths, such as one-year, two-year, and three-year terms—but this type of staggering can often create a disparity between the agendas of board members, leading to unnecessary strife.”

Keeping it Real

Along with strategic term limits, there are a few other steps and policies boards should consider to optimize their operations and promote transparency. Most management pros recommend adopting a code of board conduct to keep things above board and operating smoothly. Mutual respect and confidentiality should be emphasized, and new board members—actually, all board members—should review the past six months’ minutes and manager’s reports to get informed and up to speed about what’s been going on in the community prior to their election. 

Communication between board members, and with the community and management, is among the most important aspects of any board, tenured or new. “As such,” Sikorski says, “management must…assist boards in accurately presenting their message via the best channels for their community. In addition to standard letters and memorandums, virtual town halls are a great way to reach the majority of owners and shareholders, particularly if recordings or recaps are distributed afterwards. Colorful and informative quarterly newsletters can also be a great tool to communicate the status of items and property reminders.”  

When a new board or new board members are elected as a result of discontentment with their predecessors, it’s important for the newcomers to offer an olive branch to the opposing side. “The most important thing in this situation,” says Popoli, “is to be transparent about everything. Not only about what happened in the past, but also moving forward. Boards sometimes forget that all owners are entitled to know what is going on with their property, or their investment(s). The first step in this process is usually holding a community meeting with the owners. The board should prepare for that meeting with financials, audits, or any information they have on file to help explain to the owners what happened. They should not call out individuals during such meetings, but refer to them as ‘the board,’ strictly stick to the facts, and make sure not to speculate. It is essential to have as much community involvement as possible, and to not be afraid of feedback from owners who are involved.”

Stegeman agrees. “We have only seen a whole board removed once,” she says. “When coming from a contentious situation a new board should hold open meetings and community socials. Don’t hide—bring in the community programs to build good will.”

Quick, efficient integration of new board members or even a whole new board is critical for the continued smooth operation of any residential community, be it condo, co-op, or HOA. The key factors to making this happen are transparency, training, and, where possible, continuity. 

Cooper Smith is a staff writer/reporter for CooperatorNews. 

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