Bridging the Gap Between HOA Boards and Management Companies

Last modified on March 22nd, 2022
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Board members are responsible for finding and partnering with an association management company that will best serve their needs and the needs of their community. When board members are satisfied and find value in their management company, they are more likely to stay with them and also recommend them to other community associations.

However, board members’ expectations have shifted. Today’s boards expect to be able to communicate instantly and carry out their duties from anywhere, on any device. And many association management companies aren’t measuring up.

According to AppFolio and HOA-USA’s latest survey, which polled board members, only 23% of respondents said they’d recommend their current or most recent management company – that’s a big gap for association management businesses to fill. Additionally, more than half of board members surveyed, 66%, said lack of responsiveness was the number one reason why they switched – or are considering switching – management companies, followed by failure to quickly and accurately follow through on projects (65%) and overall poor customer service (61%).

On this episode of The Top Floor, we sit down with AppFolio experts to go deeper into the survey data to see exactly how board members’ expectations are changing and why it’s critical for management companies to pivot their customer service strategy. We also hear from our partner in the board research who details the inner workings of homeowners’ associations and provides insight into how to foster great relationships. Lastly, we learn how one association management company has been able to overcome challenges and better serve their boards by implementing mobile tools and on-demand experiences. 

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Episode Transcript

Sean Forster: You’re listening to The Top Floor, a podcast featuring critical conversations around property management, community associations, and real estate investing. I’m your host, Sean Forster, an industry trend researcher at AppFolio. Once a month we embark on a narrative journey into the height of industry disruption. And with the help of thought leaders and change-makers, we bring you the insider knowledge that’s fueling our industry’s future. Now let’s turn it over to Megan, who will take us through today’s episode.

Megan Eales Monroe: By and large, board members are responsible for finding and working with an association management company that will provide the best service to their community. Ultimately, they get to decide whether or not to use a management company and which one to partner with. But, they’ve also got a lot on their plates. Many board members work full-time jobs, and carving out time to help govern their communities isn’t easy. This challenge can be compounded, if the management company they work with doesn’t communicate properly or lacks the tools they need to carry out their duties with ease. When board members are happy with their management company, they are more likely to stick with them in the long-run, and recommend them to other communities. However, in recent years board members’ expectations have changed — they now expect to be able to communicate instantly and carry out their tasks anytime, anywhere.  

So are boards truly satisfied with their management companies today? To find out, AppFolio and HOA-USA partnered to survey HOA and COA board members. In this episode of The Top Floor we’ll be revealing the research findings, and diving deeper into how board expectations are changing and why it’s imperative to meet their needs. Here to kick off the conversation is James Erickson, a Senior Product Marketing Manager at AppFolio and Brittany Benz, Content Strategist at AppFolio who will detail some of the key takeaways from the survey and what it means for your business. 

James Erickson: So almost 200 people took the survey, and the majority, over 90% are currently using a management company. 74% of the people who took the survey live in a homeowners’ association, and 23% live in a condo association.

Megan Eales Monroe: And what exactly do board members want from their association management companies? Here’s James again with the most surprising findings from the survey.

James Erickson: Board members expect their management company to handle financial management above all else, so when survey respondents were asked to rank the top three responsibilities that they thought were the most important for their management company to handle, 75% ranked funds management and financial reporting in the top three, with 29% ranking that as the number one priority.

Brittany Benz: … I could totally see why that would happen, because association financials are quite complex and require professional expertise in many cases. 

Megan Eales Monroe: Speaking is Brittany Benz.

Brittany Benz: So especially with changing federal and local regulations, I can understand why that would be listed as a top responsibility.

James Erickson: Following funds management, 54% expect their management company to provide information to keep homeowners informed, and 51% expect them to collect dues and assessments. 

Brittany Benz:… And that’s also interesting, both keeping homeowners informed and collecting dues and assessments came in second and third, since both of those duties fall into customer service and the communic ation budget, so they really go hand in hand. It makes sense that board members would want their management company to be efficient, transparent, and attentive. So it would make their lives easier.

Megan Eales Monroe: Not only do board members expect their management company to handle the finances, but customer service continues to prove to be a top priority. Still, board members just aren’t as happy as they should be.  

James Erickson: Another interesting stat was that the majority of board members would not recommend their management company, so only 23% of respondents said that they would recommend their current or most recent management company.

Megan Eales Monroe: So, why are they so dissatisfied? Here’s James again. 

James Erickson: Two-thirds (66%) of board members cited unresponsiveness or long response times as the reasons why they switched management companies in the past year or were considering switching now. This reason was closely followed by a failure to quickly and accurately follow through on projects (65%), and just overall poor customer service in general (61%). 

James Erickson:  … In the survey, we also asked board members to share one piece of advice they would give their management company, and some of the responses that we found were, “Focus on response time to HOA and community members. Even a response of ‘we’re working on it would help.’” Another response was, “Understand what it means to be proactive with customer service and responsiveness.” A final example would be, hire better community managers and then make sure they do their jobs, that they can answer emails, and carry out their duties appropriately.

Brittany Benz: … So board members are pressed for time, but I would say association managers are equally stretched thin, as one association manager will often have to manage numerous associations. So I could see why they may be slow to respond or have trouble following through on projects. And this challenge that we mentioned board members currently face is actually really mirrored by association management companies. I remember in another survey we conducted last year in 2021, where we polled association management companies to find out their top business challenges, communication was actually at the top of the list followed by meeting customers’ needs and expectations. And when it comes down to it, I feel like board members today are much like the rest of us. They’re accustomed to carrying out tasks on their phone or computer from anywhere, like ordering your groceries on Instacart or calling an Uber, or paying your credit card online. 

Megan Eales Monroe: As Brittany touches on, board members want to rely on tech when it comes to carrying out tasks. James explains more about the importance of tech for board members.

James Erickson: … More than half, about 57% of respondents, said it was extremely important or very important for an association management company to use modern technology and self service tools.

James Erickson: … Based on the survey, communication is the number one task that board members can currently accomplish online, so about 73% of people who took the survey can do that online.

James Erickson: … 72% of the people who took the survey said that lack of access to online or digital tools would influence their decision when choosing a new management company.

James Erickson: … This was followed very closely by making payments and accessing association documents like CC&Rs and meeting minutes, which over 70% of respondents were able to do online. And just an interesting point is that those considering switching management companies were actually less likely to be able to accomplish all those online tasks compared with those currently not thinking about switching. So this finding suggests that management companies who offer more online tools are less likely to lose their associations to competitors since boards are generally more satisfied with technology offered and thus not looking to switch.

James Erickson: 83% of respondents ranked online portals in the top three most valuable digital and online tools that a management company can offer their association.

Megan Eales Monroe: For an association management company to go from good to great, they’re going to need to level up their tech game in order to gain business from boards, the AppFolio survey suggests. And as many as 72% of respondents said that the lack of access to digital tools would influence their decisions when choosing a new management company. Next let’s get some perspective from someone who knows the inner workings of homeowners’ associations and how to foster  great relationships. Here’s Matt Genaway, Partner Account Manager at HOA-USA, our partner in the board research.

Matt Genaway:  … I think is very important to be able to ask these questions and get this feedback that not many people have had a chance to get, but then, you know, obviously

Matt Genaway: In terms of the industry and what it can do for management companies, what it does for us boards, it allows us to help make these folks, their role in their HOA, just a little bit easier and, you know, a happy board member is a great thing for a management company, boards, they have a very thankless job.

Matt Genaway:  … The communication between a management company, the manager themselves and the board members, and even more so the residents, can really make or break that relationship. We’ve seen it so many times.

Matt Genaway: And we’re in a position where we get a lot of questions every day. We get questions from both boards and residents. And so many of those questions have to do with the communication side. Why can I not ask my manager a question? Why are we not being filled in on what happened at the board meeting?

Matt Genaway: Why are there so many executive sessions, all this stuff, and I’ve personally seen a few HOAs and I’ve seen both sides. I’ve seen the side where the manager does not do a great job of relaying information to the residents.

Matt Genaway: And that lack of transparency is really frustrating, not just for the board, but for the homeowners as well. And now I’m fortunate enough to be in a community that – it’s just the exact opposite. Communication is amazing. We get sometimes daily, but at least weekly updates on, just things that are happening with the community. And that comes straight from the manager. So for management companies, to be able to see just how much the board members value, that amount of communication, that transparency, all that, is gonna make the management industry a lot better as they see that, that’s what people care about.

Megan Eales Monroe: Community association boards are notorious for having a high-turnover rate — which poses a challenge for association managers who are constantly working with new board members. The task becomes, how do you build relationships with board members when it becomes a bit of a revolving door?

Matt Genaway: Yeah there’s a lot of turnover in HOAs … board members often – I think they usually get on the board for the right reasons, but they find just how much work it is. And oftentimes their first question once they joined the board is how do I get off the board?

Matt Genaway: And unfortunately, a lack of folks who want to step in and take up those roles is a real problem in the industry and has been for as long as HOAs have been around.

Matt Genaway: … Management companies can really utilize that to make the roles of those board members and committee members and folks like that, just that much easier then maybe just maybe the turnover rate goes down a little bit. It would surely help a lot of HOAs that we’ve talked to when they have a real problem, finding more people to step up and take on that responsibility and management companies. So if they can make their board members that much happier, make their jobs that much easier through communication and other means it’s really a win-win for everybody.

Megan Eales Monroe: Being a board member poses its own challenges, especially as a representative for sometimes hundreds of residents. They need to move quickly when it comes to taking action and making changes for the best interest of other homeowners and their community. Here to discuss more on some of the challenges board members face today is Joe Rector, CEO of Pelican Property Management.

Joe Rector: … Being a board member … Seeing it from their perspective, it’s a tough gig. You are an elected official to serve in the best interest of your community, on behalf of your community, while trying to be a community member at the same time. So you’re making difficult decisions and having difficult conversations with neighbors while trying to be a neighbor and a community member yourself. I think that’s a very tough aspect of it. We’ve always tried to make it so that the board’s life is a little easier and that they can sort of sit in the passenger seat if you will. And that allows them to be a neighbor. They can help and be informed and guide it through the decisions they have to make and have educated answers to why they’ve made those decisions. We provide all that information and in turn, again, that allows them to be a neighbor.

Megan Eales Monroe: Jordan Levine, co-founder of Pelican Property Management joins the conversation.

Jordan Levine: Yeah, we would say probably the vast majority have worked two jobs and they do this on the side and they get paid nothing to do this, other than the satisfaction of keeping the value of their – probably for most of the people, their most valuable asset, keeping that value high and keeping a nice place to live as well. I mean, there’s a lot of different aspects to it.

Megan Eales Monroe: So, how can association managers and board members work together effectively?

Jordan Levine: It’s a hand-in-hand approach. It’s an interesting process so we’re actually relatively, although we’re pushing in the nine years, we’re a relatively young company in an area where we’re competing against people that have been doing this for 35 or 40 years in a lot of cases. So we’ve had the privilege and really the difficult part of taking on a bunch of new properties. And so you meet the boards for the first time and this is the first time we’ve done their financial packages. And it’s probably in, I think, a hundred percent of the cases, the first time they’ve ever used our software, AppFolio. And so there’s a process in which we go through, which we’re getting better at, where the board members become more familiar with the property manager and the property manager gets more familiar with the board and the community and then together, everybody gets more familiar with the process but that usually is a 12 to, I would 12-to-18 month process be before the board fully trusts the manager and fully knows where to access all the information that they need.

Jordan Levine: And it’s on us to continually offer training for the boards and help them along the way. And … it’s good for them to constantly communicate with, if we’re not doing something right or if we’re posting something to the wrong account and they want to see it here instead of there. So in the beginning it’s something that we’ve had to work through a lot because as a new company, all we were doing is transitioning in new properties.

Jordan Levine: … that’s a process … once you gain that trust and once they actually gain the trust in our management system, then things just become easier and they let you, I don’t want to say it’s autopilot, but they let you make decisions and more and more decisions.

Megan Eales Monroe: Finding the right rhythm between the board and the association management company is a balancing act in the beginning, but like Jordan highlights, it gets easier with time and a proven track record that the management company can lean into the boards’ needs. The goal is to develop a deep sense of trust, and this is most successful when association managers master the art of hospitality in terms of catering to board members’ and residents’ needs. Here’s Joe again to explain more.

Joe Rector: Yeah, it’s always been our mission. And I tell this to every new board that we meet to change the relationship between board members and property managers and really communities and property managers. A lot of times people think property manager, they think, “Ugh, they’re going to write me up for something or my grass is too high.” And there’s just this weird cat-dog relationship that really doesn’t need to be there. And what we’ve set out to do at Pelican really is to change that and make it more of a hospitality style of management so that they look at us more as helpers, more as – they might have an issue but we’re there to solve it. And they’re looking for us to get it done not necessarily as the bad guy but as you would call a doctor or somebody else that’s going to help you. And I think as our boards have gotten to know us, they realize that we’re a little bit different in that regard.

Joe Rector: And we build good relationships with them. We build really good relationships with our communities. Us property managers, we have it tough as well. The board members have a tough gig but the property managers have it tough as well because when I’m training new managers, I say we’re almost diplomats. In that we’re serving a board, we’re serving a community, we’re serving vendors in a sense and we’re the conduit between all these moving parts and making sure that it goes smoothly, and that everyone’s happy with each other and that the whole operation goes smoothly and most importantly that the communication is there.

Megan Eales Monroe: Like Joe says, building a good relationship with the board is imperative. It also requires ongoing nurturing in the form of communication and support. 

Jordan Levine: In general, it comes down to communication. They want to know that you’re doing something for their community. So the issue, one of our issues, is that our managers are very busy. They work constantly. And we weren’t necessarily telling the boards what they were doing on a daily or weekly basis. So we’ve developed internal systems where we can share that information better with our boards.

Jordan Levine: And frankly, our relationship with AppFolio, which is wonderful, we’ve been telling them about it and how we can create more board member and manager communication built into AppFolio. And Joe we talk about this all the time. They work so hard but sometimes board members and especially community members just don’t know the amount of time it takes to do certain things. And if you don’t tell them what you’re doing, then they think, “Well, you guys are doing nothing and we’re paying you all this money.”

Joe Rector: Yeah, communication is a big thing. I always say, nobody’s perfect, we’re not perfect. But with perfect communication you can take a bad situation and make it a little bit better. With boards we, boy, do we water that garden. You have to keep those relationships good. You have to be accessible. You have to be present. And I think that’s something that we’re a little different, being the leadership of the company, Jordi and I, we’ve always made sure that we’re present, not only for board members but for community members that have something. And we keep an ear out and an open mind.

Megan Eales Monroe: Fostering strong relationships with board members and proving reliability go a long way in building a successful  association management company, but the other piece of this puzzle is empowering board members to take action if they need information fast. One way to do this is by giving them the information at their fingertips. Here are some solutions that have worked for Joe and Jordan’s company.

Jordan Levine: … The technology that we use is primarily AppFolio. And we really pride ourselves on not only knowing it well ourselves but training our boards to access it as well. And so within that, where we rely heavily is in financial reporting, the automated billing and features, the eCheck and bill pay. Being able to gather information that they want in a timely manner is where we’ve always been pushing and we’re getting better at it. We’re still not fully there. And frankly we’re working with AppFolio to give our boards better access. So at the moment they have access through a board member portal, which is great, and we can upload information to the board member portal which is wonderful. But we really — what we do is we actually give them read only access into our system for their community.

Jordan Levine: So if they want to look up an individual in their community, if they want to look up a specific invoice, rather than calling us to get that information or emailing us, it’s faster and easier for them to just pull it. And we always tell people that we’re an open book. So we’ve got nothing to hide and we want to be incredibly transparent. So the fact of the matter is the more information we can provide, and the more ability that we can get them to do things. So looking into the future now with technology, is that we do have a few boards that not only will they want to pull files and documents and reports, that just one aspect, we have certain communities now that want to actually do, they want to do the violation walkthrough for the community and they want to manage that themselves, which they can do. It’s so easy on a mobile device today.

Jordan Levine: And if they’re willing to do that, then that helps us out, it helps them out and things just get done faster and more efficient. So we’re excited about where we came from and we’re extremely excited about where we’re going. I mean, some of the stuff coming down the pike is amazing. It’s going to revolutionize our entire – we’ll revolutionize our entire industry, I’m convinced of it.

Megan Eales Monroe: To give some real world color to how this tech can be leveraged effectively, here’s Joe again with anecdotes from board members whose experience was improved by having access to digital tools. 

Joe Rector: So some of the board members that are utilizing the tools and software that we give them have noticed just how much better the communication can be. And that’s because there’s a few more outlets to do so. In an old fashioned way was to call or email. Now we can have their portal, they can respond, they can submit things through their architectural requests, they can review the architectural request or delinquencies, they have access to all the reports and just the overall communication and transparency has allowed them to really, I think, see our operation from a different angle. And a word we like to use is, AppFolio has allowed us to give our boards a sneak peek at what goes into a property management outfit really.

Joe Rector: We’ve switched almost entirely to electronic meetings and Zoom meetings and I love it. I think that the virtual meeting is actually a stronger way to hold the meeting because you can, number one, because you can share your screen. You’re saving on paper. You’re saving on all the admin fees that come along with printing out a board packet to pass along. You can get right to your point and show everybody very quickly what you’re talking about. I think people can do it from home. The engagement is up because people aren’t having to travel to get to these board meetings that are so exciting. So they’re much more likely to pop on and say, hello, get their point across during the forum and … I think one thing that we took from COVID was this, that we can have very productive board meetings virtually and get a lot done.

Megan Eales Monroe: And the amount of time saved by converting in-person board meetings to virtual is a game-changer for the industry in terms of working and collaborating more efficiently. Jordan, again. 

Jordan Levine: Just to add on to one other point, which is for our staff, for our managers, for them not having to travel to the property for a board meeting at night. I mean, that’s a multiple hour, even for a one hour board meeting, they’re probably traveling half an hour, 45 minutes there and a half an hour, 45 minutes back and they get there early and then people want to talk afterwards. So from a burnout perspective for our managers, I think that’s revolutionary.

Megan Eales Monroe: It’s abundantly clear that board members’ expectations of their management companies are higher than ever, and there is a lot of room for improvement. To recap: we learned that only 23% board members would recommend their current management company. James shared eye-opening statistics on what board members are looking for in an association management company, insights as to why they might switch, and the kinds of technologies they use or expect. 

Matt spotlighted the importance of transparency in maintaining clear lines of communication between boards, homeowners, and association management companies. Joe and Jordan stressed the ways that tech solutions can be a game changer with regards to saving time for board members and making their lives easier. Leveraging digital tools has proven to be effective whether it’s turning board meetings virtual or giving board members access to important documents or information at their fingertips.

A special thanks to our guests, AppFolio’s James Erickson and Brittany Benz,  Matt Genaway, Partner Account Manager at HOA-USA, and Pelican Property Management’s Co-Founders Jordan Levine and Joe Rector. 

Oh, and before you go. Be sure to check out our new webpage dedicated to “The Top Floor” podcast. You can find it on our website, AppFolio dot com, forward slash The Top Floor. That’s AppFolio dot com, forward slash The Top Floor. 

Sean Forster: Thanks for listening to The Top Floor and remember to join us here monthly for each new episode. For more information about today’s guests, visit our industry insights page at appfolio.com. And to view the latest property management insights as they’re published, follow AppFolio on LinkedIn, Twitter and Facebook. Don’t forget to subscribe to The Top Floor on Spotify, Apple Podcasts, Stitcher or wherever you listen. We’ll see you next time.

 

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