Professional Management Pros & Cons

What is professional management?

Why do I bring up this question when the Elizabeth Condominium Association (ECA) just had an informational briefing May 21, 2009, on professional management by Legum & Norman, the firm that is under serious consideration to become the supplier of building management services? The reason is that most of the questions asked by ECA members attending the meeting indicated that despite the clearly explained details and handouts from Legum & Norman principals John Rhodes (President) and Brenda Harrington (executive Vice President, Operations), ECA members for the most part do not understand the responsibilities of those who provide management services (no matter whether the services are by a in-house manager or a professional management company’s employee who serves as the ECA manager) versus the responsibilities of our elected Board of Directors.

THE PLAN: SITE AND COMMUNITY MANAGERS

Let me recap briefly the organizational structure Legum & Norman (L & N) have been discussing with our Board members. L & N would put in place a site manager (this is what we know as our in-house manager) and a community manager. Why? Let me first offer this example from those who oppose professional management: some people have said (I will paraphrase here), including our current Board Treasurer, that our current manager has too much to do and that’s why we don’t get proper maintenance of the building. The thought was that our manager should be concentrating on contracts while her assistant should be attending to the daily issues. The belief is for those who support in-house management that our manager should act as a community liaison while the assistant manager should be the site manager.

Now here is what L & N lists as the responsibilities of the community manager:

• Supervise the site manager.
• Visit the property at least once a week.
• Approve all payments on behalf of the property.
• Inspect the property monthly and prepare inspection report.
• Prepare and present monthly management and financial reports.
• Attend Board of Director meetings.
• Coordinate and attend the annual meeting of owners.
• Communicate frequently with the Board’s liaison.
• Develop specifications for service contracts and bid those contracts.
• Analyze contract proposals and make recommendations to the Board.
• Implement and supervise contracts.
• Purchase equipment and supplies in accordance with the budget and an approved purchase order system.
• Administer community covenants and rule enforcement procedures.
• Investigate and follow up resident complaints.
• File insurance claims and supervise restoration of property as appropriate.

THE ARGUMENTS FOR IN-HOUSE MANAGEMENT

To be fair to those supporting in-house management, I have heard a number of these proponents say that they advocate restructuring our staff. This means that our current manager and assistant manage would be replaced by new hires. Those of us who have been in our manager’s office know that the way her office looks (cluttered, unorganized, and unclean) stands as a metaphor for the service we get and the way the building is deteriorating.

Although there are those that say all they have to do is go tell our current manager about a problem and the problem will be addressed, I find that most of the fixes are cosmetic and do not treat the source of the problem. For example, one resident owner told me she saw mold on the ceiling tiles in the west lobby and as soon as the manager heard about the problem, she had the mold cleaned up. I’m not sure if the tile was washed off or replaced but what about the source of moisture that invariably will recreate the mold in a visible place? Clearly the source of the problem has to be addressed by our Board of Directors to fix the long-term problem but what recommendations did our manager present to the Board for how to deal with the mold issue? I don’t know but so far I haven’t heard anything in monthly board meetings to believe that our manager has been thinking about how to resolve water, moisture, and mold problems. Anyone who has owned a single family dwelling for a long period time will be able to tell you that the longer a problem is left untreated, the more expensive the fix will be. Long-term neglect can also go beyond the possibility of economical repair and mean demolition and reconstruction.

Also let me address the recently failed service we experienced with a security guard serving as doorman. Among the tasks the doorman was suppose to perform included keeping the driveway clear of parked vehicles, assisting people with packages as needed, and being a visible security presence. Many residents, including me, were unhappy with the performance of those providing this service. Our current manager, tasked with managing the security services contract, failed to be proactive and call Securitas (the company we currently employ for security personnel) and tell them to replace the guards who were not performing as expected. While some might blame this on the Board for failing to tell our manager what to do, the question that comes to my mind is what does it take to have smart management?

PROFESSIONAL MANAGEMENT & SAVING MONEY

What does L & N bring to the table that in-house management supervised by our Board of Directors would not offer? It brings years of experience, a network of resources that mean economical advantages, and an objective point of view backed up by a wide and experienced community. Let me say clearly that we are already reaping the financial benefit of possibly hiring L & N. They told our Board that we were paying utility taxes that we should not be paying. Our President announced at the meeting that we would be receiving a refund of $89,000 (this goes back three years), which covers most of the cost in the first year of hiring L & N. Going with a professional management company means the ECA does not have to re-invent the wheel. If we have water pouring into walls in our building, L & N has a vetted list of contractors to evaluate the problem as well as an archive of experience accrued from managing other buildings.

Now back to the problem of ECA members not understanding what a professional management company does versus what our Board does or would do. The main questions that came up in the May 21 meeting is who is responsible for hiring and firing staff who are or would be managing our building? The Board President has explained that the Board has the final word on personnel. L & N would make their recommendations and the Board would consider those recommendations.

One other thing I wanted to bring up is that some ECA members tried to say that L & N has not done a good job in some of neighboring condominiums such as 4620 North Park Avenue. The word I have heard on the street from people who live in 4620 is that they love the management provided by L & N. One 4620 resident I spoke to also owns commercial property here at the Elizabeth and she is completely fed up with the lack of services here at the Elizabeth where garbage smells waft into the arcade and dogs urinate on the walls.

No one knows what the future will bring and I am not so naïve to think that just hiring L & N will immediately bring the Elizabeth back to its former status of a luxury high-rise building. Who is hired to be our site manager will make a significant difference. Getting 21st century services such a website where we can order usual repairs like fixing a leaking faucet won’t happen in the first year’s contract. The thing is before the building falls down, hiring a professional management company such as Legum and Norman is a big step in the right direction. Let’s hear it for spending our money wisely, maintaining our property values, and saving us from paying unnecessary expenditures!