Management vs. Governance: 3 Functions of an Effective HOA
The distinction between governance and management in a homeowners’ association may seem minor but understanding it is crucial to ensuring a successfully directed community association. Homeowners’ associations and their Boards benefit from recognizing three “P’s” – Process, Priorities, and Policies. Management and governance work together like two hands of an association, and the three “P’s” break down a practical delegation of roles for each.
The definition of Governance is “Establishment of policies, and continuous monitoring of their proper implementation, by the members of the governing body of an organization. It includes the mechanisms required to balance the powers of the members (with the associated accountability), and their primary duty of enhancing the prosperity and viability of the organization. See also corporate governance.”
From www.businessdictionary.com/definition/governance
Process (Management)
Process refers to the many administrative functions of an association that drive its management. According to this Long Beach property management company these may include: handling mail, tracking work orders, providing documentary support to real estate transactions, accounting for payments, reconciling accounts, issuing regular financial reports, issuing reminders when payments are late, etc. Generally, process is the most time-intensive component of an association’s work, and is thus often outsourced to a qualified HOA management company. As experts in their field, professional community association managers relieve much of this burden from the association’s Board, allowing board members more time for other important community activities.
Priorities (Governance)
Associations face a great number of decisions from allocation of funds to how to effectively address homeowner concerns. When the Board establishes priorities, it evaluates the options and assigns a level of importance to each. This evaluation reflects the association’s values in a way that cannot be delegated to a professional community association manager. These decisions require the judgment of an elected board.
Policies (Governance)
Like priorities, policies reflect the judgment of the association. A community’s recorded covenants establish a set of restrictions by which owners agree to abide. These restrictions may relate to use of the property, modification of the property, or use of the common area amenities. For example, policy decisions may include how the Board enforces existing restrictions, whether the Board adopts additional rules to address specific issues, or how a delinquent homeowner account is handled. An effective Board governs a community by considering the balance of financial efficiency, ultimate effectiveness, and homeowner well being and seeks to establish policies accordingly.
The Three P’s Together
Together, the three P’s provide a helpful structure of discernment between management and governance functions in an HOA. An association cannot thrive without each function working together in harmony. Effective Boards understand the difference between governance and management, and prioritize their time for higher-level governance items. With the help of a professional HOA management firm, board members are empowered to address governance issues as they arise without the strain of day-to-day management responsibilities.
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If your homeowners’ association is swamped with the myriad issues that confront all HOAs, consider partnering with a reputable, reliable and accredited HOA Management firm, Wise Property Solutions. With a wealth of experience managing HOAs Wise Property Solutions alleviates stress with documented management plans, practical expertise, and professional guidance.
Contact us today and let us show you just how good life can be with a great HOA.