September 15th, 2014 by David Burman
The Community Association Lifecycle
Every organization, business, charitable organization and other human enterprise has a natural life cycle. Leaders and members come and go. The organization encounters challenges associated with growth or outside threats and takes action. Markets change and require adaptation. Organizations lose focus and strategy. Rules change. Some organizations are purposefully temporary and some are created for a perpetual existence. Community associations are no different. Community leaders are elected and then, hopefully peacefully, step aside. New members join the community bringing both risk and opportunity. Each phase of the community life cycle is unique and requires unique planning and strategies. Just like a start-up business in a spare bedroom is vastly different from an established household name, community associations require special planning to avoid the pitfalls that plague businesses and charities at every phase of their life cycles.
The start-up business may be the neighborhood whiz kid developing a next blockbuster gadget in the garage of his parent’s home. It may be the charity operated by unpaid volunteers who are able to direct every penny of revenue to their target needs. The start-up community is the new community. The members are excited not only about their new homes but their new community. Everything is shiny and new. Everyone has wonderful ideas and most at least consider becoming involved in some way. Sometimes they coalesce around a common perceived bad guy, represented by the developer or their management company or both. Board elections often have more candidates than open positions.
Despite the vibrancy and member involvement, there remain risks for the start-up community. The fact that everything is new can obscure the future needs of the Association. Start-up communities should immediately consider engaging professional reserve studies and base their long term budget strategies around the identified needs. It should consider just a few important standing committees, such as finance, grounds, and social planning to help steer the most important functions of the community. The very future of the community depends heavily on what happens now. The start-up community needs to recognize and address early the fact that the community is changing quickly and set the foundations for the community’s future.
The Mid-Life Crises
Mid-life businesses have reached stable growth levels but are now experiencing new demands and costs that it has not seen before. They begin to develop rules, protocols, or horizontal leadership structures to better manage the growth and expansion. Charities are now regionally recognized and still addressing target needs pretty well. But now have a paid CEO, office staff, and marketing costs resulting in fewer dollars directed to target needs. The mid-life community might start to require major capital replacement projects such as painting, roofing, and roadway maintenance. This is also where owner apathy can become pervasive. Ballots for elections might now have fewer names than available positions and obtaining a quorum may be rarer still. Communities that did not undertake thoughtful planning at start-up, almost invariably, now agonize of the obvious needs it cannot meet, and perhaps the costs necessary to address them.
The fruits of start-up planning either ripen or spoil at mid-life. But the community is still changing and there are still opportunities to get back on track. It is said that the best time to address a problem was yesterday and the next best time is today. It may be painful but all of the principles that guided the start-up community remain as important and as effective as ever. It may be painful at first but with proper education and communication, the community can work towards solutions that can protect the long term health of the community. Start first by identifying the needs and recognizing that they are permanent. Think strategically and encourage member participation to avoid poor conditions from becoming insurmountable.
The Mature Community
Mature businesses are often so paralyzed by rules and stodgy leadership that they cannot adapt to new challenges, identify fresh opportunities, or recognize emerging threats. The structural leadership changes made earlier become more akin to bulky, intransigent political systems than to an entrepreneurial enterprise. Mature businesses are often identified by declining revenues, lower employee satisfaction, and reduced market share. Mature charities are now nationally known but have massive budgets, highly paid leadership, and as a consequence, a relatively small percentage of their budget is actually directed at the target needs. The mature community is no different. Elected Board members might have been in power for many years and chosen from among the same exclusive group of entrenched members. These communities might be identified by a proliferation of forms and rules. Want to change the color of your home? Here is the form for that. Want to add a pool? Here is the different form for that.
But yet again, because the community is forever changing, opportunities exist to introduce a time of renewal to the community. These communities should examine the demographics of the community as they may be dramatically different than in the past. On average, the members may be younger or older. They may be from different socioeconomic conditions. They may be looking for something vastly different from the community than earlier members were. The community should also conduct an exhaustive review of the organization to identify inefficiencies and outmoded concepts. Seek interaction from the members, either through participation or fact gathering surveys, to ensure that the necessary changes and improvements reflect the new realities. Every community is different, primarily because the members are different in every community. Take advantage of new members to inject new thinking and strategies into the community.
None of the risks for the community, at any phase of its life cycle, is unavoidable. Communities everywhere use sound planning and practices to keep the community vibrant and well maintained for the long term. At every step, there are tried and true concepts that yield positive results. Proper budgeting and reserve funding, proactive communication, and fair and equitable policy all contribute to a healthy and vibrant community. Community leaders that remain focused on both the current and future health of the Association protect the community from the pitfalls of its age.