Did you just get elected into the Managing Committee of your Apartment/Villa Community?
Congratulations! You get the opportunity of running a small town. The opportunity to build a small prototype of the dream place that you may want your nation to be.
On this role, you have certain powers, within the scope of the Bye-Laws of the Association. Each Association may have specific by-laws, read yours to know your exact powers so you don’t over or underutilise them.
It is important that you avoid the typical pitfalls that most MC first-timers fall in. This happens since there is no college course on managing a Residential Community in the capacity of an MC member.
So here are the 8 top Tips that will make you a successful MC member!
Member = Each Apartment Owner.
MC = Managing Committee = The group of 10-20 Apartment Owners elected to serve on the Managing Committee of the Association.
1. Each Member may have an Opinion, but MC must have the Decision
You have been elected by Members, along with other MC members, to make decisions on behalf of all Members. At every point, you are driven by the good of all. There will be many tough decision-making scenarios – involving vendors, local authorities, and often members themselves.
Never take the decision making to open forum – e.g., to all Members. Most Apartment Owners don’t understand the perspective of the Managing Committee if they have not served on a similar committee before. They can provide you with the perspective of an individual Apartment Owner, which is useful towards decision making. So gather information from the open forum, but do not ask them to decide.
Also, when you ask Members to decide it polarises them, as there will always be people on each side of the decision.
Keeping all decision making within the MC builds respect and confidence for the Managing Committee team. This, in turn, strengthens the image of the Society among the Members and in the locality.
2. Association Office is different from Corporate Office
Within the MC team, decision making is consensual and not hierarchical as in typical corporate setup. Though there are different designations in the MC, there are no actual reporting lines. Consensual decision-making is a great builder of character as you must keep your Ego aside, go by the facts and decide for the greater good. You can not always win, but you can always be a great team player that everyone loves to have in the meetings.
3. Be aware of legal risks
Often it comes as a cruel shock to MC members when an accident happens in the community for which legal liability is placed on the MC. MC (typically president/secretary) then finds themselves spending time attending to summons in police stations or courts, answering many questions and in some unfortunate cases struggling for anticipatory bail.
Below are the situations that hold high risk with high probabilities:
a) Fire. In case there are loss of life and property due to fire, authorities will look for possible negligence on part of the Managing Committee. If all Fire Prevention and Fire Fighting standards have been followed, the MC can stand clear of any charges.
b) Crime. Upon a crime taking place in the society, the investigation will require the availability of all information relevant to the crime. MC’s inability to provide such information or withholding such information amounts to negligence against which charges can be placed.
c) Storage of Liquor. This is one of the least expected but frequently occurring risks. In community functions where Liquor is served, liquor must not be stored beyond the time provided in the Permit. It is best to avoid liquor in community functions, but if made available then a dedicated Team must take charge of necessary Permits and compliance with the permits.
Most often legal risks come from Society Members rather than external entities. A strong collaborative environment built by MC can minimise legal actions.
MCs may consider a Directors & Officers Liability Insurance if high risks are perceived.
4. Outsource – as much as possible.
Taking Manpower on own Payroll – Often MCs get frustrated with Security or Housekeeping Agencies and take on Manpower on own Payroll. This is an unnecessary administrative overhead for the MC. Large manpower on own payroll means high cost of retention, replacement, training as well as complying with labour laws.
Building own Software – MCs with technology expertise often consider building own software or portal for the Association. The thought comes with noble intentions to utilise surplus resources that the MC may have available at that point. However, soon complexities surface and the in-house development becomes hard to sustain in the long term.
Having members do critical tasks pro bono – Many of us would have experienced a retired uncle – also an Apartment Owner in the same community, who keeps Accounts of the Association. Almost always this ends in bitterness as there is the ambiguity of accountability and recognition.
In all such cases, it is best to outsource. Unlike a few years back, the ecosystem of vendors serving Residential Communities has a sizeable number of Vendors.
For ongoing administrative services and systems, It is best to take services of professionals with proven track records with Residential Communities, instead of saving small money by having members volunteer for the work.
5. During vendor evaluation, don’t always go for the cheapest option, the problem doesn’t get solved and you get very temporary fame for small savings.
This is a decision making bias that many MCs fall in. When choosing for self, they give equal importance to Quality as well as Reasonable price.
However, while selecting Vendors for the community Lowest Priced vendor becomes the safe choice due to pressure from Members (See #1.)
Often MCs are blindsided to the Lakhs and Crores of funds that they are answerable for, and the long-term Property Value of the overall Property that their decisions impact.
The lowest paid manager, cheapest security agency, cheapest online software, duplicate hardware etc. may bring applause from few members in the short term. But in the medium term it leads to hidden costs due to inefficiencies and in the long term, it causes detriment to the property’s maintenance and loss of overall Property value.
Each community is different. Choose a Vendor that your Community can afford and not necessarily the cheapest.
When selecting Vendors, take the time to define the problem that you are trying to solve. In many cases, you may not know the problem completely, use the vendor meetings to understand the problem better.
6. Avoid financial engineering
Some MCs leverage ambiguities in tax laws and other financial rules while designing the accounting of the Association. This happens with the noble intention of saving every Member money.
This is best avoided – you may take risky decisions with noble intentions, but when the time comes to explain the strategy to the inspecting authorities, you may not be in MC or may not even be the Owner in the Association.
Always err for the straighter path, even though it may seem less optimised.
7. Make few Rules, but make them Simple and Effective
Any good Association – just like any good Government – is known by the Rules it creates and enforces, which builds an environment of peace and harmony for all.
When creating rules to be enforced in the society make sure these 3 aspects are covered –
- Who will own the enforcement of a rule
- What will be the consequence of breaking the rule
- What will be the exceptions to the Rule
Be very conscious that the Residential community is a home environment.
Implement only the unavoidable rules and only a few rules, but implement them well. A culture of abiding rules will build.
8. Respect your limited time
Finally, do not forget that you are volunteering your limited time. It is important that more people in the Association volunteer and feel successful in this role.
Build Systems and Processes that you can proudly hand over to the next MC that get elected.
Often there is animosity between outgoing and incoming MCs. While a friendly rivalry is a good thing, it is important that outgoing MC empowers the incoming MC with their knowledge, and the incoming MC acknowledges the great work done by the outgoing MC.
All MC handover events must have a recognition ceremony for outgoing MCs so the gratitude they duly deserve is given, and their contribution is made memorable. This sets the right expectation and professional conduct among future MCs.
Bonus Point – For the First Managing Committee of an Association.
On your shoulders lie the biggest responsibilities. You will be caught in the Builder-Members crossfire, you will need to learn the ropes of the particular Facility first-hand, you will have to put the fundamental administrative processes in place.
Apartment Communities that get effective MC team in the first 1-2 years end up with steady processes, a positive community culture, and a well-run administrative machinery.
The cumulative contribution of good MC teams is seen after 10 years. Such Properties become a respected landmark in the locality where People want dearly to own and existing owners don’t want to sell! Those who sell do so at handsome profits thanks to the increase in valuation of a well-maintained property in a well-developed locality!