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Is Bigger Better?

 Not since the “chicken or the egg,” has there arisen such a debate! 

  • Less is more…

  • More is more…

  • It’s not the size, it’s the efficiency…

  • Efficiency be darned, look at the big pretty package…

  • Dynamite comes in small packages…

  • If it’s bigger, it must be better!

Obviously, you realize that I am talking about Homeowner Association Management Companies. Right?

 

What began as a small cottage industry grew out of necessity as local governments became adept at collecting property taxes, while shifting fiscal responsibility for amenities once paid for through tax dollars onto the backs of homeowner association dwellers. Taxation without representation? A whole other article, but what started out as a lifestyle choice has morphed into a huge industry and the “big boys” have taken notice! 

 

Publically traded companies, mergers and the gobbling of companies nationwide under a single umbrella has become the latest business model. With large marketing budgets at their disposal, unsuspecting Board members are  jumping on the “bigger is better” band wagon. Unfortunately, it is too late when they realize that bigger is just…well…BIGGER. Bigger fees - bigger turnover – bigger bureaucracy - bigger messes.  It doesn’t take long to figure out the error of their ways, and these clients are walking out the door before the ink is even dry on the contract. This revolving door style of management is creating trust issues within the industry. 

 

What has gotten lost in the rush for market power is the understanding that first and foremost, Community Association Management is a people business. Regardless of how large a company, the client has not changed and neither have their needs and desires. Homeowners don’t want to call another state for emergency service. They don’t want to be caught in voice mail for forty-five minutes and they don’t want to off-set their assessments through bulk buying programs. They want their vendors to be vetted through proven superior performance, not through paying fees to be placed on a company list. They want a well maintained community, fair assessments and somebody to actually answer the phone or respond to their e-mail. As much as it hurts my ego to type this, HOA Management is not brain surgery. 

 

Recently, I was contacted by the Board President of a mid-sized community. I made it through each round of interviews only to learn that my company was not chosen, even though the Board felt I had the most knowledge, the best answers to their questions and, by far, the best references. What put me out of the running was their concern that my company did not have the infrastructure for an account of their size. While my initial reaction was to rail against the injustice and educate him on just how qualified I was, instead I thanked him for his time, wished him well and went about my business. After all, wasn’t this pay back? Isn't this exactly what I preached to potential clients when I helped to build a large private company that was bought out by a mega company a few years back?  You know what they say about payback! 

 

Each mega company started off small and grew because they offered excellent service. Each one was privately owned, and there was a sense of pride in delivering promised service. Staff was treated well and their pride was evidenced in their work product. Company pride is rapidly diminishing and turnover is at an all-time high within the industry. Out of the 150 staff in place when I left my former company, perhaps 25 people remain. Many of the positions have turned over several times. Sadly this is becoming the norm and as clients leave in record numbers, they are off-setting these losses through reducing company benefits, support staff and salaries.  Those once “A” companies, are not where qualified Managers are flocking as revolving door management / staffing, lack of support and

 

embarrassment are driving the best talent to privately owned small and mid-sized companies.   

Absent the person working out of their garage using Quick Books and Microsoft Office, today’s small to mid-sized companies have the same bell and whistle technology as the “big guys;” this is known as hard infrastructure. There are only a handful of HOA Management Operating Systems on the market today, and they are fairly standard across the Board. These systems are in place to assist the management firm in providing increased service while reducing operating costs. The add-on's such as e-blasts, emergency call systems and web-portals are the shiny stuff that attract clients. 

 

Soft infrastructure is the service and support provided through staffing. No company, large or small, has extra staff just waiting in the wings.  Staff is directly proportionate to a company’s operating model and number of accounts. When a marketing professional or company owner tells you they have 200 employees, or conversely 15 employees, this is directly proportionate to the number of accounts the company is currently managing.  The number of employees has absolutely nothing to do with their ability to service an account.  The hard infrastructure,  the experience level of the executive management and the willingness of the company to invest in their clients is where the "rubber meets the road."  

 

As this industry continues its metamorphosis, it will be interesting to see what our clients’ value more, size or value, quality or quantity, bigger or better.  

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