Keys to a Smooth Management Transition

Probably the most difficult, important and often delayed decision the board of a co-op or condominium makes is deciding to change management companies.  Numerous factors, both realistic and psychological, play into this, but one of the most prevalent is the fear of change and the requirements of getting a new management company up to speed.

Unfortunately, the final decision is often made after communication has virtually broken down with the manager and the company, the building’s services and physical plant have deteriorated and the financial records are in poor shape.

Our Strategic Management Program Uses Sound Business Principles

What many boards fail to understand is that some management companies are organized and prepared to move in, take control and bring order to a deteriorated situation.  At Matthew Adam Properties, we follow the policies outlined in our Strategic Management program.  Strategic Management is our adaptation of sound business principles.  We set objectives and a timetable so our performance and the property’s improvements can be measured.  It is a planned approach to property management rather than the usual band-aide cure.

We follow this approach in the transition process.  As we transition the property into our portfolio, we are cognizant that every detail – every record, every management professional’s decision – must be incorporated into management files for the property.  Our Strategic Management program facilitates the transition process and helps us move quickly when we officially start.   We keep the board informed of our progress and alert it to any problems encountered.

When we are retained, we immediately conduct a full evaluation of the property’s operations and finances.  We then create a customized Strategic Management Plan that includes financial issues, service contracts, maintenance, repairs and long-term capital improvements.  This is reviewed periodically with the board.

Organization and Communication are Key Points in Management Transition

While we are working on the Strategic Management Plan, our transition team is working to get the property up to speed.  In taking control of the process we emphasize two points: communications and organization.  It is important that we develop a solid working relationship with the board.  Often, we find board members wary of property managers after a disastrous experience with the previous company or companies.  We work hard to demonstrate our capabilities and professionalism in getting the tasks accomplished.  In organizing the transition, we follow our Management Transition Checklist and the procedures outlined in our Strategic Management program.  These guide us in collecting the information we need.  In some instances, we have found that bookkeeping is totally disorganized and a great deal of information is missing, or hasn’t been recorded.

The Real Estate Board of New York (REBNY) has instituted a professional pledge signed by most management firms saying they will provide the required records and information.  In reality, often the fired management company is lax or resistant to turning over the records. In these instances much of the needed information can come from the auditor, if he/she is still on board.  Sometimes, the auditor has also been fired making it more difficult to obtain records.

We need copies of maintenance contracts, the general ledger and bills that have been paid or are outstanding.  We also have to understand a building’s cash flow requirements and need to know the schedule and amount of mortgage and real estate payments (for co-ops), the payroll and which residents are delinquent in their monthly payments.

Communication and people skills are a significant part of a property manager’s job description and these talents come into play when dealing with the staff.  Very often, when the previous property manager has been lax in his responsibilities, the work quality of the staff has deteriorated.  The new manager must walk a fine line between acting like a bull in a China shop and wanting to change everything immediately and one who shows his/her authority, but will listen to the employees and work with them to make improvements.

To improve the quality performance of the staff, a manager can modify work schedules and job descriptions, however, the union must be kept informed of changes and the changes must comply with labor agreements.

The building’s superintendent should play an important role in this, unless he is a large part of the problem.

Overall, a professionally organized and implemented transition can be smooth while affording the board an opportunity to evaluate operations and services and discuss additional improvements with the new manager.

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