Property Management Issues
Managing Service Providers is Everybody's Business
From the Summer 2023 issue of CCI Toronto Condovoice Magazine.
As in all Good Shows, the Cast Needs to Work Together to Create a Good Production
We’ve all seen this show before. A newly elected condo board terminates their contract with a long-term service provider, a service provider no longer wishes to continue to provide services to a client, a condominium manager needs and wants to get work done with an existing provider but can’t and is forced to make a switch. These stories take place all too often and the reasons for parting ways, just like any drama, are endless.
In scenes like these, there are no happy endings, everyone loses and not the least of which is ultimately the unit owner. What went wrong? Where does the responsibility lie? How could a different outcome be achieved? The real answers to these questions can be elusive, subjective even, and can take many forms, but there is one single certainty: everyone has a role to play. The good news is that within that same certainty lies a unique aspect of all these stories: the real common element here is the unified desire for a successful outcome. Who wants to succeed? I suggest everyone does. Given this premise, every player can contribute in different ways to elevate the chances of creating success stories.
To gain insights into these stories, I’ve consulted and interviewed the main cast and have combined their opinions with my own experience over the years. In this article, I’ll touch on each major player’s part and will make some high-level suggestions from each of their perspectives to help us all better understand from a 360-degree perspective.
Finally, I’ll leave it to you, the reader, to make your own contribution to the script and empower you to write your own part to increase the chances of a hit for everyone.
The Service Management Picture and the Players
As a beginning, it’s important to contextualize the story by looking at the wider view of service management to see and understand the hierarchy and relationships between each key character involved. It’s also fundamental to grasp the element binding every seam together in the mosaic below - and that key element at every connecting point is communication.
The unit owners are the stakeholders and the board is ultimately accountable to them.
Board responsibilities include the oversight and management of the condominium corporation, its financial well-being and the upkeep and maintenance of the assets in addition to compliance with all applicable regulatory requirements.
The condominium managers are the key interface between unit owners, the board, and the service providers. They are charged with the all-important responsibilities of day-to-day operations.
The Unit Owner
The unit owners are the paying audience. As obvious as it sounds, all players must understand this significantly important context. It’s all too easy to focus on what’s in front of us, the job at hand, but it’s crucial to understand that without a paying audience, there is no part for anyone to play.
The role of a unit owner isn’t necessarily a passive one since they can also play an active part in the picture and the key part they can play is through attendance and attention. Since they are the paying audience, it’s important for the unit owner to participate by understanding both the short and long-term needs of the building(s) and this can only be achieved through attending meetings, AGM’s, and other information sessions and understanding key drivers such as what a Reserve Fund is and how common element fees are derived, etc.
Being informed is of the utmost importance and being knowledgeable empowers unit owners to make the best possible choices for those who represent their interests. Conversely, it isn’t to say you can’t go to see a movie just to get a good sleep, that’s a perfectly viable option in life, but it’s also a more expensive one and you don’t really have grounds to complain about the movie you haven’t seen.
The Condominium Board
Condominium boards are the directors and producers. They are comprised of a range of people with different skills and knowledge and play the role of temporary custodians of the corporate entity and who have the responsibility of the continued maintenance of the building assets over its lifetime.
It’s both explicitly and implicitly demanded of directors to set goals for continued maintenance of the assets of the corporation and in order to do so, directors need to proactively and continually raise their awareness, knowledge, and capabilities required for the task at hand. This includes gaining an understanding of how a business operates, the requisite skills of managing one and, especially, the role of service management.
A key skill we can all continually develop in life is critical thinking. This skill is essential in order for informed decisions to be made together with a drive to seek out the complete knowledge required to make such management decisions. The adage is in order to make informed decisions you need to be diligent in seeking out the information in order to be informed. Personal biases must be left at the door. Directors must understand they are working in the best interests of the entire community and not their own. If not, then successful service management and effective unit owner representation is impossible.
Cases in point are those referenced at the beginning of this article where the lack of critical thinking, incomplete knowledge or the presence of personal biases can lead to decisions to keep the less suitable provider or conversely, to let go of a highly valued service provider. In either instance, changing or retaining suppliers can create significant risk through incorrect maintenance or the lack of maintenance continuity. The worst type of risk is an unknown risk and so critical thinking is essential to the role of the board director.
A requisite task for board directors (especially new members) to effectively manage services on behalf of the unit owners is to gain a solid understanding of the service providers themselves and the key elements associated with those providers such as who they are, the history and relationship, what services they provide, what the annual costs are to the corporation and when contract expiration occurs. Board members can also request a provider to talk to them about what they do and the value they bring to the table, and most service providers are perfectly happy to do so.
Board directors must make good use of the condominium managers’ knowledge, experience, field expertise and seek out their input and guidance. Condominium managers are on the battlefield each and every day and their input, guidance and advice are nothing short of essential.
When boards are tendering bids, limit the number of bidders where possible. It’s a good idea to conduct research on available bidders first. There’s no point in putting out an RFP to six different providers and there are many different reasons for this. Service providers always consider the success probability factor when bidding (or deciding to bid) and odds of one in six aren’t great and could lead to considering bidding a waste of time and effort, it costs money to bid. Conversely, if they determine they have a reasonable chance of competing, they’re more than happy to put the work effort into a quality proposal. Service providers want honest consideration and do not want to simply be a due diligence-based procedural check box.
Board members are required to develop and maintain an understanding of cost versus value. We all know from our daily life experiences that cost does not always win the day and cost does not necessarily equate to value, so changing providers on the basis of cost can be much more expensive. This is especially so in a condominium since the entire life of the asset must constantly be uppermost in the minds of directors and taken into consideration in every decision made. Understanding this value proposition is of the utmost importance. To put this into perspective, board members are temporary custodians of the corporate assets, and the value of their contribution extends beyond their temporary part into the life of the asset itself which makes all service management decisions very important.
Corporate reputation management can often be an under-recognized challenge boards face. It’s important to treat all service providers with respect. Respect their efforts, their time, and their input and recognize service providers are spending time and money to work and bid. Boards would be wise to not dismiss the additional and important work service providers do as “their cost of doing business”. It’s not an “us vs. them” situation, today’s service management is a partner-based engagement model.
Reputation management is oftentimes largely underestimated. Reputation extends well beyond the tendering process. How you work with, treat, and compensate a service provider in a timely manner is very significant and this again is where good communication coupled with a partnership approach is highly effective.
Ultimately, in order to continue to avail themselves of quality service providers, a board’s goal should be to build a solid reputation and position themselves as true working partners to service providers in the marketplace.
The Condominium Manager
Condominium managers are at the nexus of the story and where the proverbial rubber hits the road. This is where the work takes place and the real connecting events in the story are. As shown in the diagram above, condominium managers have a unique vantage point and are central to everything. They interact with everyone and deal directly with unit owners and service providers, and they work hand in hand with the board to execute and oversee their decisions on an ongoing basis.
Primarily, it’s essential for condominium managers to have and to continually develop an entire range of skills, including excellent communications, program management, people management, regulatory knowledge, insurance information, fire and safety codes, condominium budgets, human resources, etc. the list goes on.
The success of service providers’ work also relies upon the condominium manager’s understanding and entire skillset for the direction, proper execution, and success of work under their supervision. A manager who takes a partnership approach, while establishing and maintaining lines of communication, working hand-in-hand with every stakeholder, and gaining each party’s definition of success, will lead to successful work completion and satisfaction for all. Once again, communications and interpersonal skills are at the top of the list of essential attributes required to achieve this on a daily basis.
Things don’t always go right, and one of the top items service providers ask of condominium managers is to be given a chance to resolve a problem. Oftentimes, service providers aren’t even aware that a problem exists until it’s too late. Condominium managers must strive to clearly communicate where expectations haven’t been met to the service provider and extend an opportunity to resolve the issue wherever possible.
Similar to directors, condominium managers’ biases must be left at the door. Managers must understand they are working in the best interests of the entire community and to be inclusive of all service providers who have the professional requirements and the competence to perform the work.
It’s also important for condominium managers to avoid classifying service providers too broadly and to understand the dynamics involved in service delivery. For example, a manager may hear that a provider wasn’t successful in a particular location. This doesn’t necessarily mean the provider can’t execute the work perfectly well in their location since the dynamics of locations can vary widely and affect outcomes.
In the instance where a new property management company is put in place, it’s essential for condominium managers to gain an understanding of the existing service providers of the facility and to avoid replacing the existing providers by simply deploying providers they know. A provider in place may have proprietary knowledge, especially during in-flight projects, and it’s necessary to make the correct informed decision as to who is best suited for the work.
In order to get a broad picture of the service providers’ work and installations on an ongoing basis it’s also very helpful to solicit input from local maintenance technicians and staff who either work with or on post-installation equipment. They can often shed light on items which aren’t obvious but are important to know.
The Service Provider
It’s noticeable during discussions with service providers that they are far less concerned about the challenges of the actual work they perform. They’re confident in the work they do, they have a strong drive and sense of customer satisfaction, and the vast majority genuinely want to do the very best job possible.
What comes up fairly often are three areas of concern.
- The challenge of having the client see the depth and breadth of the true value proposition a service provider brings to the table.
- The recognition and valuation of the intellectual property (IP) and knowledge of the building they bring to a particular client over time.
- How clients don’t always necessarily understand or appreciate a provider’s cost and time.
With these areas in mind, there are a number of recommendations and suggestions that follow which would go a long way to alleviating concerns, some of which are also related to, or referenced in, previous sections but from a different perspective. When problems arise, as they inevitably do, the first step in resolution would be to discuss this openly and honestly with the service provider and the second is to provide them with an opportunity to redress the situation. Both of these steps would address a large percentage of problems before they become worse or go unresolved.
Surprisingly, many providers have been unaware of or don’t know the extent of the problem(s) until it’s too late and find themselves scratching their heads when a job is terminated, or they are not asked to submit future bids. It’s in everyone’s best interests to step forward and speak.
Feedback on work or bids is an essential part of any provider’s continuous improvement efforts. They appreciate feedback on the work awarded, completed, or lost. All data points are important and work to serve the best interests of all parties going forward. On a related note, communications in the form of clear expectations are substantively welcomed, will be well-received and are very helpful.
Service providers say much more could be accomplished quicker and easier if boards could listen more to the recommendation(s) of condominium managers. Some boards tend to overanalyze and create unnecessary delays that can impact the cost of a project instead of simply turning to their managers, especially experienced managers with deep field experience, for advice.
In decision-making, boards need to take time to understand the true value proposition a provider brings to the table and be considerate of the time and effort a provider has put into a bid. Boards are also expected to be cognizant of any nuances where they exist and to feel free to request or solicit additional information from a provider if anything is unclear.
Boards are well-served by recognizing that certain providers may have accumulated knowledge of the building, environment, and systems over time and this IP will continue to be built on an ongoing basis. This IP represents real value to both the condominium board and the unit owners alike. This intangible asset needs to be recognized and taken into consideration in multiple forms e.g., risk mitigation, reduced time to delivery, etc. and so the benefits of this IP must be recognized and considered.
Mutually beneficial goodwill can be gained by compensating a provider for their information and findings if prework is involved, especially reusable work. For example, if pre-work must be conducted, pre-execution discovery made, or if a report or presentation needs to be produced in order to submit a more accurate bid or to give a clearer picture of the work involved, then the provider should be compensated.
Service providers don’t mind doing the odd small favour here and there, but board and condominium managers need to keep these favours to a minimum as sometimes requests can get out of hand and providers can be put into an awkward position. A good board can build on the partnership approach by understanding the time value of service providers’ contributions and efforts since their time is money.
A good provider wants to be honestly considered and not simply be a number or a procedural checkbox or a compliance step to be completed.
Last, but far from least, please remember to treat all service providers with respect and be considerate in engagement. This once again is where the partnership model works well and at the end of the day, service providers are critical members of the cast.
In all good shows, the cast needs to understand their audience, their own role, the roles of others, their lines and communications combined with the timing of events to seamlessly work together well to create a good production. If someone drops a line, play an active role and be there to pick up the slack and not miss a beat since, after all, the show must go on. In closing, in the service management show, it truly is everyone’s business.
James O’Hara CEO, JGO Solutions Inc. Member, GTA Condominium Directors Group
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