As we reach the end of our journey in outlining the 8 traits of highly effective HOA directors, it’s appropriate to recap the first 7 traits that make these individuals outstanding participants in the governance of their homeowners’ associations (“HOAs”). So here’s a recap from the beginning:
Trait #1: It’s all about the HOA and not about their personal agenda.
A highly effective director understands that he/she has a fiduciary duty to act in the best interests of the association as a whole and is able to put aside his or her personal interests or agenda on any given issue. A highly effective director is also able to put the interests of the association ahead of the interests of neighbors or friends.
Trait #2: A highly effective director never attends an association meeting without having the governing documents of the association close at hand and routinely consults the documents for guidance.
A highly effective director understands that he/she has a duty to comply with and enforce the governing documents of the association. A highly effective director understands and is committed to consulting the governing documents of the association prior to making decisions. These directors always have the declaration, bylaws, SB 100 policies, and the rules and regulations of their association available for review at all meetings.
Trait #3: A highly effective director asks constructive questions and is an outstanding listener.
A highly effective director never believes their opinion is the only reasonable opinion and their solution is the only correct solution. Instead, a highly effective director always approaches issues and solutions in an open-minded way. These directors understand the value of soliciting input from others and really listening to what others have to say. Highly effective directors always listen respectfully to others and don’t interrupt them. These directors understand when homeowners feel strongly about an issue and give them an opportunity to express their concerns and even anger. A highly effective director never permits their personal feelings about an individual to interfere with actively listening to that individual and giving their input fair consideration.
Trait #4: A highly effective director never acts as a Lone Ranger.
A highly effective director understands that he/she is only one member of a board of directors and has very little (if any) authority to make independent decisions on behalf of the board. These directors (including officers of the HOA) understand that any individual authority they may have is set forth in the governing documents of the association or is conveyed to the individual through formal action by the board. A highly effective director never makes promises to homeowners or others on how the board will act on any given issue. Instead, these directors invite homeowners to attend meetings of the board to provide constructive input on issues that are important to them. A highly effective director never enters into contracts or binds the association to any particular action unless the governing documents provide the director with this authority or without first obtaining board approval.
Trait #5: A highly effective director passionately debates issues in the board room and then supports the ultimate decision of the board.
A highly effective director understands that the board room is the place to debate association issues. While these individuals are passionate proponents for their position, they are always constructive in their presentation and never engage in verbal attacks. If the board of directors votes to take a different approach than the position they advocated for, these directors understand that it’s in the best interests of the association to speak with “one voice” and will never cause dissention in the community over the decision. Highly effective directors will support the decision within the community or if they cannot do so – they will say nothing at all.
Trait #6: A highly effective director is committed to governing with transparency.
A highly effective director understands and embraces the fact that their HOA is made up of members who have a right to observe the governance process and provide input to the board prior to important decisions being made. These directors do not use “working sessions” as an excuse for holding closed meetings. Instead, these highly effective directors provide notice to members of regular board meetings and invite their attendance. These individuals also understand that routinely carrying out the governance of their association via email does not promote the transparent governance of their association and should only be utilized when necessary. A highly effective director understands and complies with the open meeting requirements under the Colorado Common Interest Ownership Act (“CCIOA”) and the right of members to speak to an issue prior to a vote being taken by the board.
Trait #7: A highly effective director strategically looks at and plans for the future.
A highly effective director understands that the directors of the HOA cannot afford to put their heads in the sand and not look to the future. Instead, these individuals encourage their boards to effectively address the issues of the day and to engage in strategic planning to look at the strengths, weaknesses, opportunities and threats (SWOT Analysis) facing their association and to appropriately set achievable goals and objectives to meet them. Highly effective directors encourage their boards to keep their eye on the ball and follow through with these goals and objectives. These individuals understand the financial and operational consequences of not planning for the future.
The final trait of a highly effective director addresses the importance of ethics and integrity in the governance of HOAs.
Trait #8: A highly effective director discloses and properly handles conflicts of interest.
A highly effective director is familiar with and complies with the SB 100 policy of his/her HOA relating to board member conflicts of interest. These individuals understand when they must recuse themselves from discussing and voting on matters relating to potential conflicts of interest. Highly effective directors understand that any monetary benefit the director, a family member or related business entity may ultimately receive relating to a business transaction with the association must first be disclosed to the entire board of the HOA before a decision is made on whether to enter into the transaction. These directors also understand that covenant enforcement actions against residents of the HOA which would uniquely benefit the director are also conflicts of interest and the director should recuse himself/herself from acting as an impartial decision maker on these enforcement matters. Highly effective directors never attempt to unduly influence other directors for personal or financial benefit.
We hope you have found this series of blog entries on highly effective directors useful. Stay tuned for a new series we will be starting soon addressing "homeowner bill of rights" types of provisions in the Colorado Common Ownership Interest Act ("CCIOA") that every board needs to be aware of and comply with.