Evaluating Management Performance
Does Your Firm Measure Up?
Professional residential management is a service industry, and some service providers perform better than others. To evaluate how your property's management measures up, it's necessary to assess both how the company functions as a whole and also how your individual managing agent is performing. To do that, it's important first to understand what professional management is supposed to do, and then to have a clear picture of what really good management looks like.
The Basic Menu
Every full-service firm worth its fee should provide management of your property's finances and accurate, up-to-date financial reports on a regular basis as well as oversight of your property's structural and mechanical elements. The firm should also supervise your property's staff, including hiring, firing and documentation of staff performance and it should provide appropriate and timely response to federal, state and local laws and to violations issued against your property.
You should also expect maintenance of accurate, accessible files and records for your property and preparation for—as well as attendance at—regular and special board, annual and other meetings of your property. Last, but not least, the firm should provide knowledgeable interaction with your property's other professionals such as legal counsel, accountant, engineer and architect in addition to effective responses to resident inquiries and concerns. Many management companies, either as part of their standard management fee or at cost above that, also offer ancillary services such as transfer and closing services, sales and brokerage, construction management, utility bill evaluation and refund application.
Evaluating the Firm
Assuming your management company is providing the basic service menu, you can expand your evaluation by looking at other areas like the firm's commitment to performance. "We operate our properties as though we were the owners," says Eugene Warren, a partner with Buchbinder & Warren, a Manhattan-based firm managing more than 100 properties. "We take on all the responsibilities of operating the building."
At Mark Greenberg Real Estate (MGRE), a Long Island-based management company that manages more than 50 properties throughout New York City and Long Island, vice president Jim Goldstick and director of management Steve Greenbaum attend just about every board meeting with their agents. "We're there to make sure that the agent has the benefit of all the expertise our company can provide. For boards to be most satisfied, they need not only back-office support, but also support from the principals," says Greenbaum, who calls this the MGRE Team Approach.
Teamwork is indeed critical to management, which is why companies that support their managers with assistants who attend to paperwork and field calls when the agent is unavailable generally demonstrate a higher level of effectiveness. Companies that support their managers with access to in-house experts also are better able to serve their clients. At Buchbinder & Warren, there's one employee whose primary job is to deal with boiler issues, one who is expert in insurance, another who handles matters of unsold shares, and yet another in charge of curing violations. At Rose Associates, a Manhattan firm managing more than 50 metropolitan properties, a full-time supervisor of maintenance acts as internal consultant for managers and superintendents, a resource, according to director of management J. Brian Peters, that's very beneficial to clients.
While the services management performs are generally universal for all properties, no two properties are alike. So it's important to know that your management company has a tailored procedure in place to ensure uninterrupted service to your individual property. Some companies conduct weekly full-staff meetings so that the principals, their managers and all back-office support personnel stay informed of what's going on with each building and so that, at any time, any manager can step in to fill the shoes of another. If your management company doesn't follow this practice, you may want to find out how your building will be managed if your agent disappears from the scene.
Rating the Agent
While the internal operation of your management company is obviously crucial to performance, "The key to successful management is the right property manager," says Elizabeth Whitcomb Brown, long-time board president of The Dorchester, a 107-unit midtown Manhattan co-op managed by Brown Harris Stevens. According to Brown, your managing agent should be working for your property with the understanding that he is answerable to the board, and that ongoing communication with the board is essential to productivity. Whether this communication takes the form of phone calls or written memos, "Communication lets the board know that the agent is following through," agrees Peters.
Ideally, the agent should respond to residents' questions and concerns in a timely, courteous and knowledgeable manner, as is the case with Kerry Smith, managing agent of 870 United Nations Plaza, a 175-unit co-op in the Rose portfolio. "Kerry has the ability to deal with people and with problems that others would walk away from," says board president Donald Bady. "Because he can handle everyone from an irate elderly person to a five-year-old child, the residents don't bother the board."
The willingness and ability to deal with issues so that the board doesn't have to is a key feature of superior management. "We're a very hands-on board," says Frank Daliendo, board president of a 360-unit Queens co-op managed by MGRE, "but we don't want to micro-manage. No board with professional management in place should also have to function as the management company." Daliendo says that his board and MGRE have established a comfortable balance between what the board is supposed to do—which is to set policy and direct management—and what management is paid to do, which is to implement the board's policies and directions.
According to Greenbaum, MGRE's Rule of No Surprises "means that our managers are expected to take action beforehand," he says, "so that surprises don't have the chance to happen." A similar philosophy dictates agents' performance at Kaled Management, a Long Island-based management company with over 40 co-op and condo clients in New York City, Westchester and New Jersey. "Our managers don't just sit around and follow the board's agenda," says Frank Galizia, Kaled director of operations. "We expect them to take the agenda to their clients, give their clients the benefit of their ideas, opinions and the full measure of their knowledge, and supply enough solution scenarios to enable the board to make proper decisions."
Effective management is hallmarked by getting things done so that the property can move forward. For example, after arduous work over the course of two years, Rose manager Smith recouped $500,000 owed to the property from a service charge miscalculation. "Kerry is a guy who takes up a matter and marches with it from start to finish," says board president Bady. "He knows how to get things done." If issues languish on the agenda meeting after meeting without action, results and closure, you may want to question what you're paying for.
The best managing agents are also masters of preparation. These agents, for instance, work with boards to produce agendas and to provide pre-meeting information so that board, committee, annual and other meetings can be as productive as possible. "We've gotten to the point that we never give out paper at board meetings," says Dorchester board president Brown. "This saves time. Otherwise, we'd be discussing things forever."
Lessons from the Self-Managed
Self-managed properties, which run the gamut from very small buildings to major complexes, can also evaluate their management. Self-management often presents greater challenges and the way those challenges are met sheds light on what effective management can do. Esplanade Gardens, a 1,872-unit co-op in Upper Manhattan, has an 11-member board, an office staff of seven, an in-house accountant, a resident superintendent and 66 maintenance and security staff personnel. It's a big property and independent managing agent Charles Holden, a seasoned professional manager, is responsible for it all.
In addition to addressing structural maintenance, financial management, staff supervision and preparation for board meetings, Holden is currently working with the board to institute in-house programs that address the interests of the co-op's formidable senior citizen population, to beautify the grounds and to entice Citibank to open a satellite branch in the complex because there are few banking facilities in the neighborhood.
"Good management," says Holden, "has to focus on the needs of the residents and the property's quality of life." Esplanade Gardens board president Mary Jane Sweeting adds, "Whether it's outside or in-house, management needs to be always available. Managing a residence can't be just a nine-to-five job. There has to be a full-time commitment to the property."
Measuring Overall Performance
"We measure our performance by how happy and productive our boards are," says Greenbaum. According to board president Daliendo, "We're so relaxed, we make jokes now at our meetings." But when MGRE assumed responsibility for the Queens property several months ago, the board was handling the property's finances and supervising a major capital project themselves. They were meeting almost daily and were completely burnt out.
If you're still unsure whether your property is getting the kind of management service it could be, you may want to learn more about the management industry. "The best thing I ever did was to take a course at NYU in what management is supposed to do," says Brown. "From that course, I understood the scope of management's job, I became better able to communicate with management, and I developed a lot more respect for our managing agent."Barbara Dershowitz is Contributing Editor for The Cooperator.