Condo Media - May 2011 - 44

FEATURE

by Nena Groskind

Resolving Ethical Dilemmas

ommunity association managers confront operational, financial, legal and even psychological questions every day: How to schedule maintenance work, how to reduce expenses, how to enforce association rules, how to mollify an angry and not entirely rational owner. Answering those questions is part and parcel of a manager’s job. But sometimes — not often, but often enough to warrant discussion — the questions managers confront are ethical; i.e., not what is most cost-effective, most efficient or least likely to incur liability, but what is “right.” In this month’s “Industry Perspective,” two management veterans discuss some of the most common ethical challenges managers face and offer some advice on how to resolve them.

Patricia Brawley, CMCA, AMS, PCAM Property Management Consultant Community Solutions Conflicts of interest, or the potential for them, top the list of ethical dilemmas that Brawley has encountered,

both as a manager and as a consultant advising community associations on management issues. Management companies that own subsidiaries offering vendor services to associations, she says, “can create real problems” for portfolio managers, who end up “trying to serve two masters.” The company is looking to its subsidiaries to generate additional revenue and improve profit margins, and the manager owes a duty of loyalty to the company, Brawley agrees. But the manager also has an obligation to recommend the vendor that will do the best job for the association. If the company-owned subsidiary turns out to offer services that are better or comparable to those of other companies at a competitive price, the ethical strain is reduced, but not eliminated, Brawley says. “What happens if the company doesn’t perform after it is hired?” She has seen managers pressured to accept inferior performance or to overlook excessive billing that they wouldn’t tolerate from an outside vendor. In most cases, she thinks, the best course is to avoid these conflicts

altogether by keeping the management function separate from other services. “As a manager, I can be much more objective if I am dealing with a vendor unrelated to the management company,” she says. Ethical questions also can arise with independent vendors, however. The pooled purchasing arrangements some vendors offer can prove particularly vexing for portfolio managers, Brawley notes. She cites insurance coverage as one example. The management company might suggest (or insist) that the manager recommend a pooled policy covering multiple communities. By leveraging the good loss ratios of some communities, these policies could reduce the premium rates for those with higher claims ratios, so some communities in a manager’s portfolio would benefit; but others might be able to find lower rates or better coverage independently, outside of the pool. The ethical solution for the manager, Brawley says, is to recommend the best option for each community; the manager’s ability to do that comfortably, or at all, will depend on “the corporate culture” in the management company.

CONDO MEDIA • MAY 2011

Condo Media - May 2011

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