Passing the torch: Why succession planning is essential for community association professionals

Do you know what happens to your company once you’re no longer able to work? Have you determined who will take charge after you’re gone? For any business today, the importance of having a succession plan is critical for a company’s long-term success.

Succession planning involves creating an arrangement for someone to either own or run your business after you retire, become disabled, or die.

The need for a strategic succession plan was the leading topic discussed by more than 200 community association management company CEOs and executives at the 2019 CEO-MC Retreat hosted by the Community Associations Institute (CAI) in La Quinta, Calif.

As the growing industry is witnessing a changing of the guard, its pioneers—those who spent the past 40 years building thriving management companies and businesses that support community associations—are looking for ways to successfully pass the torch to the next generation of leaders.

Today, there are more than 7,000 community association management companies and nearly 55,000 community association managers, according to the Foundation for Community Association Research’s 2018-2019 National and State Statistical Review for Community Association Data. Acquiring the next generation of talent to manage and lead these companies is no easy task.

When asked if their company has a succession plan, more than half (54%) of the CEO-MC Retreat attendees reported that their firm does; 43% do not.

CAI President Cat Carmichael, CMCA, PCAM, challenges executives to avoid the expectation that a family member will be the one to step up and lead the business in the event of an absence, a dangerous assumption many business owners share today. Carmichael added that it’s essential to think of current employees and the value they bring to the company’s future.

“Developing succession plans helps to ensure business continuity if and when an executive or a key employee leaves. Every business should be thinking about its ‘transferable value’—that’s the value of the company when the executive no longer works in it full-time,” says Carmichael. “Elevating current staff value will not only add business value because of the quality and reliability of the workforce, but it will assure that monthly recurring revenue continues.”

Carmichael adds that there’s no better time than the present to deal with the unexpected and protect the businesses that have been built over the decades. A strategic succession plan will ensure the company’s culture is maintained and reduces stress on staff during the transition. It also means the company retains knowledge, history, and business relationships.

Learn more about building a succession plan from the Small Business Administration.

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Now hiring: Employment growth projected for community managers

Community association management is becoming a sought-out career for those entering the job market for the first time or those considering a change late in their professional lives. The role is expected to see growth for new hires in the coming decade, according to recent data from the U.S. Bureau of Labor Statistics.

There were about 363,000 property, real estate, and community association managers working in 2018 with employment forecast to grow 7% through 2028, faster than the average for all occupations. BLS attributes this growth to more people choosing to live in condominiums, cooperatives, planned communities, and senior housing.

“Community associations are a true economic engine, and there’s a need for talent at all levels,” says CAI’s 2019 President Cat Carmichael, CMCA, PCAM, who has made it her mission to open channels that can bring in talented individuals to common-interest communities. “We are striving to find new talent where the talent is and increase awareness of the benefits of community association service.”

Employers typically prefer to hire college graduates with a degree in finance, accounting, real estate, or public administration, but workers with a high school diploma and less than five years of relevant experience also can be considered for entry-level positions, according to BLS.

Employers also may require that community managers participate in training programs or workshops from professional trade associations (like CAI’s Professional Management Development Program) to develop their management skills and expand their knowledge on topics such as insurance and risk management, governance, homeowner relations, personnel management, and reserve funding.

BLS calculated the median pay for a community manager in May 2018 at $58,340 per year. This amount is higher than the median compensation reported by assistant community managers ($43,340) and portfolio managers ($52,500) in the Foundation for Community Association Research’s 2017 Community Association Manager Compensation and Salary Survey. Compensation increases significantly as managers gain more experience and responsibility. According to the Foundation’s research, on-site managers earn an average of $71,560, high-rise managers earn $86,500, and large-scale managers earn $100,000.

Community managers oversee the daily operation of residential properties. In addition, BLS lists some important skills that community managers should have to excel in their role:

  • Communication. Managers must understand contracts and real-estate documents to clearly explain the materials and answer questions raised by residents or board members.
  • Customer service. Managers must provide excellent customer service to keep homeowners happy and expand their business with new clients.
  • Interpersonal. Because community association managers interact with people every day, they must have excellent interpersonal skills.
  • Listening. Managers must listen to and understand residents to meet their needs.
  • Organizational. Managers must be able to plan, coordinate, and direct multiple contractors at the same time, often for multiple properties.
  • Problem-solving. Community association managers must be able to mediate disputes or legal issues between residents, homeowners, and board members.

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