Strategic planning for HOAs

Strategic planning is about projecting where your association expects to be in five, 10 or 15 years – and how your association will get there. It also ensures that your association will remain financially sustainable, and be able to maintain its reserves

It is a systematic process of planning, scenario setting, forecasting, and identifying the impact of occurrences before they happen. It involves a number of phases of thinking and application that identify the current status of the association, including: its mission; vision for the future; operating values; needs (strengths, weaknesses, opportunities, and threats); goals; prioritised actions and strategies; action plans; and monitoring and review processes

Strategic planning is the foundation of every common-interest community. Without strategic planning, communities will never know where they are at the moment, where they are going, or if they will ever get there. An important concept of strategic planning is understanding that, in order for the community to grow, everyone needs to work to ensure that the team’s goals are met. Team members include all association home owners, the board of directors, professional management, and various service professionals such as accountants, auditors, strategic consultants, engineers and financial professionals. This team needs to work as a collective body to be successful. Part of the team concept is the establishment of roles for the team players.

Benefits of the long-range plan

In short, some of the benefits of strategic or long-range planning are:

1. It stimulates thinking to optimise the use of the association’s resources.
2. It ensures that responsibility and scheduled work are assigned to the individuals or teams that are best equipped to fulfill that role.
3. It ensures coordination and unification of effort.
4. It facilitates better control and evaluation of the association’s activities and the association’s mandate, thereby ensuring accountability.
5. It creates awareness well in advance of obstacles that may occur so that they can be overcome through sound decision-making.
6. It identifies opportunities that may otherwise have been overlooked.
7. It ensures that creative thinking is used to solve potential problems.

While there are numerous strategic planning models that your community association could adopt, this document does not advocate a specific model or technique, but focuses rather on the essential steps, components and outcomes of the strategic planning process.

Applying strategies in community associations

Drawing up a strategic plan involves the following steps:

1. Recruiting core leadership and team members, including representatives from all stakeholder groups in the community. This should include internal and external stakeholders.
2. Training, motivating, and empowering the group to see how they will be adding value to the community in which they live or serve.
3. Setting objectives, timelines, key roles, and success indicators.
4. Understanding the history of the association, how it came into being, and why it was established.
5. Imagining and understanding multiple visions of the future, by setting possible scenarios such as size; financial position; market expectations; and the impact that the political, environmental, social, and technologic environment will have on the community.
6. Identifying current and likely challenges and opportunities.
7. Identifying things that the community does well, and what it does badly, and measuring these against the core values of the community.
8. Describing a picture of the vision of the future using strengths and opportunities, and integrating the threats and weaknesses.
9. Describe the plan to all association members at each phase of the development of the plan in order to solicit comments and fill gaps where critical areas may have been missed.
10. Restating the accepted plan, seeking broad-based consensus for it, and soliciting more feedback and involvement.
11. Developing operating plans, budgets, and schedules.
12. Prioritizing goals, and allocating and planning resource utilisation.
13. Monitoring accomplishments, and soliciting and reaffirming consensus on remaining items.
14. Restating the vision-making process with each new group of interested members.

Components of strategic planning

Strategic planning’s three main components are plan development, plan execution or implementation, and plan monitoring and review. Many of the functional areas within these components are similar in that all three require a team concept that is based on: ensuring that the members’ roles are defined; educating team members about the process; and using quality communication and interaction.

1. Plan development

Plan development is the first component of strategic planning. During this stage, the following steps should be completed:

• Assess the association’s history, significant accomplishments, and weaknesses. Develop a history of the association and the community. List important milestones that brought the association to where it is today (open land controlled by the developer to 50% occupancy). To help visualise how the association has changed over the years, include items that impacted on the association’s operations, such as: hiring additional staff; upgrading computer hardware/software; changing processes significantly; raising levies; building additional facilities; changing some of the rules; developing a new newsletter format; changing the size of the board; rebuilding/renovating existing facilities, etc. Include dates, quantities and rand values, as appropriate.
• Assess the association’s current status. Determine the association’s current status by assessing such things as: the state of the facilities; infrastructure of the operations; the financial statements; demographics; beautification of the parks; the result of the last service survey; the perception of the external environment; property market; number of residents attending events; debtors’ age analysis; traffic load; the attendance of trustees at board meetings; and the number of complaints, security breaches, architectural guideline breaches, breaches to the rules and regulations, and so on.
• Evaluate the association’s current governance structure. Review the operations, communication channels, and lines and parameters for decision-making, etc., to determine the levels of accountability, and the extent to which the fiduciary responsibility of trustees is being met.
• Determine how responsibilities are assigned, defining communications and authorities. Examine the available policies, procedures and desk guides to determine the chain of command within the association’s staff, within the board, and for oversight and communications between the staff or management company and the board of directors. The point of contact between the staff, or management company, and the board is critical to preclude misunderstandings, duplications of effort, or things falling through the cracks, etc. Determine the board’s responsibilities versus those of the staff or management company. An example of a delineation of responsibilities between the staff or management company and the board is covered in policy governance. Simply stated, policy governance assigns the board’s function as that of policymaking – the ‘what is’ of the subject/issue, while the staff’s or management company’s function is that of carrying out the policies – the ‘how to’ of the subject/issue.
• Develop mission and vision statements. The vision statement is the dream or end state to which the association aspires. It emphasises the dream of where the association will be at a specific time. The mission statement is the organisation’s purpose stated in a memorable phrase. In short, an association’s mission statement describes the business it’s in. It should be geared toward fulfilling the association’s purpose, and what it intends to do, as contained in the governing documents – with some specifics. Mission and vision statements should not be a list of goals.
• Determine operating values. Also called guiding principles, these values state the association’s intentions and expectations. They are used to judge the association’s policies and actions, as well as individual conduct. Associations should include values such as: the importance of customers and customer service; commitment to quality and innovation; importance of honesty; integrity and ethical behavior; corporate citizenship; respect for employees, and the duty that the association has to its employees; and the importance of safety and protecting the environment, etc.

1. Perform a needs assessment. Determine the needs of the association by analysing the present state of the community; addressing any critical issues; and identifying the association’s strengths, weaknesses, opportunities, and threats.
   • Determination of key result areas – Define five to 10 areas in which the association must be successful in order to accomplish its mission, based on customer expectations.
   • Determine customer expectations-  Determine the customer’s (members, suppliers, and employees) expectations of the association as stakeholders.
     Group the expectations into five to 10 key result areas.
   • Determine critical issues – List the critical issues that must be addressed for the association to achieve its mission and vision, based on an assessment of its strengths, weaknesses, opportunities, and threats (SWOT).
   • Strengths – List the organisational attributes that promote the association’s ability to meet its mission and vision.
   • Weaknesses – List those organisational attributes that hamper the association’s ability to meet its mission and vision.
     Some examples include inadequate technology or use of technology; lack of core competency training; poor service, and so forth.
   • Opportunities –  List those factors, internal and external, that would enable the association to meet its mission and vision.
     Some examples include technological advances in needed areas, consolidating functions, etc.
   • Threats – List those factors, internal or external, that could prevent the association from meeting its mission and vision.
     Some examples include high rates of foreclosures, drawn-out worker strikes, changes in developer focus, etc.

• Define the roles of key players. Who will be the key people responsible for each aspect of the strategic plan? Answer questions such as:
  • What level of control will the board have?
  • Is the manager going to be a proactive leader or an administrator?
  • Are the home owners going to be active as committee members or are they going to be less involved?
  • Role definition is extremely important so that efforts are not duplicated – or neglected overall.

One way to establish a team and define specific roles is to adopt a model similar to a city council and city manager form of government. The city council (board of directors) sets policies, votes on contracts and bids, and is the on-site eyes and ears (oversight) of the community. The city manager (management) should be the professionally educated, proactive, paid leader who manages the day-to-day operations, brings issues and solution options to the table, and then implements the board’s decisions. The citizens (home owners) should attend meetings, serve on committees, and elect competent individuals to the board of directors. This concept of team roles goes much deeper than this discussion allows, especially in the areas of compliance, budgeting, and home owner interaction.

• Educate and communicate the plan. Without education and communication, team members can neither perform their roles effectively nor interact with each other. Make sure that every player has the necessary documents and basic knowledge to perform effectively. Further ensure that each of the players communicates with each other – provide updates as necessary and always ask for others’ input. Better to catch a potential problem earlier rather than later. In the event that there is a change in management, association boards should also be sure to communicate their strategic plans to the new manager, and revise it, if necessary. Also, if the strategic plan calls for specific management participation, make sure it is spelled out in the management contract.
• Develop and prioritise long-range goals. Develop long-range goals to address the critical issues identified through the needs assessment, and then prioritise those goals.
• Develop short-term goals and action plans. Establish shortterm goals and specific action plans along with scheduled completion dates.
• Monitor the progress. Establish a monitoring process to assess the progress made on both short-term and long-range goals.

2. Plan execution

Plan execution is the second phase of strategic planning. In this step, an association puts its plan into action through the allocation of resources. This step has three components:

• Programmes – Association programmes serve as blueprints for converting objectives into realities.
• Procedures – Procedures are the specific sequence of tasks required to complete the programmes.
• Budgets –  An association should prepare budgets to fund programmes. Instead, many develop programmes based on their budgets. Simply put, an association should be strategy-driven, not budget-driven. If the plan development phase was put together well, then the plan execution phase is much easier.

Many of the previously discussed items such as teamwork, roles, communication and education are important and apply to the plan execution phase. Hold periodic meetings to review progress on short-term goals and plans. Without periodic meetings and reviews, the community will not move forward and achieve its goals. Lastly, adaptability is crucial to the plan execution phase, since all plans will have flaws. If the team members are not adaptable, there may be simple issues that will not be resolved in a reasonable manner, and the community will suffer.

3. Plan review

Plan review is required constantly in order to improve the plan and ensure its execution. Part of the plan review occurs naturally when there is board turnover, a new home owner, or changes in the law. In addition, plan review needs to be scheduled to ensure that the plan is meeting the community’s goals. This can be achieved through surveys, management review conferences, or discussions at meetings. If the community fails to update the plan, the plan will eventually fail the community. Industry experts suggest that associations and their managers review their strategic plans annually, and completely overhaul their strategic plans every three to five years.