Steps to Take Before Changing Management Companies

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For HOA and Metro District boards, few decisions carry more long-term impact than selecting a management company. This service provider is a key partner to help boards navigate operations, financial responsibilities, vendor relationships, resident communications, compliance requirements, and strategic planning. Because of this, changing management companies should be approached thoughtfully and intentionally and not as a reaction to a single frustration or isolated issue.

The Community Associations Institute (CAI) notes that the relationship between a board and its management company is one of the most significant partnerships a community can have. [caionline.org]
If your board is considering a management change, here are several important steps to take before making a final decision.

Define the Problem

Before discussing termination, take time to identify the specific concerns. These may relate to response times, financial reporting, communication with residents, expectations of board and management responsibilities, service levels overall, including staffing or workload challenges.

It is important to distinguish between a management performance issue and broader community challenges. Sometimes issues that appear to be management-related are actually the result of board turnover, unrealistic expectations, budget constraints, deferred maintenance, or unresolved policy decisions.

Documenting concerns with specific examples helps create a productive discussion and avoids making decisions based on frustration alone.

Communicate Concerns

One of the most overlooked steps in the process is simply having an honest conversation. Many boards are surprised by how much can be resolved through direct communication with their management team.  
Boards that communicate concerns early tend to achieve better outcomes than boards that immediately begin searching for a replacement.

Evaluate Expectations

Community governance is increasingly complex. Managers are balancing regulatory requirements, resident requests, vendor coordination, meeting preparation, financial oversight, insurance matters, maintenance projects, and board communications.

Strong management relationships are built on partnership and transparency. Often, issues can be resolved when both parties have a clear understanding of expectations and priorities. Before concluding that a management company is underperforming, boards should assess whether expectations align with the scope of services being provided.

We recommend that boards clearly define desired services and expectations when evaluating management relationships, emphasizing that successful partnerships depend on strong communication and mutual understanding.

Explore Improvement Plans First

Before making a final decision, consider implementing a formal performance improvement plan.

A 60 to 90-day review period allows both the board and management company to focus on agreed-upon priorities and measure progress objectively.

Include defined performance goals, with plans for regular and detailed status updates. Agree upon and hold to response-time expectations, financial reporting benchmarks and meeting communication standards. This approach creates accountability while giving the existing partnership a fair opportunity to succeed.

Changing management companies can be the right decision in some circumstances, but it should rarely be the first step. Boards that clearly define concerns, review contracts, communicate openly, and pursue reasonable improvement efforts often discover that challenges can be resolved without the disruption of a transition.

Compare the Cost of Staying Versus Leaving

Changing management companies involves more than signing a new contract. Transitions often require significant time and effort from both volunteers and professionals and create community disruption.
Some things to weigh in the balance include transferring of records, especially if it involves a change in databases or other key systems; potential vendor issues or fallout; banking updates; resident communications; website and technology conversions; and staff onboarding and community familiarization.

Boards should carefully evaluate whether the anticipated benefits outweigh the operational disruption that may accompany a change.

Review the Management Agreement

If a change is necessary, the board should carefully review its current management contract before proceeding.

Pay close attention to contract terms and renewal provisions, performance obligations, notice requirements, transition responsibilities, including transfer of records.

Understanding the agreement ensures the board knows its obligations and avoids unexpected costs or disruptions during a transition.

At Westwind Management Group, we believe the strongest communities are built on collaboration, transparency, and professional partnership. Whether your community ultimately stays with its current management company or decides a change is necessary, taking a thoughtful and methodical approach will help ensure the best outcome for your residents and stakeholders.

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