Governance of Condominium Management Associations from the Perspective of an Internal Auditor, Part 3: The Challenge of 'Human Resources'
Governance of Condominium Management Associations from the Perspective of an Internal Auditor, Part 3: The Greatest Challenge for Management Associations is 'Human Resources'
Having been involved in internal auditing at corporations for many years, there is one thing that surprised me most when I became an auditor for a condominium management association.
It was the fact that it is an organization
that lacks human resources.
Of course, it is not that there are no people.
There are board members and auditors.
There is also a management company.
However, the 'human resources as an organization' that exist as a matter of course in a company do not exist here.
—
Mechanisms that are standard in companies
In companies, there is:
Recruitment.
Placement.
Development.
Evaluation.
Transfers.
Succession planning.
In other words,
Human Resource Management (HR)
exists.
Organizations are designed on the premise that people will change.
—
Management associations lack HR
On the other hand, condominium management associations are different.
Board members are often chosen by rotation or lottery.
Specialized knowledge is not required.
Management experience is not required either.
The term of office is generally one to two years.
Once they step down, they return to being ordinary unit owners.
In other words,
recruitment,
placement,
development,
and evaluation
do not exist as an organization.
From a corporate perspective,
it is an extremely unique organization.
—
Yet decision-making never stops
However,
management associations must continue to make
important decisions every year.
Management entrustment contracts.
Equipment upgrades.
Insurance contracts.
Long-term repair plans.
Repair reserve funds.
Decisions involving tens of millions,
and sometimes hundreds of millions of yen,
are made by a board of directors that lacks a specialized department.
Herein lies
the difficulty unique to condominium management associations.
—
Supporting with mechanisms, not people
In companies,
excellent talent supports the organization.
However,
management associations are different.
It is inevitable that board members will change.
Therefore,
rather than expecting excellent board members,
we must create a mechanism that functions regardless of who becomes a board member.
This is governance.
—
Experts are there to supplement human resources
This is where the role of external experts becomes clear.
Management companies.
Condominium management consultants.
Lawyers.
Architects.
Accountants.
These experts
are not a substitute for the board of directors.
They are there to reinforce the human resources of the board.
However,
reinforcement is different from total delegation.
The final decision-making
is always done by the board of directors.
Therefore,
while utilizing experts,
the board of directors itself must fulfill its accountability.
—
How to ensure continuity
Board members change.
However,
the management association continues.
Therefore,
knowledge must be left not in people,
but in the organization.
Minutes.
Contracts.
Management ledgers.
Repair history.
Audit reports.
Improvement items.
These
are not just records.
They are the memory of the management association.
In my audits,
I place importance on whether these records are properly maintained
and handed over to the next board of directors.
—
Conclusion
I believe that
the greatest challenge for a condominium management association
is not funds.
It is not the building either.
It is human resources.
That is why
we utilize experts.
That is why
we keep records.
That is why
the auditor audits the board of directors from an independent position.
Everything is
to create an organization where the board of directors can continue to make appropriate decisions, even with limited human resources.
Next time,
I would like to consider the appropriate relationship between the board of directors and the management company, starting from the theme of 'Is the management company a partner, or an object of supervision?'
—
HI (Human Intelligence)
Certified Internal Auditor (CIA) | Certified Fraud Examiner (CFE)
Translating the knowledge of governance, risk management, and internal control cultivated in corporations to the field of condominium management associations, and researching and disseminating 'governance appropriate for condominium management associations'.
Series
'Governance Theory for Condominium Management Associations - Decision-making by the Board of Directors as Seen by a Certified Internal Auditor -'
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