Creating a Camel

"Have you ever heard the definition of a camel?" asks Don Levy, director of management at Lawrence Properties. "It is a horse created by a committee." He laughs. "That's the sense a lot of people have about committees — that they're unwieldy and get things wrong. But a well-run committee is a very useful thing."

Indeed. Boards, overworked and underappreciated, can frequently use help. And one way to find such assistance is through well-designed committees. One Manhattan co-op board began using the committee system because "things had not been done well," the manager says. "The building needed a lot of work but no one had the time to focus on everything."

In that case, using committees increased the scope of the work that the board could do by increasing the number of people available to investigate the issues. This past August, five years after that co-op turned to committees, seven major projects were underway. Although it was more than most boards could normally handle at once, this co-op succeeded, thanks to the seven different committees which helped research and then coordinate the jobs.

Whether an ad hoc group set up to deal with a one-time lobby renovation or an ongoing arrangement to cope with budgeting and financing, a committee can increase a board's reach and ensure a more smoothly run building. "Committees are an excellent resource for boards to tap into," observes David Khazzam, vice president at PRC Management, "but when you tap in, you have to make sure the appropriate guidelines are laid out. People need to understand their duties." In fact, for such a system to work, the board must ask a number of questions. Among them:

Do you need a committee? Look at your property's needs. Do you even need a committee? Not every building is ripe for such a system; those with five to ten units might find it superfluous. "When the function of the committee can easily be handled by the board, that tells you that you don't need a committee," explains attorney Steve Wagner, a partner in Wagner, Davis & Gold. "There should not be overlapping responsibilities."

"The committee is not a platform to delegate what the board should be doing," adds Arthur Davis, a co-op consultant. "Committees are there for a specific purpose, to take some research work off the board's and manager's hands."

What kind of committee do you need? If you decide you want to set up committees, what types do you need? That will depend on the kinds of problems you face.

Boards can simplify decision-making by giving some committees very limited authority to make decisions. For a committee to have the authority to act, it must be created by the articles of incorporation, the bylaws, or a resolution of the full board. According to a booklet published by the Community Associations Institute, "When a committee is granted the authority to exercise a portion of the authority normally exercised by the board of directors," it must be made up of board members appointed by a majority of the full board. When a committee is created by board resolution, that resolution should specifically, in writing, express the powers and limits being delegated.

Much more common are advisory committees, which can help analyze problems, review facts, and gather information and alternatives, but do not make decisions. The most typical of this type are finance and administration, which advise on money matters; maintenance, which keeps watch on the building's cleanliness and general upkeep; decoration, which handles lobby and hallway renovation; communications, which publishes the newsletter; resale, which handles admissions interviews; grievance, which looks into complaints; and community services, which liaises with the shareholders.

How big should the committee be? The size of the committee is an important consideration. It can range from two or three people to as many as ten. Remember: larger groups are harder to manage and it is more difficult to get everyone together at one time. "You don't want to make it unwieldy," says Davis. "You want a working group."

Who should be included? A member of the board should chair each committee. This is crucial because the director is a conduit to the full board and its decision-making. "The most effective way to do it is if the committee head is a board member and the head reports directly back to management and the board," advises Keith Werny, senior property manager at Cooper Square Realty. "It's the committee head's responsibility to deal with the committee and the board. If you don't have a clear leader who deals with individuals, you have 20 chiefs and no Indians and nothing can be accomplished."

The rest of the group should include people with some knowledge of the subject being investigated. If you're setting up a finance committee, for example, try to get an accountant; for a legal committee, a lawyer; for a design committee, architects and artists.

You also want people who demonstrate that they can be thorough. For example, one Manhattan board is installing a new canopy. The committee, says the manager involved, spent "four months researching it before they made a recommendation. They were very dedicated and conscientious."

In addition, you want people who do not need to be handheld every step of the way by the board. "If committees are not self-sufficient, it adds hours to the board's responsibilities," says attorney Robert Tierman, a partner in Litwin & Tierman. "The board will then be dealing with three or four more personalities and still not be solving problems."

How do you avoid the pitfalls of committees? Committees go wrong by assuming too much authority and not remaining within the guidelines of the board. It is important that committee members realize that their function is usually to advise the board, not to dictate a course of action. "If a committee oversteps its bounds and believes whatever recommendations it makes must be followed, there can be conflicts with the board," says Alvin Wasserman, director of Fairfield Property Services. "How well a committee works depends on how well the members understand their role."

To avoid pitfalls, it is important to set clear-cut parameters. "Committees need clearly defined responsibilities and goals," notes Steve Greenbaum, director of management at Mark Greenberg Real Estate. "Otherwise, they can go beyond the scope of work needed; the lobby work is budgeted at $30,000, for instance, but they get $50,000 proposals."

Why are committees important? In the last analysis, committees are good tools because they allow the board to broaden its accomplishments by getting non-directors to participate. On another level, committees are a training ground for future directors. Many buildings regularly draft directors from committees. "The plus side for the board is that you get to see how certain shareholders work with the board," says Greenbaum. "It is the best way to recruit new members — a good trial run. And that goes both ways. The board can see how the board member can work and the committee member can see how the board works."

It is also a good way to increase a familial feeling among residents. As the decision-making process becomes less of a mystery, there is less resentment from people who feel the board is acting capriciously. The tenants are more involved because they understand the problems and feel part of the process.

"Committees can be useful because they expand the interest in the property to other owners and encourage cooperation," concludes Wasserman. "If the committee understands its function, and the board makes its decision based on recommendations, the system can work nicely."