February 2022
One important difference between condominium corporations and private sector corporations is in the selection of directors.
In the private sector corporations seek the best qualified individuals to advise their businesses. Individuals offer some combination of skills, experience and influence valuable to the business. Condominium corporations operate differently.
Condominium corporations rely on volunteer directors elected by owners. Some elected directors may be skilled professionals offering value, experience and influence. Others may lack useful skills and simply be interested in serving. Many are elected because of friendship rather than what they can offer to their community. This leads to condo boards ranging from excellent to disastrous.
The benefits of the condominium corporation approach are less clear. Directors do have a vested interest in the well-being of their property and community, and should be motivated to act in best interests of the community. They are volunteers giving of their time at no cost.
Individuals lacking experience and skills are not to be faulted. Nevertheless, such individuals may not add much of value, and may be a hinderance, to the good governance of a community comprising hundreds or thousands of individuals, millions of dollars in annual revenues and assets of hundreds of millions of dollars.
Communities may be better served by hiring a professional director to work alongside volunteer directors. Benefits of this approach:
- A professional director can be more willing to identify poor decision making than a condominium manager whose employment can be terminated by a condo board.
- Inexperienced directors are more likely to make decisions based on personal opinion. The professional director is more likely to offer objective opinion supportive of good decisions.
- Boards and owners can be hesitant to spend money viewed as coming from their own pockets. Professional directors focus more on the benefits or savings from good decisions rather than the costs.
A professional director is a seasoned manager paid to participate in monthly board meetings. They share in the responsibility of management by undertaking research and activities not handled by condominium managers or volunteer directors. Like volunteer directors, professional directors must be elected by owners. A remuneration by-law must be passed, valid for three years, before professional directors can receive compensation.
Today, most communities view the professional director as a cost to the corporation rather than a long-term investment. Those employing professional directors do so because they save money and make better decisions.
