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What Happens in the Boardroom Should Stay in the Boardroom

Steven Greenbaum in Board Operations on September 11, 2018

New York City

In the Boardroom
Sept. 11, 2018

Co-op and condo boardrooms have at least one thing in common with Las Vegas: what happens there should stay there. 

Many new board members run on a platform about transparency, communication, and being a liaison between the board and the shareholders. All commendable reasons to serve, but not without risks. These good intentions can easily slip into bad results when a new board member gets overly involved with building staff; wants to share all the information he or she has learned; or gets manipulated by a clever shareholder or staff member. 

How do you deal with these situations? Point out to the new board member who likes to get chatty with the staff – he may see himself as the liaison for management, the board, and the staff – that too many chefs may spoil the meal. For example: management may give the staff a task to do, and one staff member goes to the managing agent and says, “Do we really have to do this?” The managing agent says, “Of course, you do. It’s part of your job description.” Then the staff member will go to the “liaison” board member and say,”Do we have to do this?” The board member says, “Well, this is not right. You shouldn’t have to do this.” The next thing you know, the board member is contradicting what either the other board members are saying or what the managing agent says. The staff gets mixed messages, and the result is chaos

If “Mr. Chatty” wants to share everything discussed at board meetings with fellow shareholders, the staff, or other people, you have to explain to him that some things need to stay in the boardroom and cannot be shared. That could be information on a shareholder, legal information, or future plans of what the building’s going to do. You want to be especially careful with financial information.

Finally, people new to a board may find themselves being unwittingly used by neighbors. A shareholder knocks on this new member’s door at 8 o’clock at night saying, “Can you just sign this document? I’m refinancing.” Or: “I need to sell my apartment. My mortgage broker said I only need a signature from a board member. Sign this.” The board member, inexperienced and naïve, may sign – and that may not always be in the best interests of the co-op.

I’m not saying that new board members should not be communicative or transparent, or that they should ignore the staff. But they need to understand their fiduciary responsibilities

Steven Greenbaum is senior vice president of the Charles H. Greenthal Group/MGRE.

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