Once upon a time, I found over $100,000 of fluff in my condo association’s budget proposal. I wasn’t a board member. I wasn’t on the budget and finance committee. I was “just” a co-owner–and I was mad.
I hadn’t paid a lot of attention to the budget until then, but I was pretty sure that the proposed fee increases were excessive. So I went through the three previous budgets, comparing the plans to actual expenditures–and to the new proposal. I discovered that if a category (say painting) had been increased in Year 1 to account for a major expenditure (e.g., repainting of corridors), the bump was maintained in Years 2 and 3. Run that across the entire budget, and the estimated expenditures were wildly higher than actual expenditures.
Management companies are famous for this. It gives them a de facto slush fund to tap if something goes awry and they can still claim they came in under budget at the end of the year. (Well, unless something goes really, really wrong–but that’s a topic for a different post.) Condo boards don’t ask questions because, well, they came in under budget.
It wasn’t just the budget that was a mess.
The management company was running our condo. The board of directors at the time was just rubber stamping everything.
Who runs your business?
- Your CFO may be handling the finances–but you have to look at and understand your own books.
- Your IT team may be recommending systems and keeping them operational–but you have to make sure the technology in place meets the company’s needs.
- Your product developers may be coming up with lots of new ideas–but you have to decide which ones to pursue.
- Your sales team may be doing most of the talking to prospects–but you have to understand who your best prospects are and what they need.
I could go on–but you get the picture, right?
Owners have to own it. And leaders have to lead.
I was thinking about this the other day after I heard former collegiate football coach Bobby Bowden on Mike and Mike. The conversation was about the Penn State scandal, the NCAA’s sanctions, and big-money collegiate football. Bowden was asked if a coach can have too much power on campus. Bowden’s reply:
“Yes, if you have a weak administration… To me, if a coach can rule a university or a president, you’d better get another president. You’d better get another board of trustees because they cannot let that happen. It [doesn’t] work and this shows it.”
Whether you oversee a $60 million football program, a $1 million condo association, or a business of a more modest size, the decisions you make and those you abdicate come back to you. Are you running your business?
Photo by Edward Stojakovic (Flickr).