A Co-Op Nightmare: When Conflict Rules, Part 2

Conflict, many persons

Conflict: When a cooperative divides.

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SO WHAT CAN BE DONE TO AVOID CONFLICT IN THE FIRST PLACE? We have yet to find the one remedy that works in every situation. Differing situations typically require differing variations of cure. However, there are actions that should be implemented in all cases to proactively help reduce conflicts and diminish their severity when they do take place.

Experience shows disagreements between residential cooperative shareholders and their boards of directors are frequently rooted in misconceptions and misunderstandings, which seemingly result from something many co-op boards seem to dismiss too readily: Training — regular specific training for the board, co-op officers and shareholders. Consequently we’ll begin to look at training.

Too often we find a co-op views training as an unnecessary expense or needless luxury … and we’ve heard most, if not all, of the so-called rationale reasons to avoid it: The board has an attorney and knows what to do; shareholders don’t need training; its a waste of time; we already do what’s right; no one will attend; etcetera, etcetera.

Unfortunately, reality frequently paints a contrasting picture.  Many times board members have little or no background in business (yes, a residential cooperative is a business), have an incomplete knowledge of applicable co-op and housing laws, and may be unfamiliar with the corporate documents to be enforced. This is not a criticism but rather an observation that underscores proper board training can be beneficial and open opportunities for each board member to give his/her best efforts in service to the cooperative.

Yet, beyond other responsibilities involving legal, operational and residential aspects of the cooperative, the board needs to be a driving force for unifying and keeping co-op members on the same page. Like any group, a cooperative is most effective when everyone pulls in the same direction. It’s no easy task and is a never-ending work in progress. Even for the cooperative that does provide occasional board training, we’ve found new board members under the impression their only task is to attend board meetings. While attendance at meetings is necessary, newbies and veteran members alike often have no clear or full idea what is expected of them, what their authority is or what comprises their responsibilities. For example, some board members are shocked to learn they typically have a fiduciary duty to the cooperative–that is, placing the interests of the cooperative ahead of his/ her own personal interests.

When a board is in this situation it flies by the seat of its pants, generating decisions that can easily become inconsistent (or worse) and cause confusion that can leave the cooperative vulnerable to strife as well as potential liability. Without understanding their roles there is an absence of focus or a straightforward vision, and without focus inadvertent inconsistencies are likely to follow. When it occurs such erratic behavior tends to ferment uncertainty for shareholders, who may see it as whims that fluctuate according to who is involved and the prevailing mood. By itself this type of climate yields a fertile ground for uneasiness that can turn into shouting matches at board meetings or divide shareholders into factional camps. But if this situation is coupled with a lack of adequate two-way communication between the board and shareholders, it starts to get nasty with rumors and accusations running amuck.

This is especially true when the board needs to enforce rules against shareholders.  When the board interprets a rule one way for a violator then interprets it another way for a different person, anyone who is treated more harshly may feel “picked on” or singled out, an event that can turn ugly very quickly.

So, the very first thing to consider for smooth cooperative operation is proper training for the board and its officers, which can be two different types of training sessions. If both types of training are not provided on a regular basis, at least once every two to three years, they should be.

Certainly, each cooperative shareholder should be grateful for every person who serves as a board member. But what should be gratitude can be rapidly replaced with contempt, and it can happen even more quickly without the guidance and focus of training. Indeed, when the cost of training could be a bargain when compared to the stress and burdensome expense of dealing with these difficulties.

More next time.

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Need help with training or problem troubleshooting? Visit us at the Inhouse Corporation website or contact us at inhouseco@aol.com

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Blog Terms of Use and Disclaimer: The purpose of this blog is to promote awareness and general discussion of the presented topic. Use of this blog shall be the reader’s agreement that at no time will the reader rely upon or act upon anything contained or implied in this blog and that any and all actions that may be taken shall be under the specific guidance and oversight and/or performance of a professional qualified in the subject matter. If you have a question or want assistance with a featured or related matter please contact us at InhouseCo@aol.com (include the blog article title on the subject line). Links, references and credits in this blog are for convenience only and are not endorsements by the author or Inhouse Corporation.

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