“The Secret of Freedom lies in educating people. Whereas the secret of tyranny is in keeping them ignorant.” Maximilen Robespierre
The Diamondhead Board of Officers, Directors and paid management team seems to lack the knowledge and professionalism which is required to manage the many individual pieces making up the assets of the corporation. Exceptions seem to be the golf course and tennis club managers. The areas that most glaringly stand out, now and in the past, are construction management, personnel management, and risk management.
And example is the 2014 replacement of the roof on the Country Club. The roof was less than 10 years old when leaks appeared requiring the replacement of plywood sheeting, underlayment and shingles. A prudent management team would have asked why a replacement was necessary and contacted Belfor USA for an answer. Instead, the management team just authorized the $300,000 expense, no questions asked. Having retired from a publicly traded company after 20 year’s experience as risk manager, structure manager and years of experience working with Belfor USA, and wanting to save Diamondhead POA some money, I asked to see a copy of the contract. Belfor USA, a national property restoration company had replaced the roof after Katrina and with their excellent national reputation, would probably have replaced the defective roof had POA management been able to locate its copy of the contract. No contract could be found. I asked to look at the Roof Warranty File, since roofing manufactures issue 20 year to 30 year warranty’s on their roofing products. Again, no Roof Warranty File was available. After explaining the need for these files, I was told no such file existed. The POA representative seemed unfamiliar with the fact that had these files been kept, if they had ever existed, the roof could have been replaced without cost to the membership. The incompetence continues.
A few months ago the 10 year old Harbor House (Yacht Club), had a flooring failure apparently caused by moisture incursion and Formosa Termites. Again the Diamondhead management team just authorized the expense without questioning how this failure could have happened in such a very new building. I requested a look at the contract and construction plans that had been executed with the builder. First, I was told there was no contract since the Harbor House was a combined effort with the Silver Slipper Casino, built with Silver Slipper specs. I asked the POA manager who PAID the building contractor and was told that the Diamondhead POA had paid the contractor. I asked a POA Board Officer if a building construction contract existed but never got an answer nor did I get a look at the contract to determine if the POA had any remedies with the contractor. If there was ever a contract it must have been lost as well. At a POA open Board meeting, the manager told the audience there was no repair insurance for the termite damage in a contract with “RedMan” exterminators. The POA, out of the membership dues, also paid the Harbor House employees’ salary the entire time it took to repair the damage. As an expert in risk management, I find this incompetence, lack of management expertise and failure to protect the corporation, to be totally unforgivable.
The origins of this incompetence lies with the POA Rules and Regulations that take all management powers from the officers by stating that the Board of Directors shall control the affairs and business of the corporation. Most companies, be they for profit or non-profit, have a Chief Executive Officer (President), an Executive Vice President, (vice-President), a Chief Financial Officer (Treasurer) and an Administrative Officer (Secretary) who operate and run the company with a Board of Directors who aid in setting company policy and who provide recommendations for products the company offers and other management issues. Our POA Rules and Regulations take all management powers away from the company officers by stating that the Board of Directors shall control and the affairs and business of the corporation. However, this statement is in conflict with the stated duties of the Treasurer which states that the person filling that position may designate agents to assist the Treasurer in the performance of his/her duties. Now, if an officer or director happens to be incompetent or unable in any way to perform the duties of his/her position, that person can only be removed for cause and a special POA membership meeting must be called and the majority members of the POA membership must vote for removal. The POA Rules and Regulations have been altered over the years to the point that they are useless and only protect the POA Board members and do not consider the needs and wishes of the POA membership or individual member. This may be why our POA Board operates like a three hump camel.
Their risk management problems are not new by any means. Before Hurricane Katrina, the POA could have insured the old yacht club for total replacement had they known that a flood insurance rider was available and could have been added to the wind policy for a small fee. Since Katrina, you cannot do the same today for a small fee. We would today have a real yacht club instead of a house on stilts, called Harbor House. I guess they got the name right. This happened because our management team depends on a local agent to obtain coverages instead of enlisting a major insurance agency such as Hub International. A major broker not only obtains the best coverages available through obtaining bids from many insurance providers, they provide guidance and recommendations to make sure your out of pocket costs are limited to your deductible. A major broker will be there to help in managing any claim to an insurance carrier. They will also provide training to your personnel in all areas of loss control which will result in less claims and lower future premium expense. You will also find that your insurance companies will offer to send out representatives to help you with your loss control. This type of service is not provided by a local insurance agent.
The personnel management has experienced problems of late. It seems lately that we have a turn over every two to three years in the General Manager position. My question is why? Could it be the job is too difficult; the employee is not paid enough: the employee is mistreated by POA members: the job is not challenging enough; or is there too many non-officer bosses to answer too. Remember, these people usually come from other areas in the country, and POA pays for their transportation and moving of personal effects expense. The POA paid a country club bar manager $9,000.00 severance pay for an undisclosed harassment incident, and this manager was a significant other to our POA General Manager at that time. No investigation was conducted by the POA management team to determine if a harassment incident actually took place, to identify the harasser and take appropriate action against the harasser. An investigation must take place and a written report prepared for the POA records to justify the $9,000.00 disbursement. Also, a release should have been obtained from the employee. For any other company, these documents are standard in any employee harassment incident. The POA management hid this expense in the payroll account, and probably would never been exposed had not the Treasurer, Mike Schaefer, found this expense in reviewing accounting records and questioned the expense. When a POA member asked about this incident at an open board meeting, the answer provided by a board member was that no written documentation was produced because this is a confidential matter and no official records can be kept. Having received training in how to handle employee harassment procedures, I can only say the POA management team demonstrated a complete incompetency in handling this incident.
It is rumored another similar liaison may exist between two newly hired employees. POA management does not seem to learn from past employee hiring errors.
When this article is published there will be a response by one or all seven POA directors which will contain a comment that I am un-informed, delusional, a discontent, or a radical. They may say they cannot find anyone I spoke too like they said about me speaking with their liability insurance carrier in the Diamondhead News Paper earlier this year. They like to attach and attempt to destroy member’s standing in the community. They could use their fallback preposterous statement, “I want to destroy our Diamondhead life style”; if that is the case, why have I lived in Diamondhead for the last 44 years?
The POA Board has no incentive to become knowledgeable managers or to considered POA membership needs or desires, because they cannot be held responsible, and they are well ware of this fact.