Have You Reached Your Learning Curve? By Tom Engblom, ARM, CPM, CMCA, AMS, PCAM, Mutual of Omaha Bank
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recently had the pleasure of attending the Community Association Institute (CAI) National Conference as President Elect of the Illinois Chapter. As typical, the Conference offered instructor recertification, educational courses, industry best practices, chapter executive director training, president elect training and the exposition. The keynote speaker for opening ceremonies was interesting: as it was his presentation premised the notion of the power of three. The brain finds it easy to grasp three elements consisting of elements, colors and fonts. Push it up to four and the brain becomes confused about what to do and where to look! As I began the four-day conference (brain cannot process), I reflected on a class I recently completed for project management, primarily on cost controls. During the numerous lectures at the National Conference, I began a comparative summary of learning curves, trade-off analysis, and Pareto efficiency—three components— as they relate to the association management industry. Learning curves were first recorded by the 19th century observation of German psychologist Herman Ebbingaus, whose tests involved memorizing nonsense syllables and recording the success over a number of trials. As time went on, the result were increased production on numerous levels. Interesting information, but I’ll bet you’re questioning how this applies to association management. Typically, associations have an annual meeting with the new board consisting of a president, treasurer, secretary, etc. The new board may undertake the hiring of business partners for services like legal, accounting, landscaping, etc., or start looking for property management. The learning curve is part of the evolution process in the association industry. Here, the learning curve typically
is never contemplated, but should be analyzed on how to keep the bar high, with experienced members and vendors increasing the association learning curve. Trade-off analysis, frankly, is the demise of most associations that I have seen in more than 30 years of experience. “Opportunity cost” is interchangeable with trade off analysis—sacrificing one component for the sake of another because of the cost. Here’s an analogy using trash cans: Should one select a large or small trash can? A large trash can hold more, but it does not require emptying as often, and at some point becomes too heavy to lift with the amount of trash, and it creates a unique odor over time. Comparatively, a smaller can weighs less but requires more attention as it fills faster. Boards should compare themselves to the smaller, more efficient model, in that less heavy lifting is required with more attention to detail. Numerous trade-off analysis analogies could be applied to association management from accounting to zeal. We should never sacrifice quality for quantity (defer for cost) in the life expectancy of the association: It will add expenses to the association’s budget in the long term. Pareto efficiency is an economic theory created by the Italian economist Vilfredo Pareto. Pareto efficiency is said to exist when, in the allocation of resources, no other improvements can be made made in the allocation of resources to one individual without causing a loss to others. The concept of Pareto efficiency is not correlated to equity because something can meet the requirements of Pareto efficiency but be very inequitable indeed. Nevertheless, a Pareto improvement occurs when there is a change in the allocation of resources which
makes one person better off but doesn’t make anybody else worse off. For example, if three people have two parking spaces apiece and one person gets an extra parking space, it will be a Pareto improvement so long as the extra space did not come at the expense of the other three people’s parking spaces. A simple way of explaining Pareto efficiency would be to say that it refers to a situation where it is not possible to make one person better off without making other people worse off. At your association, what Pareto efficiency has been used that has improved the status of some individuals and not others? As a reader, only your mindset can address that concept as I could highlight so many. The power of three is an effective concept, as the brain comprehends those components without exceeding that number. I have given you three components as they relate to the association management industry: learning curves, trade-off analysis, and Pareto efficiency. The aforementioned provides a venue to apply those aspects and improve your association within the proper best practices. I trust your learning curve has increased with trading off a lesser component while creating a Pareto efficiency for all!
July | August 2014
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