STRATA IDEA : Why don't large strata buildings employ their own dedicated strata manager?
STRATA IDEA : 2025.01
THE STRATA IDEA
Large strata buildings should directly employ their own dedicated strata manager rather than contract with a strata management business.
WHY IT’S NEEDED?
Large strata buildings are complex structures and have many operational needs because they:
generally have more complex building systems,
usually have more [and higher] compliance requirements,
interact with many suppliers of goods and services and regulators,
have many strata owners and many non-owner residents,
collect and spend a lot of money,
receive and send many communications,
have more records to keep and retrieve, and
enjoy [perhaps that’s the wrong verb] more internal and external disputes.
So, large strata buildings need more things done, more often and faster.
And, ideally, large strata buildings need internal strata building corporate knowledge preserved and used well.
Plus, large strata buildings have more eyes watching them ready to catch them out.
But, when strata buildings contract with a strata management business and are allocated an employee strata manager, they don’t get:
all [or even a fixed proportion] of that strata manager’s time,
guarantees of strata manager continuity, and/or
rights to end contracts if the replacement appointed strata managers are not suitable, and
compensation or credits for replacement appointed strata managers getting ‘up to speed’ time or mistakes.
As a result, there’s a dilemma because:
Large strata buildings need and want a strata manager [the person or persons] that’s suitable [that they like and that they can work with] who stays in the role for a long time.
Contracting with a strata management business makes continuity impossible [and it’s not the strata management business’s fault].
However, if large strata buildings directly employ their own dedicated strata manager, they could have all those things and more.
HOW WOULD IT WORK?
It wouldn’t be easy. But, it’s also not very difficult.
In the simplest terms, a large strata building would need to do the following things.
Employ a person with the qualifications, skills and experience to perform the functions ordinarily done by a strata manager by the usual processes of advertising the role, interviewing and selecting from candidates and an employment contract.
There are now many more strata managers than ever before, and even specialist strata recruitment businesses that can assist.
Set up and manage the employee strata manager’s wages, superannuation, PAYG, and other money matters.
Since large strata buildings already have an ABN and a TFN, they can become employers.
Also, employee wage-related matters can be handled by an accountant or even by very standard small business accounting software.
Manage the employee strata manager’s HR needs including leave, holidays, complaints, performance reviews, etc.
That can now also be done by an outsourced HR management business or even by HR management packages.
Set up and provide the employee strata manager with necessary equipment [computer, internet, technical and compliance resources] and space.
That’s easy as most large buildings have spaces that can be used full time or in a mixed home/onsite working arrangement.
Licence strata management and other operational software to run the strata building accounting, strata levies, meetings, minutes, notices, strata searches, etc.
That’s also easy as there are multiple software providers that offer specialist strata management software via the cloud.
Interact with and manage the employee strata manager on a day to day or week to week basis.
Which is happening already in most large strata buildings.
Have a contingency plan for sickness, holiday and other leave.
And, what about the money math?
Here are the back of the envelope [or is that voting paper?] calculations for a 250 lot strata building and a 400 lot strata building.
First, according to the latest Macquarie Bank strata manager data analysis reports [see the GoStrata Media Article Macquarie Bank Explains Strata Manager Profitability the average revenue for [including extras, expenses and insurance commissions] for high performers was $474 per lot per year in 2023. So, for that’s management charges of $115,500 per year for a 250 lot strata building and management charges of $189,600 per year for a 400 lot strata building.
Second, according to Macquarie Bank, experienced strata managers' wages are, on average, $100,000 per year. Add another 12.5% for superannuation and associated costs. So, that’s $112,500 per year.
Third, let’s allow $10,000 per year for external accounting and HR support for the strata manager's employee regarding wages, superannuation, leave, tax, performance, and related issues.
Fourth, let’s allow another $10,000 per year for space in the building, office equipment, computers, software licenses, etc.
Fifth, allow another 8.5% of the strata manager employee’s wages for a locum or relief strata manager for 1 month of leave per year.
So, that $12,500 per year.
That means, as the following comparison table demonstrates, that:
a 250 lot strata building that’s paying $115,500 per year for a contracted strata management business and access to some of the time of one of their strata managers would pay $145,000 instead for a full-time employee strata manager with a 1 month relief manager; so that’s $30,500 more, and
a 400 lot strata building that’s paying $189,600 per year for a contracted strata management business and access to some of the time of one of their strata managers would pay $145,000 instead for a full-time employee strata manager with a 1 month relief manager; so, that’s $44,600 less.
SOME BENEFITS
And, here are 10 potential benefits to large strata buildings of directly employing their own full time, dedicated strata manager.
Immediate responsiveness
Having a full time dedicated strata manager means that urgent issues [such as maintenance emergencies, security concerns, or strata owner/resident disputes] can be addressed immediately. Plus, routine matters can be dealt with more promptly and without distractions. This reduces downtime, prevents minor issues from escalating, and enhances everyone’s experience of dealings with the strata buildings.
Efficient maintenance work coordination
A full time dedicated strata manager can quickly identify and handle the strata building’s repair and maintenance needs, schedule and supervise contractors, issue and follow up on work orders, etc. This active and uninterrupted oversight helps to better maintain building systems [e.g., HVAC, lifts, common facilities, etc], preserves the strata building’s long-term condition, and improves the value for money of repairs and maintenance.
Comprehensive knowledge of the strata building
Because they are on the premises and only focused on one strata building, a full time dedicated strata manager develops detailed familiarity with and knowledge of the building layout, equipment, systems, history and strata committee, strata owner and residents’ needs and preferences. This allows them to proactively spot potential problems, better handle them and suggest improvements that part time and off site strata manager might miss or can’t.
Consistency & continuity
A full time dedicated strata manager provides stability in governance and operations. They know the building’s history, past decisions, strategies, and ongoing projects, ensuring that record-keeping and long-term plans remain consistent, even as strata committee members, goods and service suppliers, or strata owners and residents change over time.
Proactive budget & financial oversight
A full time dedicated strata manager can more closely monitor day-to-day expenditures, better preparing realistic budgets for repairs, maintenance and capital improvements, watch cashflow, and help ensure that the strata building’s financial resources are spent wisely and transparently.
Enhanced strata community engagement
Having a full time dedicated strata manager available and at the building fosters stronger relationships with the building’s stakeholders, including strata owners and residents, strata committee members and goods and services suppliers as they have a direct, familiar contact for queries or concerns. This visibility and approachability can lead to higher strata owners and resident satisfaction and a better sense of community in the strata building.
Improved enforcement of by laws or rules
With onsite and full time attention, a full time dedicated strata manager can better observe and address issues related to by laws or rules [like noise complaints, parking violations, and other infractions] potentially resolving them quickly, without tensions escalating and, perhaps, even without requiring more formal and legal or quasi legal action.
Centralised communication hub
A full time dedicated strata manager can [and probably will] become the go-to resource for disseminating information to strata owners and residents [notices, maintenance schedules, events, meetings, finances, etc] and for fielding questions about that information. This kind of streamlined communication and information management processes helps keep everyone well-informed, improves transparency and reduces misunderstandings.
Faster issue resolution & conflict mediation
Minor disagreements, like internal disputes between strata owners or residents, or confusion about strata operations and controls, can be quickly mediated by a full-time dedicated strata manager. The same applies for external issues with adjoining properties, regulators, advisors and goods and service providers. This faster [if not immediate] personal intervention by a dedicated and better resourced strata manager will improve outcomes.
Protecting & enhancing property values
Well managed and well maintained strata buildings hold or increase their property values better than when they are not. A full time dedicated strata manager’s oversight of repairs, maintenance, improvements, operations, disputes, and compliance helps ensure the strata building remains attractive to both current strata owners and residents, potential buyers and future renters.
So, a dedicated full time employed strata manager can provide efficiency, stability, and a human touch to large strata buildings, directly benefitting current strata committees, owners and residents through better service and reduced response times, as well as having medium and longer term positive impacts.
And, it doesn’t cost much more than the current alternatives for a 250 lot strata building and is cheaper for a 400 lot strata building.
FEEDBACK
So, do you like my idea that strata buildings directly employ their own dedicated strata manager … or not?
Either way, why not say so in the comments section via this link?
I encourage and welcome disagreement, discussion and debate.
I am not quite sure that many committees would be capable of managing all of the issues that come with an employee. Trying not to be disrespectful here of anyone, but I think the staff management piece of any business is the hardest, and when the controlling mind of the employer can change on a minute's notice , I think this would be a recipe for disaster in all but the most prepared and professional committees.
Great analysis. Arises as an idea in our Qld BC from time to time. (Layered scheme ). Psychology and political skills a must ;)