The Problem With Decisions Made Behind Closed Doors

An RMC is entitled to make decisions. That does not mean it is entitled to stop listening.

There is a curious habit that can develop in organisations where power is concentrated in a small number of hands.

The people making the decisions begin to regard the exercise of authority as sufficient justification for the decision itself.

The argument becomes circular:

We are the directors. We are entitled to decide. Therefore we have decided.

But that misses the point.

The question in a well-run organisation is not merely whether those in charge can make a decision. It is whether they have exercised that authority transparently, responsibly and with proper regard for the people who will have to live with the consequences.

That distinction matters particularly in a Resident Management Company.

An RMC is not a private fiefdom. Nor is it a personal enterprise belonging to its directors. It is a company with members, a constitution and defined responsibilities.

Directors are entrusted with authority.

They are not handed ownership of the membership.

The illusion that consultation means surrender

One of the more persistent misunderstandings in corporate governance is that consulting members somehow diminishes the authority of directors.

It does not.

Consultation is not necessarily a vote. It does not mean every resident gets a veto. It does not mean directors cannot make difficult decisions.

It means something considerably less threatening:

Ask people what they think before you commit them to the consequences.

That ought not to be controversial.

Yet when major decisions are made without prior consultation, members can reasonably wonder whether their views were ever regarded as relevant.

And once a decision has been made, a subsequent invitation to comment can become little more than theatre.

The timing tells you everything

There is a fundamental difference between asking:

“We are considering this. What do you think?”

and saying:

“This is what we have decided.”

The first is consultation.

The second is notification.

Confusing the two is not merely a semantic error. It changes the entire relationship between the Board and the membership.

If the contract has already been signed, the expenditure committed, the equipment ordered or the new regime announced, members may have been presented with a fait accompli.

They have been given information, perhaps.

But they have not necessarily been given an opportunity to influence the decision.

That is why consultation belongs before commitment.

Major decisions deserve more than a cursory announcement

Nobody seriously expects directors to consult 35 members before replacing a broken light or instructing a contractor to carry out routine maintenance.

That would be absurd.

But major decisions are different.

Where a proposal involves substantial expenditure, a long-term contractual commitment, significant changes to parking arrangements, surveillance, monitoring, privacy, communal areas or established practices, the Board should pause before treating the matter as ordinary administration.

These are precisely the circumstances in which members have a legitimate interest in knowing what is being proposed.

• What will it cost?
• How long will it last?
• Can it be terminated?
• What are the consequences of termination?
• What alternatives were considered?
• What risks have been identified?
• Who benefits?
• Who bears the consequences?
• What information will be collected?
• What changes will residents actually experience?

These are not unreasonable questions.

They are the questions of people whose lives and property are affected by the decisions of the company they belong to.

“The managing agent advised us” is not an answer to everything

There is another institutional danger here: the gradual transfer of responsibility from the people who are accountable to the people who are merely advising them.

Managing agents have their role. They provide professional services, administrative support and practical advice.

But advice is not governance.

A management agent can recommend a course of action. The directors must still consider what the company should do, within the authority granted to them and subject to the company’s constitution and the law.

“The managing agent recommended it” should therefore never be treated as the final answer to a question about a significant corporate decision.

It is merely the beginning of the answer.

• What did the directors consider?
• What alternatives were examined?
• What information did they have?
• What risks were identified?
• What contractual obligations would arise?
• And why was the proposed course considered preferable?

A Board that cannot explain its reasoning invites suspicion where none may have been necessary.

Consultation is not an obstacle to efficient management

There is a tendency in some organisations to regard member involvement as inconvenient.

Questions take time.

Explanations take time.

Alternatives have to be considered.

People may disagree.

All of that is true.

But disagreement is not evidence that consultation has failed.

Sometimes disagreement is precisely what consultation is supposed to uncover.

A member may spot a contractual problem that nobody else noticed.

Another may identify a cheaper solution.

Someone else may understand a practical consequence that looks insignificant on paper but is highly significant in everyday life.

The uncomfortable truth is that the people affected by a decision sometimes know things that the people making it do not.

Good governance makes room for that possibility.

The real test of leadership

There is nothing particularly impressive about making decisions when nobody is allowed to question them.

The more meaningful test is whether those exercising authority are prepared to explain themselves.

A confident Board should be able to say:

This is what we propose.
This is why.
This is what it will cost.
This is the contractual commitment.
These are the alternatives.
These are the risks.
This is what the members told us.
And this is why, having considered all of that, we reached our decision.

That is not weakness.

It is evidence that the decision has survived scrutiny.

Authority has limits — and legitimacy has expectations

There is an important legal distinction here.

Not every decision affecting members necessarily requires their approval. Whether a particular decision requires a vote, consultation, notice or some other procedure depends upon the company’s Articles, applicable legislation, existing contractual arrangements and the nature of the decision itself.

But there is a wider question of governance which should not be reduced to the legal minimum.

Something can be legally permissible without being a particularly good example of corporate governance.

The law establishes boundaries.

Good governance establishes standards.

An RMC should not aspire merely to discover how little information it can provide while remaining technically compliant.

It should aspire to something better.

The membership is not an inconvenience

A company whose members are routinely informed, consulted and treated as participants is likely to enjoy greater confidence than one in which important decisions simply appear as finished products.

And confidence matters.

Because once members begin to believe that decisions are being made without them, every subsequent decision becomes harder to trust.

The problem then becomes larger than the original decision.

It becomes a question of institutional culture.

Are members participants in the governance of their company?

Or are they simply recipients of decisions made elsewhere?

That is a much more important question than any individual proposal.

The NobleCourt.Estate position

The principle is straightforward.

Routine management should be dealt with efficiently.

But when directors contemplate a decision capable of materially affecting the membership as a whole, consultation should be the starting point, not an afterthought.

Tell the members what is proposed.

Give them the material information.

Explain the financial and contractual consequences.

Allow reasonable questions.

Listen to the objections.

Consider the alternatives.

Then make the decision within the company’s legal and constitutional framework.

The Board may ultimately reach exactly the decision it originally intended.

That is perfectly legitimate.

What matters is that members were given a genuine opportunity to be heard before the door closed.

Because there is a profound difference between a Board that says:

“We have the authority to decide.”

and a Board that says:

“We have the authority to decide — and therefore we have a responsibility to listen before we do.”

The first is an exercise of power.

The second is governance.

And for an organisation whose decisions affect an entire membership, that distinction should matter.