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Topic
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Should Strata Managers be compensated with more than their salary, by being paid a portion of the “Schedule B” charges that the Owners Corporation pays to the strata management company? The strata management agreement has a base charge, and also time based charged, normally listed in “Schedule B” of standard strata management agreements.
But a search on “Seek” for strata managers shows that many are being paid a salary as well as a percentage (eg 45%) of those Schedule B charges. So every time the strata manager engages a contractor or calls a strata committee meeting, which have a charge set out in Schedule B, then almost half of that amount goes into that strata manager’s pocket. Is this an appropriate way of managing a building? By providing an incentive to over service the Schedule B activities that are optional?
How did this practice arise? Surely, it is better to just offer a higher salary, rather than one relying on the strata manager doing more and more of their Schedule B activities? If nothing else, the administration of the billing in the strata manager’s office to keep track of the Schedule B charging and which strata manager was involved must be a massive overhead…
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Schedule B charges can be a legitimate way of compensating your strata manager for the work they do – or they can be a way of milking maximum funds from their clients.
My thinking on this is that A Schedule B charge should reflect work that needed to be done (if only at the OC or SC’s request). Offering incentives to strata managers for Schedule B charges must therefore be encouraging them to do work that’s unnecessary. OK, that’s possibly an oversimplification, but you get the idea. Your strata manager’s income should not depend on you getting work done that you don’t want or need.
Schedule B charges make sense, especially if the base charge is lower than average. Commissions for Schedule B charges are encouraging and rewarding dishonesty.
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Also significant that an owner does not know “who” is charging. For example – in the heading it stipulates different rates for different entities doing the job. So are you paying someone at $250 an hour when it may have been able to be done at $100 an hour?