Loading...
HomeMy WebLinkAboutAgenda Truckee Donner Public Utility District Post Office Box 309 • 11570 Donner Pass Road • Truckee, California 95734 (916) 587-3896 REGULAR MEETING 7:00 P.M. - Monday, June 15, 1987 Tahoe Truckee Unified School District Board Room Donner Pass Road, Truckee A G E N D A 1. Call to order 2. Roll call 3. Discussion and possible appointment relative to the filling of the Board vacancy created by the resignation of Director James Hamilton. 4. Approval of minutes a) May 18 , 1987 b) June 1 , 1987; Board direction 5. Bills for approval 6. Manager's report - discussion and possible direction: a) Water quality b) FmHA indenture conflict c) Status of Beck authorization regarding SPP Co. d) Building Permit fees 7. Public input 8. Correspondence 9. Committee reports-Water Committee UNFINISHED BUSINESS 1. Conflict of interest code - possible direction 2. Review of Manager's goals and objectives 3. Consideration of amendment to Water Rule No. 12 re rates and charges (clarification concerning facilities fees) NEW BUSINESS 1. Consideration of bids on Hirschdale well , review of recommendations; possible award 2. Resolution approving specifications, authorizing the filing of a Notice of Exemption, and issuing a call for bids for paving the Tahoe Donner Substation 3. Consideration of a report from the finance supervisor: a. Capitalization of new building b. REA request for internal control letter c. Investment policy d. FmHA loan repurchase e. Allocation of overhead to electric and water funds 4. New District Complex a) Status of construction, financing b) Consideration of a change order c) Consideration and possible approval of pay requests d) Approval of request for release of funds from Bank of America CLOSED SESSION - Discussion of legal and personnel matters RETURN TO PUBLIC SESSION - Possible direction resulting from closed session ADJOURM ENT C E R T I F I C A T I O N I hereby certify that the foregoing agenda has been posted in the District office and Government Center, provided to the U. S. Post Office and County Library for posting, and mailed to the Directors and interested parties on June 11 , 1987. �� �•�-^ may►-��ry Peter L. Holzmeister, District C erk st/d7.1S r^ 110^ BILLS FOR BOARD APPROVAL June 15, 1987 Total Electric Water General Description CARSON INDUSTRIES INC. 1,235.08 1,235.08 Green fiberglass boxes and lids EASTER DAY SUPPLY 2,106.55 2,106.55 Super cem Seal SAUERS ENGINEERING INC. 6,320.87 6,320.87 Soma Sierra Tank, Iron Blossom, water quality consulting, Brown development, master water plan, Truckee Junction, Truckee Business Park TRUCK PARTS & EQUIPMENT 1,421.00 1,421.00 Parts for unit 12 UNION BANK 30.50 30.50 Mastercard, Peter Holzmeister WAYNE RICHARDSON 2,030.00 2,030.00 Professional services rendered in annual trust report for defined benefit plan, actuarial services Total 13,144.00 4,762.63 6,320.87 2,060.50 �y Truckee Donner Public Utility District eakt Post Office Box 309 • 11570 Donner Pass Road a Truckee, California 95734 (916) 587-3896 May 28, 1987 MEMORANDUM To: Board of Directors From: Peter L. Holzmeister, General Manager Subject: Goals and objectives At the last Board meeting during discussion of performance of the General Manager, I was asked to prepare a draft statement of goals and objectives to guide my efforts during the next year. The following list is meant to be a discussion item. The issues listed are matters that I view as being �^ important , but I would like to hear the views of the Directors. PRIORITY ISSUE DESCRIPTION DATE Highest Power supply January 1988 a) SPPCo contract b) Boca hydroelectric project c) NCPA/CVP Highest Sphere of influence and annexation January 1988 Highest Complete new complex July 1987 Highest Soma Sierra Tank December 1987 High Complee Hirschdale improvements November 1987 High Water quality Unknown High Prosser Lakeview pressure problem March 1988 High Proposition 55 implementation March 1988 High Public relations program October 1987 High Cross connection control project March 1988 High Codification of District policies March 1988 Moderate Resolve Cemetery District problem July 1987 Moderate Implement budget billing February 1988 Moderate Devise a business plan for TDPUD October 1987 Moderate Devise a management information system for Board of Directors December 1987 Moderate Revise personnel practices of PUD September 1987 Moderate Implement automated meter reading January 1988 Moderate Negotiate new MOU September 1987 �-- PLH/sm s+ Business plans 27 Appendix Components of a small company business plan Following are brief descriptions of by the products?Satisfied in what There are creative opporunities The budgets components•some or all of which way and how well? to relate the planning of future capa- may be the interrelated parts of a I bilities to the shorter term analysis The most widely thought of budget business plan.As discussed in the The fit of the company's current and of present capabilities. is the annual budget•following article,there is wide latitude in what potential products in the market either the calendar year or some constitutes a useful business plan segments singled out. other 12-mon;h period of a business for a given individual chief executive The human resource plan cycle.But businesses don't fit neatly and that person's managerial style Analysis and selection among after. into 12-non!h periods.Additional and company. native ways to communicate with To a considerable degree in the budgets may project longer periods and influence customers. near term and to an overwhelming and rolling budcels may reach for- degree in the long lean,the single ward quarier!y.There may be capital Statement of goals Selection of distnbution channels most limiting factor of any orcaniza- budgets to separate developmental and logistical alterna!ives in moving lion,is the people irvolved.One part from epe:atir,g plans.Cash flow This is a statement of what the com- products and services to of the human resource plan may budge!s are par!icvia:!y important. pany has set about to do.It may customers. star!with an assessment cf!he cover: quality or quantity of the existing In general,budgets ir!egra!e and _e Analysis and recomr„endation of resource(people)at all levels in the reduce to dollar amounts:he anfici. The types of business and the busi- pricing structures. organization and a projection of the paled consequences al the other J ness niches the company seeks to skills needed.The plan should pro- components of a business plan. operate in. Oualified statements of market jest how future reeds will be met by Budgets represent a moment of sizes,growth,and expected market giving current enptoyees an oppor. truth in fining other plans together. A summary statement of the means shares. tunity to grow and by seeking new The structure of the budgei(s)may zr by which the company intends to employees. correspond to;ha way in which differentiate itself from other operating responsibilities are businesses—where the company's The sales plan Another part of the plan may assigned.The expectation is that principal strengths lie, address the pervasive problem of each manager will follow the perfor- Much of what is expected from economic and technical consider- manse of one area acainst plan. Numbers and dates for financial and sales follows!rom the marketing ations dominant over people.Con- other measurable objectives. plan,but the writing of orders is not sideration of people should not automatic.The plans for recruiting, come in a poor third.The company The financial plan The responsibilities of the company training,organizing,informing,and whose puns for the handling of toward the several groups whose motivating the sales force of repre- human resources best aligns Financial planning is influenced by interests relate to;he company. sentatives are parts of a business human energies with corporate pur- the performance and opportunities plan• poses enjoys distinct advantages. of the business,by the realities of A statement of any unique manage- You may need a plan to develop the finance market,and by the ment philosophy new altitudes and ways of dealing choices of the chief executive or the The production plan with emproyees that pervade the owners.Financial plans can be rela- Conditional statements of relative whole organization.This approach lively short term:How will next ur priorities among competing The production plan focuses gener- need not be—indeed should not be— year's business be financed?Or objectives. ally on existing facilities.The con- "soft:'Human values can be can be quite long term:What steps tent of the plan recognizes existing rellected in a plan that is"tough- should be taken in anticipation of Some recognition of possible loose capacities and projected near-term minded"(but not harsh). the passage of the company to new ends,of unresolved difficulties, capacities,short-term changes to � P g owners at a known or an unknown uncertainties,and planned improve efficiency,inventories, future time?The goal is to get out of flexibi!ities. backlog levels,throughput times. The organization plan a reactive financial mode into an quality objectives,production stars- anticipatory mode. Bards,and production control Some parts of the human resource The marketing plan requirements. plan just discussed may be broadly Whereas budgets have greater(but shared,but some parts are conli- by no means exclusive)focus on This is an analysis of the company's dential.The fatter are kept"under anticipated profit and loss state- present position and opportunities plans for new product design, the blotter."The organization plan ments,the financial plan has in its marketplaces.It covers the engineering,R&D,technological generally benefits from wider greater(but by no nears exclusive) following: Improvements,and investment in involvement. focus on future balance sheets new facilities (which,of course,are derivatives of The ongoing trends and opportuni- The organization chart(if one is profit and loss statements). ties in primary and submarkets to Here the time frame stretches used)Can show only a part of orean. which the company now sells and beyond the production plan,but the izat)onal planning.The starting points may seek to sell.These trends and demarcation line is far from exact. for organizational planning are sev- The control plan opportunities concern market seg- Generally the production plan cov- era[questions:What is our business ments,customers'needs•buying ers present capabilities and prod• trying to accomplish?Recognizing As described earlier,budgets are a patterns•technology regulation, ucts,and the new product plan the unique capabilities of the indi- part of the control system.The key demographics,life-style,and other covers future capabilities and prod• viduals who make up a smaller com• is Timely accurate repor!s of actual n` forces. ucts.Central to this plan are pany,how can the tasks and performance io responsible individ- changes related to the product and responsibilities to achieve that pur• uals.Other Paris of control systems The Position of competitors,both to the process that generates the pose be subdivided to give focus to cover inventory management,cost direct and indirect. product.It may include such things individual responsibilities?How can accounting systems,and statistics i as:definition of future in-house the various responsibilities be on such things as rate of incoming .The impact of change in other mar- technical or service capabilities, described so that people know what orders•the operating and downtime kets on the company's products and research and development plans, is expected of them?(Or stated of facilities,and quality control. markets. steps for monitoring external more positively.so that people are Plans to be controlled which are Anal technology and process changes, encouraged to make meaningful covered only partly or not at all by Analysis of the function and appfca- specifications for new systems and contributions?)What should be the budgets and operating stanvics lion characteristics of the compa. buildings•and location studies. structure of leadershi of mctiva• 'i nY s products and of its competing Typically, P P. maybe approached by some,grin p g ypicail ,these tans are r.ol Bevel• Uon,of communication,and of of management by objectives.ACe• products.From the buyer's view- oped de novo each year but are accounfabih!y which will best knit quate control systems may be the Point,what are the reeds satisfied approached on a project basis. people together to achieve the most overlooked part of smaller anizations purpose? or ' ... 4 p pose. businesses. 77 r From the Boardroom 3 Current, useful, constructive, and ' pertinent thoughts to serve the interests of both managements and directors— Edited by Myles L. Mace In this issue, "From the Boardroom" lantern show." He then added that"it is devoted to the subject of how is almost impossible to read and under- management communicates relevant stand the figures, to listen to the verbal financial and operating information commentary, and to develop any basis to its board of directors. Many for analyzing the operating results of variations exist—from "magic the company. From these presenta- lantern shows" to "blizzards of tions, the only figures I can under- paper"—and there is no single stand are the earnings per share for approach to best suit each the period and their relationship to company. However, one interesting previous periods." and useful concept is "the president's report," two versions At the other extreme, some manage- of which are presented in this Management ments prepare and mail to directors article. The first, contributed by prior to meetings enormous packages Robert G. Marbut, is followed with information of detailed financial information, com- a commentary on it by Edward H. pany and division P&L statements,and Harte, and then by a second version, systems balance sheets. In addition, capital ap- contributed by Robert E. Elberson. propriation requests to be acted on are for described in complete detail, some- Mr. Marbut is president and CEO directors times in 8o or more pages. To help of Harte-Hanks Newspapers, Inc, the director find his way through the of San Antonio, Texas. Mr. Harte blizzard of paper, a tab index identifies is publisher of The Corpus Christi the section of the enclosed material Caller-Times and a director of relevant to each item on the agenda. Harte-Hanks Newspapers. Mr. Elberson is president and Between these two extremes are many CEO of Hanes Corporation. other methods and variations to assist directors in understanding the finan- Managements of large, medium-size, cial performances and positions of and small companies share a common their companies. problem—communicating appropriate financial and operating data to their There is no single best way for all board members so that they can ful- managements and their directors.Man- fill their Iegal responsibilities as cor- agement information systems for di- porate directors. rectors need to be tailored to accom- modate the particular and unique re- Corporate practice varies widely. In quirements of each company. For each some companies, nothing is prepared company, there are critical factors and in written form.and sent to directors indicators that provide useful meas- prior to meetings. At some board ures of performance. meetings, the president or the chief financial officer projects slides on a An interesting and useful model screen in a slightly darkened room and adopted by an increasing number of focuses a flashlight pointer at signifi- companies is referred to as "the presi- cant numbers. One director described dent's report." Here again, there are this method to me as the "magic many variations, but I shall limit the ,_ `' - Reprinted from HBR November-December 197S,Number 756o5 Copyright D 1975 by the President and Fellows of Harvard College;all rights reserved 4r- 78 Boards of Directors r discussion to the two versions with doubled revenues, and had listed its wide deviations from plan. Finally, Ave; which I am most familiar. securities on the New York Stock when appropriate, this segment con- class_ Exchange. It was also during this tains quarterly and six-month analyses 15`�'c Accordingly, for the purpose of this 24-month period that we introduced that are similar in scope to the month- prof. feature, I have organized the material an all-encompassing planning/manage- ly analysis. sifiel into four parts: (1) a detailed descrip- ment/control system (in an environ- vier+ tion of the president's report used by ment where planning had been vir- An excerpt from a recent report will volu Robert G. Marbut of Harte-Hanks tually unknown), implemented roo give the flavor of this section: Newspapers, Inc.; (2) a commentary capital projects, introduced dozens of on Marbut's management information market research and product develop- "Operating revenue came back strong- Cur. system for directors by Edward H. ment programs, and brought into the er in June, primarily because volumes but Harte,a director of Harte-Hanks News- company 5o new faces in key roles. were closer to budget. May had caused in r papers; (3) a description of another concern because of the shortfall in "tel version of the president's report by Thus, in only two years, Harte-Hanks linage from budget and compared with will Robert E. Elberson of Hanes Corpora- moved from a family-held private May 1974; but, as -,,•e suspected, to- that tion; and (4) my own commentary on company operating solely in Texas to ward the middle of June the trend mor both versions of the president's report a nationwide communications enter- began to reverse itself. Our operating brit' based on my experience as director of prise listed on the NYSE and under- system worked well, and we are still ate both Harte-Hanks Newspapers and went more dramatic change than the continuing to track linage on a weekly Hanes. company had ever experienced. The basis and analyze it in greater detail Rec role of the board became more crucial than in the past to ensure that things met during this period, as did the need are continuing to go in the right direc- prir The Harte-Hanks AUS for the board to be better informed. tion generally. This tracking had al- pro; ready indicated in July a more opti- virc ,*`-is San Antonio-based company was It was in this environment that my mistic linage expectation at flash re- fin. lanized in 1927 by Houston Harte first president's report was launched. port time than actually occurred mis and Bernard Hanks to operate daily It was a matter of necessity. There through the third week in the month. Nre, newspapers in San Angelo and Abilene, simply were too many things going on This perhaps indicates that July and drip Texas.Robert G.Marbut became presi- for us to continue with the old hit- early August may be somewhat soft- stra dent and CEO early in 1970, and today or-miss way of communicating. Intro- er than our publishers had anticipat- the company publishes 21 daily and ducing the president's report proved ed, but generally much better than Co: 25 weekly newspapers in 23 markets to be one of the most useful things May. sha across the country. In addition, the that we did. It is not merely a rehash she company owns network-affiliated tele- or a summary of other management "Retail linage (including preprints) to vision stations in San Antonio, Texas reports; rather, it is a communication was much more favorable than in May. rep and Jacksonville, Florida, as well as from the CEO to his board. It tells While it was still 3.65o under last to the largest direct mail advertising pub- the story behind the results, articulates year in June, it had approached 15% thi lication in the United States—The the problems and opportunities that off 1974 for May. Classified improved nia. Pennysavers, published in southern he sees, and briefs the board on what only slightly (13.6% under last year of California. is going on and why. compared with r4.8%, in May), and pre national got better (9.9% under last off In the balance of this section, Marbut What specifically does any president's year compared with 20.7% in May). ite: takes over and gives his version of the report include? I selected the format Flash reports had projected linage to president's report. that I use because it is a simple, yet be down only about r.55o under 1974, Fo: effective, way to cover the following but at the current rate it looks as if 1111 Marbut: By way of background, the subjects every month: consolidated it will dip about 5.6% below 1974 po monthly president's report (as we call performance, current problems,corpor- (compared with about 6% in June and ace it at Harte-Hanks Newspapers) was in- ate activities, the environment, and r5c'o in May). We still believe, how- cet troduced in February 1973. There divisional operations. ever, that margin will be within r% rec could not have been a more critical to 3% of budget for July and that earn- Iml time for improving communications Consolidated performance:This part is ings per share will approach budget Jul ry;jth our board. used for analysis of (1) key elements (at least 20% ahead of last year). ev of revenue and expense on a consoli- prr, r,arte-Hanks was in the midst of about dated basis; (2) critical volumes, such "Classified is still a problem in that tip as much change as a company can as circulation and advertising linage; total revenues exceeded last year by an stand. During the prior 24 months, and (3) important indicators of produc- only 4.8% (rr.6% under budget). Part co the company had been completely re- tivity. of the problem has to be the combina- tip organized, had had its initial public tion of aggressive price increases in ac offering and another one 6 months This portion is also used to highlight the face of a very slow recovery on the di later, had made io acquisitions that any profit or cost centers that have part of automobiles and real estate. in Directors'MIS 79 Average rate was up 23.4% in the In a nutshell, the"corporate activities" job of keeping expenses in line and classified area and linage was down section is used for giving board mem- at the same time continuing his expan- 15%. On the other hand, the percent bers a broad perspective and the sion program in a very dismal local profit contribution per dollar of clas- "flavor" of corporatewide goings-on. economy. Circulation goals were not sified revenue is up significantly in reached, but circulation' gains were view of the change in mix from lower The environment: This portion usual- still very impressive-1,300 on the volumes to higher average rates." ly includes comments on (1) environ- daily side and 2,000 for Sunday over mental factors affecting Harte-Hanks the past year. A combination of de- Newspapers or our industry, (2) a dis- pressed economic conditions, plus his Current problems: This is the shortest cussion of critical raw materials, and recent price increases (our first and but perhaps the most important section (3) feedback in the area of new ac- only Zoo daily), accounted for most of in my report. It is the place where I quisition activity. the problem, for the product still is "tell it all," the place where I share very much accepted in the market. with the board the major problems In an era of price controls, double- that we are facing during the current digit inflation, severe recession, and "Perry says that they have just passed month—problems important enough to all the rest, this part has become crit- Yakima in average daily sales, and bring to their attention. This is where ically important as a means of getting their next goal is to beat Yakima on we all get in the same boat together. the board to understand our own per- Sunday. He is beefing up his Sunday spective and concerns in areas that we product with a quality country-living Recent reports have included com- cannot control but that most certainly type magazine edited by the Pittsfield, ments on such problems as the news- affect us. Massachusetts newspaper staff once a print shortage (and our contingency month. Also joining in the experiment programs to operate in such an en- A recent report included comments on are the Ottaway Danbury News-Times. vironment), the classified advertising the interest rates that we were get- If this works, they will expand the linage shortfall from plan (and an ad- ting on CDs, the availability and price concept. The first edition is set for mission that part of the problem is of newsprint, the general economic July 27. weak management), and organizing health of our 23 markets, activity in drives by labor unions (and our counter Harte-Hanks stock, and reports on two "The New England economy continues strategies). acquisition projects. to be lousy. July should be on budget, however. (Inserts will make this pos- Corporate activities: Here is where we Divisional operations: This coverage sible.) There is one store opening this share a number of odds and ends that is the longest segment of the report. year in Framingham, Bradlee's, which should be of interest to the board.Prior We have 23 operating divisions and, will use inserts exclusively after an- to implementation of the president's without fail, we comment on each of nouncement advertising.This does not report, these items hardly ever came them every month. Most of our divi- make up for the stores that have closed. to the board's attention. Included in sions are organized under a group August should come in on budget." this section are progress reports on president (i.e., our two television sta- major corporate projects, a summary tions comprise the TV group), so the of how I spent my time during the report is structured this way. At first blush, I am sure the foregoing previous month, reports on corporate may seem like a lot of unnecessary office activities, and other corporate Generally, there will be a comment on work that generates too much trivial items of general interest. the major variances for the previous material. I must admit that that was month and their causes. Also, each my major concern at the outset. I was For example, a recent report listed our divisional report contains summaries afraid that I had committed myself to major institutional shareholders; re- of critical events inside the company an unnecessary form of purgatory. ported on the status of affirmative as well as outside in the markets. For action plans and the absorption of re- example, the July 1975 report included In reality, my fears were unfounded. cent acquisitions; gave a summary of the following comments about the The reason that we have not had a recent formal in-company develop- South Middlesex News, our daily problem—that is, why the president's ment meetings and the outcome of the newspaper serving the Boston subur- report has not become a millstone—is July planning committee meetings; ban area: that we have a simple but reliable sys- evaluated the status of the planning tem for getting the data together with- process for the 1976 cycle, the effec- "Framingham's revenue was right on out a lot of fuss. tiveness of our national sales office, target in June, with commercial print- and the progress in our new corporate ing and paid inserts helping to offset I use the following six source materials computer center; summarized collet- shortfalls in retail, classified, and cir- for preparing my report: tive bargaining efforts and my general culation revenue. Managed expenses activities for the month; and finally, were kept S�'o under budget, pushing 1 discussed our relationship with several margin 24/a ahead of last year—r i% Computerized consolidated and divi- industry associations. year-to-date. Bill Perry has done a good sional monthly operating reports (cov- n 80 Boards of Directors eying financials, volume, and produc- tions from plan but also to give a bet- written word, there is no longer the sh tivity).. ter understanding of what our corpor- temptation to skip over things or to pL 2 ate staff is actually doing. accept shallow explanations. There is oL A variance analysis of the most recent absolutely no doubt in my mind that be month's operating reports. The two other sources used for the I have become a more effective chief or 3 president's report are my odds-and- executive officer as a result of this ar Monthly reports from each of the 23 ends file and my personal calendar. discipline. division heads (most of which come Whenever something comes up that I p( through a group president). think would be of interest to our But this has not been the only benefit nl 4 board, I make a note of it and put it to me. By going into such detail in the pi Monthly reports from the senior direc- in a manila folder in my briefcase. same manner on a regular basis, I have 1e tors of our corporate staff's functional I pull out this file at the time I dictate found that I am better prepared for 11 areas (financial, personnel, marketing, my report, and I also scan my personal meaningful plant visits, operations re- it and planning/systems). calendar at the time of dictation for view meetings,planning meetings,and e; 5 a review of my own major activities sessions with financial analysts. ti Odds and ends that I collect during during the previous month. a. the month. By being better informed, I have also 0 6 With all these inputs, the job of de- saved time. There is no longer the My personal calendar. veloping the president's report is really need for nearly so much last-minute not difficult at all. While I have tried "boiling up." Also, we have reduced a number of approaches, the most ef- the number of board meetings that Our operating reports tell numerically fective has proved to be one in which would have been required had we not E what is going on. These are relatively I dictate the entire report at one sitting. initiated the president's report. And I straightforward but, without inter- This usually occurs between the 26th spend much less time on the telephone r pretation, would be of little value. So and the 29th of the month. In all, it Nvith individual board members who t �7e put out two interpretive reports takes about four hours to review the want background on particular ques- c sat help to tell the whole story. documents and to dictate the report— tions. The same is true with others t four of the most valuable hours of who need to know what is going on, 1 The first is the variance analysis, the month to me. since we share the report with our which is simply an attempt by our fi- corporate counsel and our bankers. nancial services department to iden- From the start, the primary purpose of 1 tify the major budget variances and the president's report has been to keep And many of the benefits that have } their causes. the board members better informed— accrued to me have helped corporate and it certainly has done this. They and divisional management as well. The second is the division heads' oper- are now aware of virtually every oc- For example, the report is a useful ations report,which is due in my office currence of any consequence that con- vehicle for placing the names of dozens by the 25th of each month. These terns the company. The detail of the of divisional management personnel operating results include comments on report provides perspective and builds before the board every month. objectives reached, objectives missed continuity. This information has led (and why), current problems, items of to better board decisions and to a much A final benefit of the report is its im- interest (in the operation and in the more complete understanding of the portance as a future reference. Every market), how things are going in the programs which have been recom- few months, I go over previous reports current month,and the outlook for the mended. in order to gain better perspective and following month. In essence, these re- insight into a particular problem or ports are each division head's presi- In addition, other significant benefits— a division's performance. This can be dent's report to me. This is where he to me as chief executive officer—have a sobering experience, for I sometimes gives the story behind his numbers, emerged. find how little I have understood where he keeps me informed on gen- about a situation or how we have eral happenings in his division, and Perhaps the most important unforeseen waited too long to act to correct a also where he can get things off his plus has been the personal discipline major deviation from plan. chest. of having to look at every aspect of our company's operations every month In analyzing why the president's re- 1-functional officers in the corporate —from top to bottom, inside and out- port has become effective for Harte- adquarters also prepare monthly re- side, in the short term and the long Hanks Newspapers, I have concluded ports, which include comments on term. Despite my best intentions, it that the most fundamental element of performance against planned objec- was always too easy to shortcut this success (other than commitment from tees and feedback on significant un- vital CEO function. Since I know that the CEO) is a comprehensive system planned activities. The purpose is not I must reduce my understanding of to bring all the right source materials only to provide explanation of devia- what has happened and why to the together at the right time. The system Directors'MIS SI 11e should interface with the normal out- cause, we worried about our capacity changing, is one of the most helpful to puts from the company's MIS. With- to control the changes swirling about things to come out of Harte-Hanks is out a comprehensive system, it would us. Subsequently, our young managers board meetings. iat be almost impossible to generate an also acknowledged that they occasion- V ief ongoing president's report that has ally slept poorly. tis any substantive value. The Hanes MIS The building of mutual confidence and Perhaps it took the pressure of trau-' comfortable working relations takes Robert E. Elberson, president and CEO fit matic change to lead us to embrace the time. In the case of Harte-Hanks, that of the Hanes Corporation, also uses a he president's report idea fully. Regard- time was telescoped remarkably by the monthly report to communicate cor- -ve less of what precipitated it, this report free flow of information from our porate operational results, status, and for has proved to be one of the most use- president to the board. problems to members of the board. re- ful steps we have taken to improve the Hanes consists of five autonomous, nd effectiveness of our board and my rela- "Informal" is the best way to char- profit-and-loss measurable operating tionship with it. And its value to me acterize our former information sys- units:Hanes Hosiery,Knitwear,L'Eggs, as CEO has been beyond my most tem as a family-held company. We Bali, and Pine State. Each unit is lso optimistic expectations. had all the basic facts,such as monthly headed by a president and several _$e statements, the volume of advertising, functional vice presidents. ute payroll, consumption of newsprint, zed Comments on Marbut's MIS and so on.But reports were not consol- Here, Elberson describes how basic hat idated into a companywide statement, data are collected for the preparation aot Edward H. Harte is publisher of The and almost no analysis of the informa- of the president's letter. d I Corpus Christi Caller-Tinres and a di- tion was made. The old system was one rector of Harte-Hanks Newspapers. In entirely deficient in planning and in EIberson: Several years ago, we in- :ho this section, he offers a commentary budgeting. stituted a management assistance pro- les- on the management information sys- gram, which is designed to improve iers tem for directors that was developed Like Marbut, we have found that the control of all operations. Every depart- on, by Marbut. single most useful element of our in- ment in each of the five operating our formation system today is the monthly units has key indicators that can be Harte: The experience of the Harte- president's report. The rS to 25 single- quantified and that reflect measures of Hanks newspapers, as noted by Mar- spaced pages of highly condensed prose its performance. For example, produc- ave but, has been one of rapid transition— deal with all divisions of the company, tion control has measures of late Be- rate from family-held to public company, with the communications business liveries (number and length of time), :ell. from regional chain to national, and generally, with the national business cost of machine changes, inventory- chtl from owner-managed to professionally climate, and occasionally with that in-process, and so forth—indicators :ens managed. great unknown—the future. Although that are operational measures and not znel Marbut observed that his report could exclusively financial. For owner-managers,such changes can be "skimmed," my own experience is present difficult adjustments, not only that it has to be read twice—with the Some key indicators are tracked daily, im- in the ego department but also in door closed. others weekly, and still others month- very individual and corporate responsibil- ly. At the end of each accounting peri- ,orts ity. For several months, changes came The concrete advantages of the presi- od (four weeks), there is a full-scale and to Harte-Hanks Newspapers more dent's report are severalfold: review of results. The first step is that i or rapidly than we directors felt that we the vice president of manufacturing, a be could ride herd on. ❑ say of Hanes Hosiery, has a group 'rocs Time and the free flow of information meeting of his supervisors. Each super- tood We found ourselves in the unaccus- have built up a high degree of con- visor reports on his department's per- have tomed position of relying on a profes- fidence between board members and formance (as measured by his key in- ct a sional management team younger than management. dicators) against (a) his operating plan ourselves, trained in different tech- ❑ (budget),and(b) what he said he would niques, and subscribing to a different The board has been freed from the do last month. He attempts to explain s re- philosophy. There were also accom- need for frequent meetings. any significant deviations to both his arte- modations to be made on the personal ❑ peers and his superior. This process is *dcd,,,—, level, as we had not known our new Board meetings can now, more often repeated at a monthly meeting of the nt o. managers either long or well. than in the past, be devoted to some functional vice presidents with their from of the important issues a board should operating unit president. Then, the stern As a result, there were numerous sleep- face, such as our stance on the current corporate vice president of finance and _rials less nights in the first days of our economic climate. Gaining a consen- I hold an all-day meeting—referred to stem public exposure. Not always without sus on this issue, which is constantly internally as our monthly "barrel" 9� •8Z Boards of Directors session—with each of the presidents of Wrap-up commentary Also,the reports make our board meet- the five operating units. It is from this ings more meaningful in that each di- upward distillation process that the As a director of Harte-Hanks News- rector can concentrate on major issues vice president of finance and I draw papers and of Hanes, I have received and come to the meetings well briefed. the subject matter for the monthly these two versions of the president's To illustrate, the June 1975 board president's letter to our directors. report for many years and I have found meeting of the Hanes Corporation fo- them extraordinarily useful. The let- cused on two major items on a short I think that this method of keeping ters pull together an analysis of the agenda—the Mid-Year Plan for the bal- directors aware of what is going on critical factors that determine success ante of 1975 and the 1976-1978 Long- has a number of values: for each enterprise, and they provide Range Plan. The consideration of the analytical shortcuts that save direc- long-range plan was particularly im- ❑ tors'time. (Tabulated computer reports portant in that Elberson, his staff, and Reviewing actual performance against on each Harte-Hanks newspaper, for board members discussed it at length plan and Iatest estimate and getting all example, are available, but I find it and agreed on a strategic plan involy- this done in 3o days has been good difficult to interpret such data in their ing new directions and essentially discipline—not only for me but for the raw and voluminous form.) Marbut committing the supporting capital. rest of the organization. and Elberson both tell the story behind ❑ the numbers and thereby put meat on As a member of the compensation In order to distill information for the the numerical bones. committee of both Harte-Hanks and letter, I must sort out the most im- Hanes, I have some awareness of the portant from the less important. This By filing the monthly reports, I ac- performance of the key people whose procedure and putting it down in black cumulate a useful reference that can names bubble up in the subjective re- and white force me to step back and be used later. I am able to follow a views of their operations Thus I am look at the business as a complete problem or a project on an ongoing able to correlate the performance of er.l"— basis with better, substantive conti- those individuals with recommenda- ❑ nuity. Also, as I prepare for a board tions for salary changes and bonuses. In my opinion, verbal presentations meeting, I reread the past three or can be shaded and slanted more than four reports to remind myself of cur- What is important is that I am pro- written ones. Also, past letters can be rent background information, which vided with information useful for a valuable reference for the discerning is helpful to have in discussions at measuring the president's performance. director. For example, a past letter board meetings. One letter clearly does not give a total might contain a glowing report on picture, but the accumulated effect of some activity that has since gone The Harte-Hanks and the Hanes reports month after month over a sour and has not recently been men- boards meet six times a year, and the year's time permits the director to val- tioned. monthly presidents' reports enable our idate conclusions about executive per- directors to have current information formance. The letter is an efficient method of without having monthly meetings. imparting information. People can read The president's report idea is being facts faster than they can speak about used increasingly by companies with them. And, most important, the letter sales of over $r billion as well as by enables us to devote most of our board companies with sales of under $5o meeting time to a give-and-take dis- million. I believe managements and cussion of the key issues involved in directors will find the concept useful running the business rather than to in their respective organizations. reporting facts about what has hap- pened since the last meeting. With the knowledge that he has made a disciplined effort to keep his direc- tors informed, the CEO can sleep a little better. Also, he has a reasonable rigjr^ expect them to be informed wh ney come to a meeting.