Board Members Present: Dorothy Anderson, Peter Bartel, Sandra Bishop, Susie Smith. Commissioner Patrick Lanning was excused.
Others present: Randy Berggren, Jean Meyers, and Krista Hince of the EWEB staff; Chris Cardwell, consultant; and Ruth Atcherson, City of Eugene Minutes Recorder.
President Anderson called the Work Session of the Eugene Water & Electric Board (EWEB) on Board Governance to order at 5:45 p.m.
INTRODUCTION
Randy Berggren, General Manager, said that the team building activities had been completed and that the time has come to reach a collective agreement and decide what sort of path to forge next. He added that he is seeking a facilitator to aid in the process. He requested suggestions for names of facilitators. He noted that Maggie Moore had been a useful facilitator in the past. Commissioner Smith suggested that Gail Goldstein be contacted. Jean Meyers, Human Resources Manager, added that Diane Williams would be another facilitator to contact, but that Ms. Williams did not have experience in governance.
Vice President Bartel asked for clarification as to what the goal of meeting about Board Governance was. President Anderson responded that the specific questions to be addressed were what the role of the Board within the organization is and whether the Board should be involved in micro-managing or policy making. Mr. Berggren suggested that he take some questions from a book entitled Reinventing Your Board. Commissioner Smith said that she would like to have more Board discussion and also would like to examine how the Board members work with staff. She recommended that the Board have more input in the goal-setting of the organization.
Mr. Berggren said that he would work on a "stimulus proposal" and send it in a memorandum to the Board members and that he would find a facilitator for the discussion.
BOARD GOVERNANCE
Mr. Berggren stated that Mr. Cardwell had put together a discussion on three processes, as follows:
He said that he had compiled some suggested goals to keep in mind.
Mr. Cardwell circulated a draft of potential goals. He provided an overview of the proposed time-frame, entitled Draft Steps and Timeline for GM Goal Setting, Performance Review and Compensation Adjustments. He explained that goals for the year would be formulated in the fall of the previous year and finalized by January 1 of each year.
Vice President Bartel questioned the role of the Board, saying that he wondered whether the Board was an "isolated piece" or an integrated part of the utility.
Commissioner Smith said that there had been talk of getting some input from other Executive Management Team (EMT) members. She said that there had been concern that the input from within the organization was not enough. Mr. Cardwell noted that there would be a survey by phone to address the community issue. He added that members of the community would be answering different questions that addressed broader issues and the internal survey would contain questions structured so as to review the management. Commissioner Smith described the survey process that the City uses, noting that the results had provided useful information to her division.
Mr. Cardwell recommended, in response to President Anderson, that the review be based on survey results from only the Board in the first year. He suggested that the survey in the second year could be expanded to include the EMT and a select few and then, in the third year, could include a survey of members of the community as well. Commissioner Smith suggested that Mr. Berggren come up with his own way of collecting internal feedback in the first year. Ms. Meyers agreed, saying that Mr. Berggren would know who to ask for feedback. Mr. Berggren cited a short list of staff people who functioned as second-level managers and would be good sources for feedback on the job performance of the general manager.
Mr. Cardwell added that the Board could look over a summary of feedback provided by Mr. Berggren and conceivably request more input.
Mr. Cardwell summarized by stating that both Board feedback and management feedback would be looked at and utilized as tools to assess the General Manager's job performance. He stressed that the time to assess the job performance of the General Manager and to make a salary increase would most optimally occur in July, so as not to increase a salary in the winter when utility bills are high.
Continuing, Mr. Cardwell gave an overview of the proposed time frame for goal setting as delineated on page two of the paper entitled Draft Steps and Timelines for GM Goal Setting, Performance Review and Compensation Adjustments. Commissioner Bishop supported keeping the process very specific as to which date each step should be completed by.
Mr. Cardwell discussed page three of the aforementioned paper, delineating the process for the Performance Review and for the Compensation portions.
Using a Sample GM Salary Adjustment model, Mr. Cardwell explained the suggested model for determining the salary adjustment of the General Manager. He gave an overview of the Key Components of Recommended GM Compensation Adjustment Approach. Commissioner Smith said that she would need more details from the ERI Geographic Assessor, i.e. the salary differential for Eugene versus national salary levels, to best determine the benchmarks of salary adjustments. Mr. Cardwell noted that both salaries and the cost of living are approximately 3.5 percent higher in the City of Eugene.
Continuing, Mr. Cardwell directed Board members to look over Step 2 of the Compensation Timeline.
Commissioner Anderson noted that the events of September 11, 2001 may affect salaries. Mr. Cardwell added that one result of the catastrophe may be that Medicare reimbursements would be cut.
Mr. Cardwell said that one consideration when making a salary adjustment for the General Manager was what increase was being applied to the salaries for all the employees.
Mr. Cardwell circulated a Sample GM Salary Adjustment and highlighted the salient points.
Commissioner Smith asked what the typical annual revenue of the utility would be. Mr. Berggren responded that the revenue for the year 2001 was projected to be $130 million. Mr. Cardwell noted that in compensation terms, should the revenue double, it would warrant a 10 percent increase in market pay. Vice President Bartel felt that the General Manager's salary adjustment should not be related to revenue resulting from a rate increase. Mr. Cardwell said that there is a balance to be maintained between keeping the salary at a market value and, yet, not overspending the coffers of the public utility.
Mr. Cardwell clarified, at Commissioner Smith's request, that the adjustments to the median base salary to make them relevant to a publicly owned utility were minus 10 percent for the lack of shareholders and minus 15 percent for revenues. Ms. Meyers added that in the previous year the entire base salary levels for top executives according to Towers Perrin had been discounted.
Commissioner Smith noted that it was difficult to quantify how desirable the position of General Manager of EWEB would be to people qualified for the position across the country. Ms. Meyers stated that the system of salary assessment via the attainment of data from multiple sources has been a good one. She noted that the first year she had worked with the Board she had employed a matrix and offered to share it with Board members.
Mr. Cardwell wrapped up the discussion of the process. Ms. Meyers asked if the Board wanted to move forward with it. Commissioner Smith said that she would like to see more "fleshing out" of the salary adjustment process.
The Board took a short break and resumed at 7:52 p.m.
Upon reconvening, President Anderson gave a brief update on the Charter Review Committee. She said that rather than make any recommended changes dealing with EWEB, it proposed formulation of a new committee to include representatives from both the City Council and EWEB Board Members.
Vice President Bartel stated that he had spoken with City Councilor Nancy Nathanson and that it had seemed highly unlikely that the Contributions In Lieu of Tax (CILT) would be approved. President Anderson said that she would call Ms. Nathanson and discuss it with her.
Mr. Berggren circulated Draft Goals for the General Manager Review Process and all present took a few minutes to read the draft. He stated that he had taken input from all Board members and attempted to consolidate the data into this document. He added that he wanted to increase the level of Board involvement in the establishment of priorities and defining of goals. He gave an overview of the goals he had drafted and described the process of writing the draft goals.
Commissioner Smith asked what the "private sector aspect" of the process was. Mr. Berggren responded that in his previous job he had been sponsored and that the process was not an open process. He said that it was a unique challenge to pursue the process with openness.
Vice President Bartel endorsed the use of employee development programs i.e. mentoring employees and providing them with the opportunity for advancement. Commissioner Smith noted that hand-picking people for positions could be considered unfair labor practices. Vice President Bartel restated his position, adding that he supported "growing" your own employees, rather than going to other locations to hire people.
Commissioner Smith agreed that the idea is inherently a good one, but said that she did not feel that it would merit being placed as a goal of the General Manager.
Mr. Berggren said that he wanted to get the measurement of key end results on the table.
Commissioner Smith stated that she needed to look at the financial picture, long-term, mid-term, and short-term, to aid in decisions about management. Mr. Berggren responded that he had a five-year pro forma that suggests what the rates will be. He added that all of the senior managers were working on strategies to resolve the revenue gaps.
President Anderson asked if the problem involved difficulty in setting short-term goals.
Commissioner Smith said that financial strength of the public utility would be founded in solving the revenue gap. She stated that it was not appropriate only to raise rates. She expressed concern that the utility does not have the "luxury" that it once had in contemplating financial issues. Continuing, she recommended that the Board regroup and look at management strategies and that the Board ask Mr. Berggren to put together a package to address the problem. Mr. Berggren responded that he had tried to do this with the document that he had passed to Board members. He said that another dimension of the financial picture was rate competitiveness. He added that he was looking for reduction areas.
Mr. Berggren stated that a challenge in this process was how to state a goal so that one can rate the outcomes and determine the success of the measures taken.
Vice President Bartel said that management talent justifies the money spent on management, that management is creating financial strength.
Mr. Berggren asked Board members how they would like to proceed. Commissioner Smith responded that she needed more time and copies of the key outcomes. Commissioner Bishop asked Mr. Berggren to provide her with a list of the documents she needed to work from. Mr. Berggren said that he would provide Board members with the Goals and Strategies from the May, 2001, Board meeting, the 1997 Board Operating Principles, and the list of key results. He noted that they need work and refinement but that they would provide a good framework to work from.
Ms. Meyers asked when the Board would complete its assessment of the material. Commissioner Smith suggested that the work be completed by the next Board meeting, slated to occur on November 20, 2001.
Commissioner Smith said that she was struggling with what success would look like. She commented that the goals seemed somewhat mundane. She asked what the outcomes should be and how they should be measured. Mr. Berggren responded that the Board has adopted metrics and standards and that there would also be job performance to assess. Commissioner Smith said that she did not want to only measure the success of the General Manager by measuring the success of the business. She added that, should the General Manager see downward trends in the finances, he should make course changes that address them with a program that is already in place. She recommended that the General Manager maintain a job performance measurement system in an ongoing way.
Mr. Cardwell stated that the goal is to reach agreement on key metrics in assessing the job performance of the General Manager, i.e. finding the four or five areas that would be used to assess it.
Vice President Bartel said that one important area was creative cost containment.
Mr. Cardwell reiterated that one goal was for the Board to work with Mr. Berggren to define these things. Vice President Bartel said that the Board needed input from Commissioner Lanning as he was not present.
Ms. Meyers noted that the Board has common ground in the financial goal and the goals of Board Governance and Strategies.
Mr. Berggren encouraged the Board to define what he should be held accountable for as opposed to what is beyond the control of the General Manager.
The meeting was adjourned at 8:50 p.m.
_____________________________________ ______________________________________
Assistant Secretary President