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Is there a specific format I should follow? Just plain text written in a spiral notebook? Electronic journal? Please give an example so I don't have to re-invent the wheel.
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About this line: "[Notes] can give you a heads-up if one of your team is having some problem that may affect performance, and give you a chance to intervene before it becomes critical."

I had a team member going through a divorce. His work suffered a great deal and I could understand why. But how could I have intervened? What exactly would that look like?
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I think, atleast to me, the purpose would be to be more informed about the people around you. It does not mean that you have to intervene if you are not comfortable in that situation. By just being informed will give you a better sense about your projects and will further help manage them.
I would start with a simple table or spreadsheet that has the following information: date, name of the person, description of the incident and any cause & effects. You could also include additional remarks or your point of views
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I keep a catch all log of all meetings especially during the early development phase because regardless of how many people sign off on a project you always need to "remind" remind them of something they "forgot".
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