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La Bourse  /  Volume I  /  Nº I.04  /  Workbook — the Gainshare employee

WORKBOOK — THE LUMINOUS GAINSHARE EMPLOYEE

Chapter I.04 · Reading a Balance Sheet as a Living System

For the person working inside a gainshare arrangement — where a defined share of verified improvement returns to the people who created it. This chapter is about reading accounts. Your version of it is closer to home than you think: the gainshare is computed off numbers that come out of the same accounts, and every weakness in how those accounts see a living stock shows up directly in what you are paid.

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WHY THIS CHAPTER IS ABOUT YOUR MONEY

A gainshare has four parts: a signed baseline, a measure, a share, and a period with a named verifier. Three of the four are read off the accounts.

So if the accounts can see a flow and cannot see a stock — and that is precisely what Chapter I.04 demonstrates — then a gainshare computed off those accounts will reward flows and be blind to stocks. Concretely:

• A colleague who harvests hard this year improves the measure. The stock falls. Nothing in the measure notices.
• A colleague who rebuilds a stock this year worsens the measure, because the cost of rebuilding is an expense and the thing rebuilt is not an asset.
• The second colleague's work shows up in somebody else's gainshare, three years later, and nobody will be able to trace it back.

That is not a complaint and it is not anyone's bad faith. It is the liquidation question doing exactly what it was designed to do, applied to a purpose it was never designed for. And it is fixable inside your own scheme, in one measurement period, without changing anybody's accounting policy. That is what this workbook does.

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PART ONE — DISCOVERY

Days 1–30: find the stock your scheme cannot see

Exercise 1.1 — Classify your own measure (60 minutes)

Write your gainshare measure out as a formula. Then, for every term in it, answer one question: is this a stock or a flow?

  a flow is a quantity per period    — tonnes shipped, hours saved, units made
  a stock is a quantity at a moment  — tonnes standing, skill held, customers on book

Almost every gainshare measure in existence is made entirely of flows. That is not wrong — flows are what a period measures — but it tells you exactly where the scheme is blind, and blindness is where money goes missing in both directions.

Exercise 1.2 — The four questions, applied to your work (90 minutes)

Run the chapter's four questions over the things your team actually maintains.

1. Does it regenerate if left alone?
2. Is the rate under our control?
3. Is there an observable market for it in its present state?
4. Does somebody already count its condition, for another reason?

Candidates that come up again and again, in every industry:

The fourth column is the discovery. In almost every case the count already exists somewhere in the building, taken by somebody for a reason that has nothing to do with pay. You are not asking anyone to build a measurement system. You are asking to read one that exists.

Exercise 1.3 — Find the depletion nobody books (45 minutes)

Ask your team one question, out loud, in a room:

"Where do we make this period's number look better in a way that costs us something later — and what is the something?"

Do not write names down and do not treat it as a confession. People know the answer immediately, because they are the ones doing it, usually under pressure and usually reluctantly. Deferred overhauls. Training postponed. The experienced person put on the urgent job instead of teaching. A customer handled fast rather than handled well.

Each of those is a stock being drawn down to improve a flow, and your scheme is currently paying for it. Naming them is not a criticism of anybody. It is the inventory you need for Part Two.

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PART TWO — THE ARITHMETIC

Days 31–50: compute what the scheme cannot see

Exercise 2.1 — Build the roll-forward for one stock (half a day)

Choose one stock from Exercise 1.2. Four terms, physical units, one period:

  closing = opening + regeneration − draw

Example, filled in, from a real shape of work:

  certified operators, line 3
  opening (1 Jan)                        14 operators
  regeneration (certified in period)      +3
  draw (left, retired, moved)             −5
  closing (31 Dec)                        12 operators

Twelve. The line ran all year, output was fine, the gainshare paid. And the stock that makes the line run fell by two, which appears in no document anywhere. Next year, or the year after, it will appear as overtime, agency cover, or a quality excursion — and it will be recorded as a cost problem rather than as the arrival of a bill that was incurred two years earlier.

Exercise 2.2 — Price the draw (2 hours)

Put one number on the stock you have counted, using replacement cost, which is the most defensible basis available to you and the easiest to verify:

  cost to restore one unit of the stock  ×  the fall in the stock

For the operators: the fully loaded cost of certifying one operator — training hours, assessor time, the productivity of the line during training — times two. If that is £18,000 an operator, the year's undocumented draw was £36,000.

Two disciplines, and they are what make the number survive contact with finance.

Use replacement cost, not value. Replacement cost is a real quotable figure with invoices behind it. Value is an argument.

State what your number does not include. The chapter's own arithmetic does this in every paragraph, and it is the reason those numbers are believed. Yours might exclude the supervisor's time, or the knowledge the leavers took with them. Say so before anyone asks.

Exercise 2.3 — The threshold, so you do not over-claim (30 minutes)

Not everything is worth measuring. Use the chapter's threshold:

  S · g  >  k · C     =>     S  >  k · C / g

If tracking a stock costs meaningful time every month and the improvement it could produce is small, the honest answer is to leave it alone and choose a bigger line. A proposal that names one stock and leaves nine alone is far stronger than one that arrives with a list of ten.

Exercise 2.4 — Check the direction of your own incentive (30 minutes)

Write, in one line each:

• One thing your scheme currently pays you to do that draws a stock down.
• One thing that builds a stock and costs you money in the current period.

If you cannot find both, look harder; every flow-based scheme has them. These two lines are the entire evidence base for your proposal, and they are more persuasive than any amount of argument, because they are specific and they are yours.

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PART THREE — DESIGN

Days 51–70: make the uncounted countable

The proposal is a stock gate, not a new bonus.

Do not ask for a second payment. Ask for one sentence in the scheme:

The gainshare for the period is payable in full where the closing quantity of [named stock], measured in [unit], is not below its opening quantity. Where it is below, the shortfall is restored before the share is computed.

That is a stock gate. It costs the company nothing in a normal year. It removes the reward for quiet depletion in an abnormal one. And it is the same mechanism the chapter gives the treasurer for a lender: a closing-quantity floor in physical units, never in money.

Why in physical units, always. A quantity cannot be revalued by an assumption. The moment a gate is written in money, it can be met or breached by a valuation judgement made by somebody who is not you. Tonnes, head, hectares, certified operators, hours-to-overhaul: these are countable by two people who do not speak to each other, and that is exactly why they are the right unit for anything that touches pay.

What to put in the scheme document. Six rows, and keep it to six.

The verifier row is the one that makes it real. The person who produces the number may not be the person who confirms it. Ask for internal audit, or a named person in another function. Requesting your own oversight is unusual, it is noticed, and it is the fastest way for a proposal from the floor to be taken as seriously as one from finance.

One thing to refuse, in your own interest. If anyone proposes that a revaluation — a money uplift on a stock — feed the gainshare, decline it. It looks generous and it is a trap: the assumptions behind a revaluation are set above your head, they move both ways, and the first downward revision will be applied to your pay. Revaluation informs financing. Physical quantities inform pay. That sentence protects you and it is also simply correct.

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PART FOUR — DESTINY AND DELIGHT

Days 71–90: make it hold

Three conditions, and they are the same three that hold any schedule.

1. The count has a fixed slot. Same week each period, same form, same person. A count that happens when there is time does not happen.
2. The definition is frozen and dated. A trend across a changed definition is not a trend. If the definition must change, publish the old and new side by side for one full period.
3. It is attached to something. The gate is the attachment. A stock count that governs nothing will be quietly dropped in the first busy quarter, whatever anyone says at the launch.

The failure modes, named.

The gate becomes a way to withhold pay. Guard against it in the drafting: the gate should be breached only by a fall in the stock that the team could have prevented, and the scheme should say what happens when the fall is caused by something outside the team's control — a site closure, a cut budget, a decision taken above. Write the exception in when you write the gate, not after the first dispute.

The count becomes a negotiation. This is what the second verifier prevents. It is also why the unit matters so much: an unambiguous unit cannot be negotiated, and an ambiguous one will be.

It stays with one person. Recruit a second owner in the first period and give them the credit for the first clean count. One person is a hobby; two is a practice.

And the good part. The first period the gate is tested and passed, something changes in how the team talks about its own work. The conversation that used to be "we're being stretched" becomes "the closing count is fourteen and we need sixteen" — the same fact, in a form that can be acted on by somebody with a budget. That shift is worth more than the money, and the money is real too.

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KNOW YOUR SCHEME — THE STOCK ADDENDUM

Work through this once and keep the answers beside the checklist from Chapter I.01.

Any blank row is a question worth asking, in writing, calmly, as a request for clarity rather than a challenge. That is how a scheme improves without anyone losing face.

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THE CONVERSATION, SCRIPTED

Number, then story, then philosophy — and the philosophy is optional.

"I've been counting something we don't currently count. Certified operators on line three: fourteen in January, twelve in December, with the certifications and the leavers reconciled. At £18,000 to certify one, that's about £36,000 of capacity that went out of the business this year and doesn't appear anywhere. I'd like to propose one sentence in the scheme — that the closing count isn't below the opening count before the share is computed. It costs nothing in a normal year. It's one page, can I leave it with you?"

Note what it does not contain. No grievance. No comparison to another employer. No argument about fairness in the abstract.

You are arriving with a count, a replacement cost and one sentence of drafting — which is exactly what the treasurer in the parallel workbook is being taught to arrive with. That is not a coincidence. It is the point of the whole volume: the practitioner and the corporation are not operating different economics, only different vocabularies.

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APPRECIATIVE QUESTIONS FOR YOUR TEAM

1. Think of a period when we left this place in better shape than we found it. What did we do, and how would somebody outside the team have known?
2. What do we maintain here that nobody counts — and what unit would we count it in if we started on Monday?
3. When has one of us protected a stock at a cost to our own numbers? What made that possible, and how would we make it easier?
4. If our closing count were on the board every period, what is the first decision that would change?
5. Who else in this business already counts something well, and what could we learn from how they do it?