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La Bourse  /  Volume III  /  Nº III.01  /  Workbook — the Gainshare employee

WORKBOOK — THE LUMINOUS GAINSHARE EMPLOYEE

Chapter III.01 · What a Currency Is Made Of

For the person working inside a gainshare arrangement — where a defined share of verified improvement returns to the people who created it. A gainshare is a currency. It has a unit of account, a settlement event and a store of value, and if you cannot name all three in yours, one of them is being decided for you.

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YOUR GAINSHARE IS A CURRENCY

Read the chapter's four functions against your own scheme and they map exactly.

Most schemes are specified carefully on the first and the third, and not at all on the fourth. That gap is where the value goes, and it goes quietly, which is exactly the chapter's point about money in general.

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PART ONE — DISCOVERY

Days 1–30: read your own instrument

Exercise 1.1 — The five questions (two hours, in writing)

Take your scheme document and answer these. Write the answers down; the writing is what exposes the gaps.

1. What is the unit of account? Gross margin, units produced, energy per tonne, waste avoided, hours recovered, defects per thousand. Write the formula, not the name.
2. Who publishes it, and how often? A measure computed by one person once a year is a different instrument from one published monthly by a system.
3. What is the baseline, and what date was it set? And — the question that decides whether the scheme is worth being in — does it reset?
4. When is settlement? The day the gain is verified, or the day it is paid? The gap between those two dates is a period in which you hold a claim and somebody else holds the cash.
5. In what unit is the unpaid balance held? If the answer is "pounds, and nobody thought about it", you have found this workbook's finding.

Exercise 1.2 — Price the settlement gap (45 minutes)

Here is a scheme of ordinary size:

  unit payroll                             GBP 4,200,000
  verified annual gain                     GBP   310,000
  share returning to people                         30 %
  --------------------------------------------------------
  pool  310,000 x 0.30                     GBP    93,000
  pool as a share of payroll                      2.21 %

Now suppose the gain is verified in one year and paid in the next, and the pool is held in nominal pounds while an index drifts at 3.10 per cent:

  pool, indexed one year at 3.10%          GBP    95,883
  value lost to an unindexed pool          GBP     2,883

£2,883 a year, removed from the people who created the gain, by an accounting default nobody chose. It is 3.1 per cent of the pool and it recurs every year. Over ten years, on a pool of this size, it is roughly a third of one year's distribution.

This is the chapter's unit-of-account argument at the scale of your payslip, and it is the single most useful thing in this workbook: ask for the pool to be indexed from verification to settlement. It costs the firm nothing it has not already earned on the money, it is trivially defensible, and almost nobody asks.

Exercise 1.3 — Find the uncounted gain (one week, with your team)

The chapter's Discovery move, on the floor. You can see things the scheme cannot, because the scheme measures what somebody thought to measure in the year it was written.

Ask your team, out loud: what do we do here that saves real money and does not appear in the measure? Take notes on the conditions, not the outcomes.

You are looking for one thing where a gain is visible to you and invisible to the formula, because an uncounted gain is an unshared gain — and making it countable is the highest-leverage move available to anyone inside a gainshare.

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PART TWO — THE ARITHMETIC

Days 31–60: compute before you ask

Exercise 2.1 — Rebuild your own pool from the raw data (three hours)

Do not accept a stated pool. Rebuild it: baseline, current, difference, share, deductions. Then compare with what was declared.

Two things happen. Either the numbers agree, in which case you now have something worth more than the money — standing, because you are the person who checked — or they do not, and you have a question that is specific enough to be answered.

Ask it in the form the chapter uses: here is my working, here is where it diverges, which input am I missing? That is a question anybody can answer, and it is very different in a room from an assertion that the number is wrong.

Exercise 2.2 — The ratchet arithmetic (90 minutes)

If your baseline resets to the improved level each period, your effort compounds against you rather than for you. That is the same structure as demurrage, and the chapter has already priced it.

  demurrage  1 %/month  ->  1.01^12 - 1  =  12.6825 %/yr
  over 20 years, the annuity factor            7.3615
  penalty factor on a 20-year fund             2.717 x

Run the analogous number on your scheme: if the baseline ratchets by the full gain, the second year's identical effort earns zero, and the scheme's value to you is one year's pool, not twenty. State that in a sentence with the arithmetic attached, and it is very hard to argue with.

A well-designed scheme either holds the baseline fixed for a stated term — three to five years is usual — or ratchets on a published, gradual schedule that everyone can see coming. Find out which yours does. If nobody can tell you, that is the finding, and it is the most valuable thing you will produce this month.

Exercise 2.3 — What the firm is actually saving (60 minutes)

The chapter shows that a bank's advance creates money at 27.21× its capital on a residential mortgage, and 11.20× on an SME advance at an 85 per cent risk weight. Your gain does something similar and smaller: it improves a stock the firm can then finance against.

If your verified gain of £310,000 a year supports a covenant on a regenerating stock, the firm's indexed note on that stock saves it 1.33 points on £5,000,000 — £66,513 a year. That is a second-order value your gain created and your scheme does not measure. Naming it is not a demand. It is a fact that belongs in the scheme's next review, and it is the strongest argument available for widening the measure.

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PART THREE — DESIGN

Days 61–90: what to ask for, and how

The four asks, in ascending order of difficulty.

1. Index the pool from verification to settlement. £2,883 a year on a £93,000 pool. Costless to the firm, immediately defensible, and it establishes the principle that the unit of account in the scheme is a decision rather than a default. Ask for this first. It almost always lands.

2. Publish the measure monthly. Not the pool — the measure. A number published monthly is a number people can act on; a number published annually is a lottery result. This costs a report, once, and it is the change that most reliably raises the gain itself.

3. Fix or publish the baseline schedule. Either a stated term, or a ratchet everyone can see coming. This is a governance ask and it goes through the scheme review, not through your manager.

4. Widen the measure to the uncounted gain from Exercise 1.3. The hardest, because it requires somebody to agree a new baseline. Bring the measurement method with you, already drafted. A measure arriving with its own method is a different proposition from a measure arriving as a request.

Exercise 3.1 — Write the one page (two hours)

One page, for one person, with one number. The same discipline the chapter applies to a board paper.

• The baseline. What was true before, with its date.
• The intervention. What changed, in one sentence.
• The result. The verified number, with the working reproducible.
• The ask. One of the four above, priced.
• What it implies at ten times the size. One line.

Give it to whoever controls the scheme's next review. Not the team meeting, not the newsletter, not everybody.

Exercise 3.2 — The ledger you keep yourself (ongoing, ten minutes a week)

Keep your own record: the measure each period, the pool, the payment date, the gap between verification and settlement, and one line on anything that changed in the method.

Nobody else keeps this. In two years it is the only continuous record of the scheme's behaviour in existence, and the person holding it is the person the next review listens to. That is not politics; it is the Yap lesson exactly — the record is the thing, and whoever keeps the record holds something real.

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PART FOUR — THE TERM OF PRACTICE

Twelve weeks, forty minutes a week

Exercise 4.1 — The colleague test (30 minutes)

Explain your scheme's measure to a colleague who is in it and has never read the document. If they cannot restate it back to you in one sentence, the measure is not legible, and an illegible measure cannot be trusted by the people it is supposed to motivate — which is a design fault rather than a communication one.

Then do the reverse: ask them what they think the measure is. The gap between the document and the general belief is the scheme's real operating state, and writing that gap down in one line is a finding worth taking to the review.

Exercise 4.2 — The counterfactual line (45 minutes)

For the gain you found in Exercise 1.3, write what would have happened without it. Not the saving — the counterfactual. A retention effect is worth the fully loaded cost of the turnover it prevented. A maintenance effect is worth the deferred replacement, amortised. A waste reduction is worth the disposal cost as well as the material.

Most uncounted gains are uncounted because only the visible line was ever costed. The counterfactual is where nearly all of the value sits, and writing it down is what turns a claim into a case.

Exercise 4.3 — What you would keep if the scheme ended tomorrow (20 minutes)

Write one paragraph. Not a contingency plan — an inventory. The measurement method you drafted, the ledger you kept, the rebuild you can do, the counterfactual you can write, the colleague who now understands the measure.

Every item on that list is portable, and none of it depends on the scheme continuing. That is the answer to the only real anxiety inside a gainshare, and it is worth knowing before you need it rather than after.

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HOW THE LEDGER WORKS, AND WHAT TO WATCH

Four failure modes, drawn from the chapter's Destiny movement and translated.

Basket capture. Somebody changes the measure and the change is not published. Watch for a method that is revised without a notice period or a change history. Ask for both, once, in writing, and the problem usually ends there.

The claim becoming a currency. If unpaid gainshare balances start being traded, offset or borrowed against informally, the scheme has acquired liquidity risk with none of the buffers. Rare, but it happens in long-cycle schemes.

Settlement arbitrage. If the verification date is movable, it will move — and it will move to whichever side of a period boundary suits the declaring party. Fix the date in the document.

Nobody uses it. The commonest failure and the least discussed. If most people cannot state the measure, the scheme is not a gainshare; it is a discretionary bonus wearing the word, and the honest first step is to say so and rebuild the measure rather than to argue about the share.

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SELF-ASSESSMENT

At day ninety

Eight or more: you are operating the instrument rather than receiving it. The next move is Exercise 2.3 — the second-order value — because that is the argument that widens a scheme rather than adjusting it.

Four to seven: the gap is almost always the rebuild. Do Exercise 2.1 with the raw data before anything else; every other item gets easier once you have done it once.

Below four: start with the five questions and the indexation ask. Those two alone are worth £2,883 a year on a scheme of the size above, and they take an afternoon.

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WHAT TO CARRY FORWARD

A gainshare is a currency your employer issues, and you are one of the parties to it. It has a unit of account somebody chose, a settlement date somebody set, and a store of value nobody specified. Reading it that way turns a payment you receive into an instrument you operate — which is the whole of this chapter, at the only scale that reaches a payslip.