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WORKBOOK — THE LUMINOUS GAINSHARE EMPLOYEE

Chapter III.04 · Credit as a Commons

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 more directly about you than any other in the volume, because a gainshare ledger and a mutual credit ledger are the same object with different column headings.

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WHY THIS CHAPTER IS YOURS

A gainshare is a written promise with four parts: a baseline, a measure, a share, and a period with a verifier. A mutual credit circle is a written promise with four parts: a boundary, a debit line, a reserve, and a clearing period with published balances.

They are the same instrument. Both create a claim on future value out of a governed agreement rather than out of capital. Both are safe only because of their rules. And both fail in exactly the same way: when the claims outrun what the population can actually produce in the period.

That is the transfer worth making. Everything you learn in this chapter about clearing coverage ratios and reserve adequacy applies directly to the scheme you are already inside, and it gives you the vocabulary to ask about it precisely.

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PART ONE — DISCOVERY

Days 1–30: read your own ledger as a credit system

Exercise 1.1 — The four parts, in writing (2 hours)

Take your scheme document and answer these on paper:

1. What is the baseline, and what date was it set?
2. What is the measure, as a formula?
3. What is the share percentage, and is it of gross improvement or net of the cost of achieving it?
4. Who verifies, when, and can you see their working?
5. What happens to the baseline once the gain is realised?

Question five decides whether the scheme is worth being in. If the baseline resets to the improved level each period, every gain you make raises the bar you are measured against, and the same effort yields less each cycle. That is baseline ratcheting and it is how gainshare schemes quietly die.

Exercise 1.2 — Now read it as a credit commons (90 minutes)

Map your scheme onto Ostrom's eight. It takes an hour and it will show you exactly where your scheme is thin.

Rows 4 and 8 are where most schemes are empty, and they are the two that decide whether a scheme survives a bad year. Write what yours says.

Exercise 1.3 — Find the uncounted gain (one week)

You can see things the finance function cannot. Walk your own operation and look for obligations that loop — work your team does for another team that does work for you, materials returned, favours between shifts, cover swapped.

Every one of those is a cycle in an obligation graph, and every one of them is a gain that is not counted. An uncounted gain is not shared. Making one countable is the single highest-leverage thing you can do inside a gainshare, and it does not require anybody's permission to start.

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PART TWO — THE ARITHMETIC

Days 31–45: compute what the ledger says you are owed

Exercise 2.1 — Trace a gain from source to your line (90 minutes)

Work the chapter's clearing circle all the way through to a payslip. Every figure here is computed in lib/verify/III_04.py, in its workbook section, and you should reproduce each one.

  gross obligations cleared, year          €4,400,000
  netting efficiency achieved                   38.0 %
  cash released                            €1,672,000
  members' borrowing rate                        9.0 %
  interest members no longer owe             €150,480     ← the verified gain
  share to the people                           30.0 %
  the pool                                    €45,144
  headcount                                         34
  per person, equal basis                    €1,327.76

Do it line by line. Then do the same with your own scheme's actual figures, and if you cannot complete a line, that missing line is your question for the next review. A gainshare you cannot trace from source to payslip is a bonus wearing the word.

Exercise 2.2 — The question nobody asks (45 minutes)

Now the uncomfortable one, and it is the reason this chapter matters to you.

The circle's reserve is funded by a 1.0 percent levy on turnover, raising €44,000 a year against €640,000 of outstanding debits — a reserve ratio of 6.88 percent, reaching the Basel III leverage floor equivalent in 0.44 years and a 13.0 percent CET1-equivalent in 1.89 years.

And the gainshare pool is €45,144.

That is 102.60 percent of the entire annual levy. In other words, in year one, paying the pool in full would consume more than everything the circle set aside to absorb a default — and a 2.0 percent default year costs €12,800, falling as a 2.00 percent haircut on every positive balance if the reserve is not there.

A gainshare paid out of a reserve that has not yet reached its floor is a dividend taken from the loss absorber, and the people it is taken from are the same people who hold the positive balances: you and your colleagues.

Exercise 2.3 — Design the sequencing you would actually want (45 minutes)

So write the rule you would ask for. Three defensible versions:

1. Reserve first, then pool. No distribution until the reserve reaches a stated ratio — the Basel-equivalent 3.0 percent floor takes 0.44 years at this levy. Slowest to pay, strongest scheme.
2. Split the levy. A fixed share of each period's gain to the reserve and the remainder to the pool, so both build together and neither waits for the other.
3. Pool with a clawback. Full distribution, with a stated carry-back if a default occurs within a defined window. Fastest to pay, and the version that is hardest to enforce once the money has been spent.

Pick one and write why in three sentences. Bring the choice, not the problem. An employee who arrives with a sequencing proposal is in a completely different conversation from one who arrives having noticed a risk.

Exercise 2.4 — Your own coverage ratio (30 minutes)

The clearing coverage ratio has a direct analogue in your scheme. The chapter's tannery holds a €21,000 debit against €4,083.33 of monthly in-network receipts — 5.14 months, against a 3.0 month cap, so €8,750.00 over, by 71.4 percent.

Yours: how many periods of your team's normal improvement would it take to deliver the gain the scheme is currently forecasting? If the answer is more than the periods remaining, the forecast is not a target. It is a debit line that has outrun the trade.

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PART THREE — DESIGN

Days 46–70: make the uncounted countable

Exercise 3.1 — Build one measure and get it verified (three weeks)

Take the uncounted gain you found in Exercise 1.3 and make it countable.

1. Define the metric so precisely that two people compute it identically.
2. Establish the baseline before you change anything. Four weeks minimum.
3. Name the method — how and when it is recorded.
4. Name the verifier — someone outside your team who will look at it monthly. Internal audit is sufficient and is usually free.
5. Get two signatures, yours and the verifier's, before you intervene.

That five-part document is the same document the circle uses for a debit line and the same one the facility in Chapter I.01 uses for a baseline. Learn to write it once and you can write it anywhere.

Exercise 3.2 — Ask for monitoring you can actually do (one conversation)

Ostrom's fourth principle is monitoring by monitors accountable to the members. In a village that was free. At the current US credit union average of 31,941.6 members per institution it is not, which is why statistics and a federal guarantee replaced it.

Your scheme is closer to the village than to the credit union. So ask for the village version: the measure computed in the open, not the answer delivered. The specific ask is one sentence — "can the calculation be shown, not just the result?" — and it is very hard to refuse.

Exercise 3.3 — Write the four sanctions (30 minutes)

Every scheme has consequences for a bad period. Most have exactly one, and it is silent: the pool is zero and nobody explains why.

Write the four you would want, graduated: a published explanation, a reduced share, a suspended period with carry-forward, a scheme review. A scheme with one consequence has none, and the graduated version protects the people in it far more than the absence of any does.

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PART FOUR — DESTINY AND DELIGHT

Days 71–90: make it hold

Exercise 4.1 — Get one number into the standing pack (this quarter)

Anything reviewed monthly persists. Get your measure onto the operating review, and get the reserve ratio published beside it. Once both are in the pack, removing either requires somebody to explain why.

Exercise 4.2 — Find the second owner (this month)

One person tracking a measure is a hobby. Two is a practice. Recruit the second owner before you need them, and recruit them by giving them the credit for the first result.

Exercise 4.3 — Notice the cancellation (ongoing)

There is a specific pleasure in this material, and it is worth naming because it is what keeps people doing the work: the moment an obligation you were carrying turns out to loop and cancel and was never really there.

It happens inside teams constantly — the thing you owed another shift, the cover you thought you had to repay. Look for one this month, close it in person, and notice that it does not feel like being paid. It feels like being let back in. That feeling is the adoption mechanism of every cooperative institution in this chapter, and it is why they survive their founders.

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KNOW YOUR SCHEME — A CHECKLIST

Take this to your next review. Ten questions, and you are entitled to all ten answers.

1. What is the baseline, and on what date was it set?
2. Does the baseline ratchet? On what published schedule?
3. Is the share of gross improvement or net of the cost of achieving it?
4. What is the allocation basis — headcount, hours, salary-weighted, assessed?
5. Is there a floor, a cap, or a carry-forward?
6. Who verifies, and can I see the calculation rather than the result?
7. Is there a reserve above this scheme, and what ratio is it targeting?
8. Is the pool paid before or after the reserve reaches its floor?
9. What are the consequences of a bad period, in order?
10. Where do I go if I disagree with the number, and what does that cost me?

Question eight is the one this chapter adds, and it is the one almost nobody asks.

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THE CONVERSATION, SCRIPTED

You are not complaining and you are not negotiating. You are bringing arithmetic and a proposal.

"I traced our gain through to the pool and I think I have it right — €150,480 verified, 30.0 percent share, a pool of €45,144 across 34 of us, €1,327.76 each. One thing I wanted to check with you: that pool is 102.60 percent of what the reserve levy raises in a year, and the reserve is not at its floor yet. I would rather we sequenced it than discovered it in a bad quarter. I have written three ways to do that — reserve first, split the levy, or pay with a clawback — and I think the split is the right one for us, for these three reasons."

Three things make that conversation work. You did the arithmetic before you opened your mouth. You named the risk to the scheme rather than the grievance. And you brought three routes and a recommendation rather than a problem.

That is the whole method of this edition, applied to a room with four people in it — and it works exactly as well there as it does in a board paper.

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CARRYING IT FORWARD

Four things come out of this workbook that are yours regardless of which scheme you are in, or whether you stay in one.

You can trace a gain from its source to a payslip. Most people inside a gainshare cannot, and not because they lack the ability — because nobody has ever laid the chain out in front of them. Once you have done it on the chapter's circle, from €4,400,000 of cleared obligations through 38.0 percent efficiency to €1,327.76 on a line, you can do it on anything.

You can read a scheme as an institution rather than as a promise. Ostrom's eight is a checklist that takes an hour and finds the two rows that are empty. Rows four and eight — monitoring you can do, and something above you that holds a reserve — are empty in most schemes, and they are the two that decide what happens in a bad period.

You know the one question that is almost never asked. Is the pool paid before or after the reserve reaches its floor? At the chapter's figures the pool is 102.60 percent of the annual levy, which means the answer matters in year one and not in some distant hypothetical.

And you have a way of raising it that is welcome rather than resisted. Arithmetic first, the risk to the scheme rather than the grievance, three routes and a recommendation. That method is not a technique for this conversation. It is the method of this entire edition, and it works in any room where somebody has to decide something.

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APPRECIATIVE QUESTIONS FOR YOUR TEAM

1. When has this team created a gain that never got counted — and what would it have taken to count it?
2. Where do we already owe each other work in a loop that closes, and who keeps track of it?
3. What is already working about how our scheme is verified, and what makes it work?
4. If we could see one more number about how our scheme is calculated, which one would change the most conversations?
5. If our pool and our reserve were published side by side every month, what would we start asking about?
6. What would we want in place, now, so that a bad period is survivable rather than silent?