Haute Lumière

Commerce · IV.02 · MMXXVI · daylight

La Bourse  /  Volume IV  /  Nº IV.02  /  Workbook — the Gainshare employee

WORKBOOK — THE LUMINOUS GAINSHARE EMPLOYEE

Chapter IV.02 · Materials and the Return Loop

For the person working inside a gainshare arrangement — where a defined share of verified improvement returns to the people who created it. Materials are the easiest gain in any gainshare, and also the easiest to be quietly cheated on. This workbook is about which is happening to you.

---

WHY MATERIALS IS THE BEST GAINSHARE THERE IS

A gainshare needs four parts: a baseline, a measure, a share, and a period with a verifier. Materials supplies all four better than any other category in the firm.

The baseline is physical. Tonnes bought and tonnes disposed of, both already weighed, both already on tickets somebody signs. You are not arguing about an estimate of avoided turnover or a modelled productivity effect. There is a weighbridge.

The measure is a price you can look up. The primary index is published daily. The gate fee is on the disposal invoice. Nobody has to agree on a discount rate.

The gain arrives in the same period as the work. Materials improvements land in weeks. Most gainshare schemes die because the loop between effort and payment is eighteen months long; this one is four.

And it is a gain the people on the floor find, not the consultants. The person who knows where the clean material is, and at what moment it stops being clean, is holding it. That is not a figure of speech — it is the technical finding of this whole chapter, and it puts the gain in your hands.

---

PART ONE — READ YOUR OWN MECHANISM

Days 1–30

Exercise 1.1 — Trace the arithmetic (two hours, with your statement)

Answer in writing:

1. What is the baseline — tonnes, grade, price basis — and on what date was it set?
2. What is the measure, as a formula? Write it out with every term.
3. What is the share percentage, and is it of gross improvement or net of costs? If net, which costs?
4. Who verifies, on what evidence, and how often?
5. What happens to the baseline when a gain is realised?

Question five decides everything. If the baseline resets to the improved level each period, you are on a treadmill: every gain you find is confiscated at the next reset and you are paid once for a permanent improvement you will maintain forever. Ask for a stated ratchet — for example, the baseline moves by half the realised gain, or not for three years — and ask for it in writing.

Exercise 1.2 — Find the new scrap (one shift)

Here is the specific way a materials gainshare gets diluted without anyone lying. New scrap — off-cuts, trimmings, purge, start-up material — never left the plant and was never at risk. Counting it as recovery inflates the headline while the physical loop does nothing. Copper's widely quoted 32 percent "recycling input rate" becomes about 17 percent when only post-consumer metal is counted, and the same slippage is available inside any single plant.

Ask for two lines, separated, from day one: new scrap and returned material. This is the single most valuable thing you can ask for in the first month, and it costs the firm nothing because both numbers already exist.

Exercise 1.3 — Locate the clean moment (one shift, on the floor)

Walk your own process and mark where each material is at its cleanest — the moment of arising, before it joins anything else — and where it is actually collected. The distance between those two points is the yield loss, and yield is the variable the whole economics turns on.

You are likely to find a bin placed for the convenience of whoever empties it rather than whoever sells what is in it. That is a gain, it is yours, and it usually costs a few hundred and one conversation.

---

PART TWO — THE ARITHMETIC, FROM THE INSIDE

Days 31–60

Exercise 2.1 — Compute the gain you can actually claim (half a day)

  tonnes of a single grade returned per year        1,800 t
  virgin purchase price displaced                   2,450 $/t
  secondary material cost delivered                 2,150 $/t
  avoided disposal / gate fee                          95 $/t
  ----------------------------------------------------------
  margin per tonne                                    395 $/t
  gross annual benefit                             711,000 $/yr
  less operating cost                              310,000 $/yr
  less verification and assay                       40,000 $/yr
  ----------------------------------------------------------
  verified net                                     361,000 $/yr

At a 25 percent employee share that is 90,250 dollars a year to the people who created it, and across a unit of 42 people, 2,149 dollars per person per year. Small enough to be credible, large enough to change behaviour, and — the point — computable by you, from numbers already on tickets.

Exercise 2.2 — Know your yield, because it is the covenant (one week)

  breakeven  Y = (0.09 × 1,600,000 + 310,000 + 40,000) / (1,800 × 395) = 0.695

Below about 70 percent yield the facility stops earning its cost of capital and the gain pool empties. Yield is not an operational detail; it is the thing your share is made of. Learn what your plant's actual yield is, in writing, and track it weekly. If management does not have the number, producing it is itself a claimable improvement.

Exercise 2.3 — Know the ceiling, so you are not blamed for physics (one hour)

      c  =  ρc · Y / (1 + g)^L

With ρc = 0.70, Y = 0.93, L = 20 years, g = 3 percent: c = 0.651/1.806 = 36.0 percent. That is the maximum share of the firm's demand its own returns can supply.

And the extreme case, which you should have in your pocket: a perfect recycler — ρ = 1.00, nothing lost — at two percent growth with a forty-year life reaches 1/1.02^40 = 45.3 percent. Fifty-five percent must still be bought new, by a system that loses nothing.

Why this matters to you specifically: a loop running at a constant, excellent recovery rate inside a business growing at three percent loses share every year while performing perfectly. If the scheme is written against a percentage target rather than a tonnage or a margin, you will be penalised for growth you did not cause. Ask for the metric to be written as verified tonnes returned and margin captured, not as a share of demand.

Exercise 2.4 — Know which routes lose (two hours)

If your firm is considering a recovery route, the threshold yield is Y* = E_secondary / E_primary:

  aluminium              10.0 / 170.0  =   5.9 %   never loses
  steel, EAF              6.4 /  20.0  =  32.0 %   loses on shredder fines
  PET, mechanical        18.0 /  83.0  =  21.7 %   comfortable
  PET, chemical          55.0 /  83.0  =  66.3 %   loses on coloured streams
  paper, total energy    18.0 /  30.0  =  60.0 %   loses on mixed grades
  paper, purchased fuel  12.0 /  10.0  = 120.0 %   loses at every yield

A route below its threshold will not generate a gain, will burn the pool on operating cost, and will be reported as a failure of the people running it. Raising this in month two is a service; raising it in month twenty is a post-mortem.

---

PART THREE — WHAT TO CLAIM, AND HOW TO WRITE IT

Days 61–90

A claim that gets paid has five parts. A claim that gets argued about has four.

1. The baseline, quoted. Date, tonnage, grade, price basis. Quote it from the scheme document verbatim rather than restating it.

2. What changed, in one sentence. "The trim from line 3 is now separated at the press rather than at the skip." Physical, specific, attributable.

3. The measurement, with its method. Weighbridge tickets, assay certificates, dates. Say what you did not measure — that sentence is what makes the rest believable, and verifiers reward it.

4. The arithmetic, shown. Tonnes × margin, less costs, to a verified net. Do not round. A rounded figure in a claim reads as an estimate.

5. The counterfactual. What would have happened without this. This is the part most claims omit and the part every verifier tests.

Exercise 3.1 — Write one claim on one page (two hours). One stream, five parts, one page. If it runs to two pages the gain is probably two gains; split them.

Exercise 3.2 — Get the assay into the contract (one meeting). The covenant that protects your pool is grade, not tonnage. A tonnage covenant rewards volume and punishes nobody for contamination, which is precisely backwards, and it is the mechanism by which a good year becomes a bad payment. Ask for assay-based rejection with a named sampling protocol and test method.

---

WHAT TO ASK FOR, IN ORDER

Five asks, ranked by what they are worth to you, with the reason each is easy to grant.

1. Two ledger lines — new scrap and returned material, separated. Costs nothing; both numbers exist. Without it, every other number in your scheme can drift.

2. A stated baseline ratchet. Half the realised gain, or a three-year hold. Without it the scheme pays once for permanent improvements and the goodwill is gone by year two.

3. Yield reported weekly, to the floor. It is already measured. It is the variable your entire share is made of, and people who can see a number move it.

4. The metric in tonnes and margin, not in percent of demand. Protects you from being penalised for the firm's growth, which is the specific unfairness this chapter exists to make visible.

5. A share of the stream reclassification, not only the operating saving. When a material with a signed specification and an off-take contract moves from disposal liability to inventory, that is a real balance-sheet event and it is frequently larger than the annual operating gain. Almost no scheme covers it, because almost nobody has noticed it happens. Ask early, while it is a principle rather than a number.

---

THE SELF-CHECK — is this scheme worth being in?

Score each 0 or 1. This takes ten minutes and it is the most useful ten minutes in the workbook.

Eight or more and this is a real instrument. Five to seven and it is a real instrument with two fixable gaps — ask for them by name, in that order. Below five, the honest description is a bonus scheme, and the most useful thing you can do is to propose the missing parts rather than to argue about the payment. Every one of the ten costs the firm nothing; each is a document or a report that already exists somewhere in the building.

---

THE FOUR CONVERSATIONS, AND WHEN TO HAVE THEM

With your shift supervisor, in week one. About the clean moment. This is a physical conversation held standing up next to a bin, and it produces the first gain in the scheme roughly nine times in ten. Bring nothing but a question: at what point does this stop being one material?

With the controller, in month one. About the two ledger lines. Frame it as a reporting request, which is what it is, and not as a suspicion, which it is not. Controllers like separating things; it is the whole discipline.

With the plant manager, in month two. About yield reported weekly to the floor. The argument that works is that yield is already measured and already theirs, and that people who can see a number move it. The argument that does not work is fairness; save that one.

With whoever owns the scheme, in month three. About the baseline ratchet and the stream reclassification. Have this conversation once, in writing, with the arithmetic attached, and then let it sit. Both are principles best agreed while they are hypothetical.

---

HOW THE LEDGER READS FROM THE INSIDE

Four entries, and you should be able to see all four.

The physical ledger. Tonnes in, tonnes out, by grade, by week. Tickets.

The assay ledger. Every certificate, dated, with the sampling protocol. This is what converts a pile into a product and it is the document the money is actually made of.

The financial ledger. Margin per tonne against the published index, less costs, to a verified net. Reconciled to the physical ledger monthly.

The share ledger. Pool, share percentage, distribution rule, payment date. Per person, not only in aggregate.

If you can see all four, you are in a gainshare. If one is missing — most often the assay ledger, sometimes the share ledger — you are in a discretionary bonus wearing the word, and the honest move is to ask for the missing one by name rather than to distrust the whole arrangement.

---

WHEN THE GAIN IS REAL AND THE PAYMENT IS NOT

It happens, and it is nearly always one of four causes rather than bad faith. Diagnose before you escalate.

The counterfactual was never written. The improvement is real and nobody can prove it would not have happened anyway. The fix is retrospective and painful; the prevention is Part Three, point five, and it takes one paragraph.

The cost side moved. The gross gain arrived and operating cost rose to meet it — a new shift, a hired sorter, a higher gate fee elsewhere. Ask for the cost lines, itemised. If the share is net of costs, those lines are part of your measure and you are entitled to see them.

The yield fell and nobody told the floor. This is the commonest cause and it is why Exercise 2.2 exists. A pool that empties between 70 and 65 percent yield empties fast and silently.

The baseline reset. Check the date. If it moved without a stated rule, that is the ratchet conversation, and it is the one worth having properly, once, rather than every period.

---

THE THREE SENTENCES TO CARRY

A waste stream is an ore, and it competes at its grade. Nothing is waste because of what it is. It is waste because of what it assays at.

Yield is what your share is made of. Not tonnage, not price, not effort. Below about seventy percent the pool empties, and that number belongs on the wall where people can see it.

Growth is in the exponent, and you did not cause it. A loop performing perfectly loses share every year in a growing firm. Write the scheme in tonnes and margin and that unfairness disappears before it can be argued about.