Haute Lumière

Commerce · V.01 · MMXXVI · daylight

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

WORKBOOK — THE LUMINOUS GAINSHARE EMPLOYEE

Chapter V.01 · What a Person Is Worth

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 the one that tells you what the mechanism is actually built out of, and therefore where your claim comes from and what it is worth.

---

WHY THIS CHAPTER IS YOURS

A gainshare is the only instrument in this volume that pays a person for the gap the chapter measures.

The arithmetic runs like this. Marginal revenue product is what an hour of work adds to the firm's revenue. The wage is a markdown on it, and the markdown is a property of the market's frictions rather than of the worker — at an elasticity of 2.50, the wage is 71.4 per cent of product: a 62.00 USD product predicts 44.29 USD an hour, a gap of 17.71 USD, which across a 1,900-hour year is 33,657 USD.

A gainshare is a written claim on part of that gap, and on the improvements you make to it. That is not a moral argument. It is the same identity the chapter uses, read from the side of the person doing the work.

So the four parts of a gainshare are not administrative detail. They are the whole instrument:

1. A baseline. What was true before. Agreed, signed, dated.
2. A measure. How improvement is computed, precisely enough that two people get the same answer.
3. A share. The percentage of verified improvement that returns to the people, as a number.
4. A period and a verifier. When it is computed, and by whom.

---

PART ONE — DISCOVERY

Days 1–30: read your own instrument

Exercise 1.1 — Trace your own line (2 hours)

Take your last statement, or the scheme document, and answer in writing:

1. What exactly is the baseline, and on 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 costs?
4. Who verifies, and when?
5. What happens to the baseline when a gain is realised?

Exercise 1.2 — Compute the ratchet (30 minutes)

Question five is the one that decides whether the scheme is worth being in, and it is arithmetic rather than opinion.

Suppose a first-period gain of 100,000 USD, and a baseline that resets halfway to the improved level each period — a ratchet of 0.50. The same effort then produces 50,000, then 25,000, then 12,500, and by the fifth period 6,250 USD. Five periods total 193,750 USD and the series converges: a full ratchet turns a standing claim into a decaying one, and the worker is running to stand still.

A well-designed scheme either holds the baseline for a stated term — three to five years is typical — or ratchets on a published, gradual schedule 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 1.3 — The appreciative sweep, from where you stand (one week)

You can see things the executive cannot. Write down, without evaluating:

Two of those rows are usually worth more than everything else combined, and you already know which two.

---

PART TWO — THE ARITHMETIC

Days 31–50: know what your share is made of

Exercise 2.1 — Compute the pool (45 minutes)

Take the chapter's safety facility as the worked case, because it is the clearest gain a workforce can create deliberately.

  insured payroll                     40,000,000 USD
  manual rate                              0.025 of payroll
  manual premium                       1,000,000 USD / year
  experience modifier 1.05  ->  0.80
  annual premium saving                  250,000 USD

At a share of 0.30 the pool is 75,000 USD, which across forty people is 1,875 USD each. Note what produced it: claims history. That is a number the workforce moves directly, which makes it one of the most legitimate gainshare measures there is — you are not being paid for a market movement, you are being paid for something you caused.

Exercise 2.2 — Learn the safety arithmetic, because it is now your arithmetic (one hour)

If your scheme shares insurance cost, you need to be able to read the decisions that drive it.

• A published price for a statistical life — the transport-department figure is 13,200,000 USD — is a price for a decision taken before anyone knows who is affected. It is never a valuation of a person, and it may never be applied to one by name.
• The test on a proposal is cost per statistical life saved: a 2,400,000 USD guard-rail programme avoiding 6.0 statistical deaths implies 400,000 USD, which is 33.00 x inside a published price of 13,200,000 USD.
• The test on a refusal is the same division: a declined retrofit costing 1,800,000 USD that would have avoided 9.0 statistical deaths implies 200,000 USD a life, 66.00 x below policy.

Being able to do that division in a meeting changes what you are in the room. You stop being the person raising a concern and become the person carrying the appraisal — and under this house's first law, a concern arriving with its arithmetic is not a complaint, it is a proposal.

Exercise 2.3 — Compute what you are owed, not what you are given (45 minutes)

Take one improvement you contributed to this year. Write the baseline, the measure, the verified improvement, the share, and your own arithmetic for what the statement should say. Then compare it with what the statement does say.

Differences are usually definitional rather than dishonest — net of costs versus gross, a different period, a cost allocation you did not know about. Every one of those is a question with an answer, and asking it once teaches you more about the scheme than five years of receiving statements.

---

PART THREE — DESIGN

Days 51–70: what to ask for, in the order that gets it

Exercise 3.1 — The five asks, ranked by how cheap they are to grant

Ask in this order. Each costs the firm less than the one after it, and each makes the next one easier.

1. Publication of the baseline and the measure. Costs nothing. Refusal is itself the most informative answer you will get all year.
2. A stated ratchet schedule. Not the absence of a ratchet — a published one. Predictability is worth more than generosity you cannot forecast.
3. A named verifier and a fixed date. Ideally the one who already audits the experience modifier, because that verification exists and is paid for.
4. A line in the appraisal template — cost per statistical life saved — because it converts safety from a matter of enthusiasm into a matter of routine, and routine outlasts every champion.
5. A share of a second measure you actually move, most often claims frequency, rework or retention.

Exercise 3.2 — Write the one-page claim (one hour)

The format that works, every time:

Baseline. What was true, when it was measured, who signed it. What we did. Three sentences. Verified improvement. The number, the method, the verifier. The share. The percentage, the pool, the per-head figure. What we are asking for next. One thing.

One page, one number, one person who can act. Not the all-hands, not the newsletter.

Exercise 3.3 — Name the instrument in the sentence (ongoing)

Say which of the five numbers you are using, every time. "On a claims-cost basis this saved 250,000 USD." "At our published price this clears by 33.00 x." Six words of labelling keeps the conversation out of the category error that makes everybody defensive — and defensiveness, not disagreement, is what actually kills these schemes.

---

PART FOUR — DESTINY

Days 71–90: make the claim outlive the enthusiasm

Three things keep a gainshare alive.

Indexation. A share expressed as a percentage is inflation-proof. A share expressed as a fixed sum is not: the cautionary case in the chapter is a cap set at 250,000 USD in 1975 and never indexed, worth 45,951 USD in its original money — 18.4 per cent of its value — and needing to read 1,457,714 USD today. If your share is ever restated as a fixed amount, that is a reduction, whatever it is called.

A second owner. One person carrying the scheme is a hobby; two is a practice. Recruit the second by handing them the credit for the first verified result.

A standing place in the pack. Anything reviewed monthly persists. Get the verified improvement and the share onto the standing reporting pack and the scheme will survive people who have never heard of it.

And the honest negative, which you should know before anyone uses it on you. A gainshare is a claim on verified improvement, not on the underlying markdown. It does not by itself close the 33,657 USD a year the chapter's worked case identifies, and the rent-sharing evidence is sober about how much of a firm's gains historically reach pay at all: an elasticity of 0.05 to 0.15 means a 10 per cent rise in value added per worker moves pay by 0.5 to 1.5 per cent. A gainshare is a good instrument and it is not a substitute for the wage. Knowing that keeps you from the two failure modes at once — dismissing the scheme because it is not everything, and accepting it as though it were.

---

PART FIVE — WHAT TO DO WHEN THE NUMBER IS USED ON YOU

At some point one of the five instruments in this chapter will be pointed at you by name. A severance calculation. A restructuring paper that values a team by revenue per head. An insurance requirement. Possibly a claim.

You have one advantage in that moment and it is worth rehearsing before you need it: you know which instrument is being used, and you know what it is for.

Exercise 5.1 — Rehearse the three sentences (30 minutes)

Which number is this? Name the instrument out loud. "That is a human-capital figure." "That is an underwriting requirement." Naming it is not aggression; it is the thing that turns an announcement into a conversation.

What question does it answer? Say it plainly. A human-capital figure answers what income disappears. It does not answer what a contribution was worth, and it does not answer what is owed.

What is it structurally blind to? Every one of them is blind to something at its own centre. The present value of lifetime earnings — 1,630,736 USD in the chapter's worked case, against a published risk price of 13,200,000 USD, a factor of 8.09 x — contains a payroll forecast and nothing else. That is not an argument that the forecast is wrong. It is an argument about what it covers.

Exercise 5.2 — Know the boundary that protects you (20 minutes)

Learn this line and be able to say it without heat: a population price may be used for decisions taken before anyone knows who is affected, and may never be applied to a named individual. The withdrawn discount of 37.0 per cent on lives over seventy is the standing example of what happens when an institution crosses it, and the withdrawal is the precedent.

If a published figure is ever used to decide something about you by name, the objection is not that pricing is distasteful. It is that the instrument is being used outside its warrant, which is a technical objection, which is the kind that wins.

Exercise 5.3 — Write your own list (20 minutes)

Write the things about your work that none of the five instruments can see: the person you trained, the failure you caught, the thing that did not happen because you were there. Keep the list where you keep your statements.

It is not evidence and it is not meant to be. It is the thing that lets you read all five numbers without either flinching from them or believing them — and that steadiness, more than any arithmetic, is what this volume is actually for.

---

THE TERM PROJECT

Produce one verified improvement, claimed properly, start to finish.

1. Choose the measure you actually move. Claims frequency, rework, downtime, retention. Not a measure that moves with the market.
2. Get the baseline signed before you change anything. This is the single most important document in the exercise. An unagreed baseline is not a baseline; it is a future disagreement with your name on it.
3. Change one thing, and log the date.
4. Have it verified by the named verifier, on the fixed date.
5. Write the one page and give it to the one person who can act.
6. Ask for one thing from the list of five.

A completed cycle is worth more than any argument about fairness, for a reason that is structural rather than rhetorical: a scheme that has paid out once has a precedent, and a precedent is the cheapest thing in the world to repeat.

---

SELF-ASSESSMENT

The last row is the one that makes you useful to everyone at the table, including the people on the other side of it. A person who can state the limits of their own instrument is the person whose numbers get believed.