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Commerce · V.09 · MMXXVI · daylight

La Bourse  /  Volume V  /  Nº V.09  /  Workbook — the Gainshare employee

A woman standing at a wooden desk beside a window, looking out, afternoon light on her and the dried grasses.
Plate V.09 · Workbook — the Gainshare employeeThe Standing Desk at Four O'Clock.The claim run is the only document in the building that cannot flatter anybody. It does not know who joined the programme, and that is exactly what makes it worth reading.

WORKBOOK — THE LUMINOUS GAINSHARE EMPLOYEE

Chapter V.09 · Health as a Return on Capital

For the person inside a scheme that shares upside. This chapter hands you something unusual: an arithmetic proof that you already own most of an asset your employer is being asked to fund. What follows is how to read it, what to measure, what to claim, and what to ask for.

WHAT THIS CHAPTER GIVES YOU THAT THE OTHERS DO NOT

Start with the number that changes your position in the conversation.

Your employer retains about 14.44 per cent of the long-run value of any health improvement it pays for. The arithmetic is simple and it is in the chapter: median tenure 3.90 years, so a separation hazard of 0.17773 a year, and at a real discount rate of 0.03 the firm's share of a perpetual benefit is 0.03 / 0.20773 = 0.1444. Its hurdle is therefore 6.92 x society's.

Now read the complement, because nobody in the building has said it out loud. The rest of that asset is yours. Your health goes with you. It is the one piece of capital in the enterprise that is unambiguously portable, unambiguously owned by the person who carries it, and completely absent from the balance sheet — because IAS 38 forbids capitalising a workforce, which means the accounts cannot even represent the thing you are holding.

That is not a grievance. It is a negotiating position, and it is a better one than most employees ever get handed in writing. You are the majority owner of an asset the firm is being asked to pay for and cannot book.

PART ONE — DISCOVERY

Days 1–30: find where the gain actually is

Exercise 1.1 — Read your scheme's definition of gain (2 hours)

Find the document. Write down, in its exact words, what counts as a gain. Then mark each line with where the number comes from:

A gainshare with health in it should be worried about every S and every V, and should be delighted by every A. Not because self-report is dishonest, but because a number that can be moved by how a question is asked can be moved by somebody other than you.

Exercise 1.2 — Trace your own line (2 hours)

Pick one health-related line in your scheme and follow it all the way:

  1. What is measured?
  2. Who measures it, and could they choose who is in the measured group?
  3. What is subtracted from it before it reaches the pool?
  4. What fraction of the pool reaches you, and on what basis?
  5. When is it paid, and what happens to it if you leave in month eleven?

Question five is the one nobody asks and it is the one that interacts with the capture arithmetic. If the gain is paid annually and forfeited on departure, the scheme has just handed you the employer's problem: your own horizon on your own share is now 3.90 years too.

Exercise 1.3 — The appreciative team conversation (45 minutes)

Ask the people you work with: when did something we did here actually make somebody healthier, or safer, or more likely to stay? Write the answers down verbatim. Then check each one against the list in the chapter's Discovery — cessation paid in real money, disease management for the already diagnosed, randomised safety inspection, schedule control and supervisor support, insurance itself. Most teams find at least two of the five already happening and uncounted.

PART TWO — THE ARITHMETIC

Days 31–45: compute what is actually there

Exercise 2.1 — Take the vendor's number apart yourself (90 minutes)

You can do this without any access you do not already have, because the shape is the same everywhere:

  after:  non-participants 6,600 USD  -  participants 5,100 USD  =  1,500 USD
  naive:  1,500 x 2,800 / 750,000                                =     5.60 : 1
  before: non-participants 6,100 USD  -  participants 4,900 USD  =  1,200 USD
  effect: 1,500 - 1,200                                          =       300 USD
  real:   300 x 2,800 / 750,000                                  =      1.12 : 1
  the naive figure is                                                   5.00 x

Why this matters to you specifically. If your pool is credited with a saving that is 5.00 x too large, two things follow and only one of them is good. The pool looks generous this year. And when the saving fails to recur, the scheme — not the vendor — is what gets reviewed. A gainshare credited with a number that cannot be reproduced is a gainshare with a short life.

Exercise 2.2 — Compute the endpoint you can actually be paid on (60 minutes)

  spending:  SD 12,000 USD, effect 300 USD    ->  25,088 per arm, 50,176 total
  turnover:  20.0 % base, 4.0 point effect    ->   1,568 per arm,  3,136 total

A workforce of 5,000 is 10.04 x short of the first and clears the second 1.59 x over. So: if your scheme pays on medical spending, it is paying on noise, and noise pays both ways. Ask for the turnover line instead. It is measured from payroll, it cannot be gamed by a survey, and at 21.4 per cent of a 60,000 USD salary — 12,840 USD a separation — it is where the money is: 1,000 separations a year is 12,840,000 USD, and four points avoided is 200 separations and 2,568,000 USD, a return of 4.28 : 1 on a 600,000 USD intervention and 1,968,000 USD net in year one.

Exercise 2.3 — Your share, calculated (60 minutes)

Take that 2,568,000 USD. Write down your scheme's pool percentage, the pool's allocation basis, and your own share, and produce one number. Then produce it again on the 1.12 : 1 version of the wellness saving rather than the 5.60 : 1 version, so that you know what both worlds look like from inside your own payslip. Carry both figures into every conversation.

Exercise 2.4 — The honest negative, from where you sit (30 minutes)

Three things in this chapter cut against your interest and you should know them before somebody else says them.

One. The randomised evidence is close to null on cost. If your scheme's health line is built on medical savings, the honest expectation is 0.00 USD and the year's net on a 750,000 USD programme is −750,000 USD.

Two. Presenteeism dollars are elastic. On a 60,000 USD salary and a reported 5.0 per cent impairment, the same ten per cent improvement is worth 150.00 USD, 300.00 USD or 450.00 USD depending on a multiplier chosen in an appendix — a 3.00 x spread. A pool credited on a number that elastic can be discredited on it just as easily.

Three, and this is the one to watch hardest. Premium differentials tied to health status have been shown to shift cost onto sicker workers rather than generating savings. A "gain" produced that way is not a gain; it is a transfer, and it is a transfer out of the pockets of the people in your scheme who are least able to absorb it. If your scheme's health saving comes from a surcharge, say so out loud at the first opportunity. You will not be thanked immediately and you will be right.

PART THREE — DESIGN

Days 46–70: make the uncounted countable

Exercise 3.1 — Ask for the randomised rollout (one conversation)

Everything in this chapter turns on one clause. When a programme is deployed in waves — and it almost always is — ask that the wave order be assigned at random and recorded before the first wave starts. It costs 0.00 USD. It converts the scheme's health line from an assertion into a measurement, and it protects your pool from being credited with a number that will be withdrawn.

This is the single highest-value thing you can ask for this year and it sounds like an administrative detail, which is why it is usually granted.

Exercise 3.2 — Build the baseline nobody built (two weeks)

Before anything changes, write down and date: turnover by site and tenure band, workers' compensation cost per hundred employees, and absence read from payroll. Give the file to someone who will not edit it. The 1,200 USD that was always there gets counted as the 1,500 USD that was earned only when nobody wrote the baseline down — and in a gainshare, that mistake is eventually corrected out of your pool rather than the vendor's invoice.

Exercise 3.3 — Write the portability clause (one page)

This is the claim the capture arithmetic entitles you to make, and it is new.

Where the firm funds a health investment whose benefit runs beyond the employment relationship, the employee retains access to it on departure at cost, or the firm participates in a pooled vehicle in which the investment follows the employee.

The argument in one breath: at 3.90 years of tenure the firm keeps 14.44 per cent, so it is pricing the investment at 6.92 x its social value and declining most of it. At 12.00 years of tenure in a trade the capture is 34.18 per cent and the hurdle 2.93 x — 19.74 points recovered, 2.37 x more value to the party paying. Portability is not a concession the firm makes to you. It is the mechanism that makes the investment approvable at all.

Exercise 3.4 — Read the pooled instrument as a beneficiary (1 hour)

The chapter's instrument is 14 employers, 41,000 lives, 210.00 USD a life — 8,610,000 USD a year — returning 13,120,000 USD at a verified 320.00 USD a life: 1.52 : 1, a rate of 52.4 per cent, 43.4 points over a 9.0 per cent cost of capital, with 75.0 per cent of verified saving (9,840,000 USD) to the note and 3,280,000 USD retained by the pool from year one.

Three questions to ask about any such structure before your scheme joins one. Who governs the trust, and do employees sit on it? Is payment measured against randomly assigned control sites, in writing? And does the retained share reach the gainshare pool, or does it stop at the employer?

PART FOUR — DESTINY AND DELIGHT

Days 71–90: make it hold

Exercise 4.1 — Into the standing review (one conversation) Get one line into whatever is reviewed monthly: voluntary turnover by site. It is the endpoint you can power, it is read from payroll, and anything reviewed monthly outlives everyone who set it up.

Exercise 4.2 — The second owner (this month) Find one other person who can do the decomposition in Exercise 2.1 without looking it up. Teach them by handing them the vendor's number and staying quiet. One person who can do this is a hobby; two is a practice.

Exercise 4.3 — The written record (10 minutes a week) Keep a dated file of what was claimed, what was measured, and how you knew. Schemes are renegotiated by whoever has the record.

Exercise 4.4 — Delight, honestly (ongoing) The best thing about this chapter, from inside a scheme, is that it lets you stop pretending. You do not have to argue that the yoga returned 3.27 : 1. You can say plainly that it is good, that it costs little, and that the money in the scheme comes from turnover at 4.28 : 1 and from safety at 26.0 per cent lower compensation cost. Two true sentences are worth more to you than one impressive one, and they survive the next Chief Financial Officer.

KNOW YOUR SCHEME — A CHECKLIST

THE CONVERSATION, SCRIPTED

When you are shown a health saving:

"Before we credit this — what was the gap between those two groups in the year before the programme started? If we do not have it, the administrator can produce it in a week, and the difference between 5.60 : 1 and 1.12 : 1 is whether we have it."

When a programme is about to be rolled out in waves:

"Can we assign the wave order at random and write it down before wave one? It costs nothing, and it means the saving we credit next year is one we can reproduce the year after."

When you are asked what you want:

"The turnover line in the pool, measured from payroll by site — at 12,840 USD a separation that is 12,840,000 USD a year of exposure and four points of it is 2,568,000 USD. And a portability clause, because we keep 14.44 per cent of what we spend on health and the other 85.56 per cent walks out of the building with the person. Pooling recovers 19.74 points of that, and it is the only reason the investment clears a hurdle at all."

APPRECIATIVE QUESTIONS FOR YOUR TEAM

  1. When has something this company did made one of us measurably healthier or safer — and who can name the number?
  2. Which line in our scheme are we proudest of, and what makes it credible?
  3. If we could randomise one rollout this year, which one would teach us most?
  4. What are we already doing that would survive a control group?
  5. Who here is carrying health capital this company paid for, and what would it take for them to keep it if they left?
  6. If our scheme were the one other companies copied in three years, which single clause would be the reason?