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La Bourse  /  Volume VI  /  Nº VI.06  /  Workbook — the Gainshare employee

WORKBOOK — THE LUMINOUS GAINSHARE EMPLOYEE

Chapter VI.06 · Participatory Budgeting, Measured

For the person working inside a gainshare arrangement — where a defined share of verified improvement returns to the people who created it. This chapter's two numbers are your numbers. Read from the inside, a participatory budget and a gainshare are the same instrument with a different beneficiary, and they fail in exactly the same way.

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WHY THIS CHAPTER IS ABOUT YOUR SCHEME

A gainshare has four parts: a baseline, a measure, a share, and a period with a verifier. A participatory budget has four parts: a pot, a rule for deciding it, a share of the whole budget, and a period with an execution rate.

They are the same structure, and they die the same death. Not by cancellation. By non-execution.

Porto Alegre is the case every gainshare member should know. The city ran the most celebrated participatory budget in the world — 17 per cent of the total municipal budget in 1992, 21 per cent by 1999, about 40,000 people a year taking part in a city of 1,300,000. After 2004 the assemblies still met, the votes were still counted, the turnout statistics stayed healthy — and project completion fell from 97 per cent to 43 per cent, and to 26 per cent in the priorities people had ranked first. In 2005 the city budgeted R$338.1 million for public investment and spent R$109.4 million: an execution rate of 32.4 per cent.

Carry the 21 per cent forward and apply that execution rate, and what residents actually governed was 6.8 per cent of the budget. Nobody announced anything.

If your gainshare statement shows a healthy participation rate and a shrinking payment, you are inside the same mechanism, and this workbook is about how to see it from where you stand.

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PART ONE — DISCOVERY

Days 1–30: find your two numbers

Exercise 1.1 — Your share, computed (2 hours)

Take your scheme document and your last statement and answer in writing:

1. What is the total improvement the scheme measures, P?
2. What is the total your unit spends or earns in the same period, B?
3. s = P / B — what fraction of the enterprise does your scheme actually touch?

Most schemes turn out to sit far lower than members assume. That is not a reason to leave. It is the number you need before you ask for anything, and the public-sector benchmarks tell you how wide the honest range is: Porto Alegre at 21 per cent, Scotland at 1.4 per cent, Paris at 1.04 per cent, New York City at 0.0437 per cent — one part in 2,286.

Exercise 1.2 — Your execution rate (2 hours, one of them on the phone)

What proportion of what your scheme has awarded has actually been paid, within the period it was awarded for? Not accrued. Paid.

Then E = s · x. If nobody can give you x, that is your finding, and it is the most valuable thing you will produce this month. Write it down with the date and the name of the office you asked.

Exercise 1.3 — The appreciative record (2 hours)

List five improvements your scheme has actually produced — with what they were worth and who made them. Names where you can.

You will need this file for every conversation in Part Four, and it does the work no complaint can do. Porto Alegre's participation went from fewer than a thousand people to 16,000 in eight years because works appeared. Evidence of delivery is what brings people back to any mechanism, yours included.

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PART TWO — THE ARITHMETIC

Days 31–45: read the mechanism the way its designers read it

Exercise 2.1 — Find the tier (3 hours)

Every allocation mechanism has two populations: everyone who is counted as participating, and the much smaller group who decide what gets counted. In a participatory budget those are the voters and the proposal delegates. In your scheme they are the members and whoever sits on the committee that defines the measure.

The public evidence is unambiguous about where the inequality lives. In New York's third participatory cycle, 39 per cent of voters had household incomes below $35,000 against 21 per cent of voters in the local elections — the door was wider than the election — while the proposal stage was dominated by already-organised groups. In Porto Alegre, the assemblies drew disproportionately from the poor while the 92 elected budget councillors — one per 14,130 residents — ranked above the city average on education and income.

Write down who sits on the committee that defines your measure, how they got there, and when the seats last changed. If the answer is "the same people since the scheme started", you have found the thing to ask for.

Exercise 2.2 — Price a fair tier (1 hour)

You are going to be told that a lottery-selected, paid committee is impractical. Here is what it costs at published public rates: recruitment of 60 stratified seats at €1,883 each is €112,980; 8 paid sitting days each at €86.04 is €41,299; a care and travel fund of €12,000. €166,279 in all — 0.42 per cent of a €40,000,000 pot, and a 33.3 per cent increase on a €500,000 cycle cost, taking cost per participant from €4.23 to €5.63.

At your scheme's scale most of that is release time you are already paid for. Ask in those terms.

Exercise 2.3 — The acceptance argument, in your own words (1 hour)

German-speaking Belgium pays its lottery-selected council €155 a day and gets 10 per cent of invitations accepted, against the 2 to 5 per cent typical of unpaid processes — two to five times the acceptance. That multiple is the difference between a shift worker being able to serve and not.

Write three sentences you could say out loud in a meeting connecting that multiple to your own shift patterns. You will use them.

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PART THREE — DESIGN

Days 46–70: what to ask for, and in what order

Exercise 3.1 — The four asks, in order (half a day)

Ask for these in this sequence, because each one makes the next one cheaper.

First, publication of x. The execution rate, by unit, quarterly. It costs nothing, it is arithmetic your finance function already has, and it is the single term that prevents the hollowing. Every other ask is easier once it is printed.

Second, the carry-forward. Unpaid or unspent balances stay inside the scheme rather than returning to general funds. Without it, non-execution is the cheapest option available to the organisation, and no amount of goodwill outcompetes a budget incentive.

Third, a stratified seat rule. The committee that defines the measure is filled by lottery across shifts, sites and grades, with a stated term — not by whoever volunteers. Price it as above.

Fourth, the baseline term. A stated number of years before the baseline ratchets, published in advance. A scheme whose baseline resets to the improved level each period is a treadmill, and it is the commonest way a gainshare dies quietly.

Exercise 3.2 — Write the one page (2 hours)

One page: s, x, E, the five improvements with their value, the four asks in order, and one bold line naming what you could not find out.

Give it to one person — whoever signs the scheme rules, not whoever runs communications. One person, one page, three numbers.

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PART FOUR — DESTINY AND DELIGHT

Days 71–90: make it hold

Exercise 4.1 — Get the numbers into a standing document (2 hours)

A number reviewed monthly persists; a number reviewed on request does not. The target is the standing operational pack or the scheme's own quarterly statement, with the definition of the denominator printed beside the figure so that it cannot be redefined quietly later.

Exercise 4.2 — Recruit the second reader (1 hour)

One person watching the execution rate is a hobby. Two is a practice. Recruit someone on a different shift and give them the credit for the first finding.

Exercise 4.3 — Go and look at one of the five (1 hour)

Go and stand next to something your scheme paid for or your improvement built. The reason these mechanisms survive is that people walk past the results, and that is as true on a production floor as it is in a district of a Brazilian city.

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WHAT A GAINSHARE AND A PARTICIPATORY BUDGET SHARE, TERM BY TERM

Keep this table where you can find it. It is the whole argument of this workbook in one place, and it is what lets you borrow a public-sector precedent in a private-sector meeting without anybody being able to say the cases are not comparable.

The row that matters most is the fifth. Everywhere it has been measured, the population that votes is broader than the population that writes what is voted on — and the second one sets the ceiling on the first. In New York the door was wider than the local election on income, ethnicity, gender and age, and the proposal stage was still dominated by the already-organised. In Porto Alegre the assemblies drew from the poor and the councillors ranked above the city average. There is no reason to expect your scheme to be different, and there is a cheap published fix.

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THE EVIDENCE YOU CAN QUOTE, AND THE LINE YOU SHOULD NOT CROSS

You can quote this. Across Brazil, a panel of 3,651 areas and 47,707 observations from 1990 to 2004, with 228 adopters, found municipalities that adopted participatory allocation moved 2 to 3 percentage points of budget toward health and sanitation and registered 1 to 2 fewer infant deaths per 1,000, independent of governing party. Porto Alegre's sewer and water coverage went from 75 per cent of households in 1988 to 98 per cent in 1997 — 92 per cent of the remaining gap closed — and the health and education share of the budget rose from 13 per cent to nearly 40 per cent. Worldwide, between 11,690 and 11,825 processes are documented across 71 countries.

You should not cross this line. Those health results were measured where the process carried 17 to 21 per cent of a budget. New York City's cycle 8 carried 1/480th of that intensity. If your scheme is small, argue what a small scheme can actually deliver — better decisions about the money it does touch, faster identification of what is broken, and a fairer committee — and leave the large claims to the large instruments.

Saying that first, before anyone else does, is what makes the rest of your page credible.

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KNOW YOUR SCHEME — A CHECKLIST

Work through it once a year and keep the answers dated.

• The baseline: what it is, when it was set, and when it next moves.
• The measure, written as a formula two people would compute identically.
• The share, as a percentage, and whether it is of gross or net improvement.
• The period and the verifier, named.
• s — what fraction of the enterprise the scheme touches.
• x — what fraction of awards were actually paid in period.
• E = s · x.
• Who sits on the committee that defines the measure, and how they got there.
• Whether unpaid balances carry forward or lapse.
• What the scheme cost to administer last year, per member.

Any blank is a question, and a question with a date on it is an ask.

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THE CONVERSATION, SCRIPTED

"I've done the arithmetic on our scheme. Last period it touched about s of what this unit spends, and about x of what was awarded was actually paid, so the scheme effectively governed E. Here are five things it has produced and what they were worth. I'd like three things: the execution rate published quarterly, unpaid balances kept inside the scheme, and the committee seats filled by lottery across shifts with a stated term. The third one costs release time and about a third as much again as we already spend running it, and it is the difference between a committee that looks like us and one that doesn't. There's one number I couldn't get, and it's the first one on the page."

No grievance, three numbers, four asks, one honest gap. It works because every figure in it can be checked.

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ONE LAST THING, AND IT IS THE THING TO REMEMBER

The most celebrated participatory budget in the world was not taken away from the people who built it. It was simply not carried out. The rooms stayed open, the ballots were counted, the reports were filed, and the completion rate went from 97 per cent to 43 per cent while nobody said a word.

That is the shape of almost every quiet loss inside a scheme like yours — not a decision announced, but a rate that drifted. Which means the most useful thing any member can do is also the cheapest: find the execution rate, write it down with today's date, and ask for it to be printed every quarter. It costs the organisation nothing, it is arithmetic they already hold, and once it is printed it is very difficult to let it drift without somebody noticing.

Everything else in this workbook follows from having that one number in public.

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APPRECIATIVE QUESTIONS FOR YOUR TEAM

1. What is the best improvement anyone on this shift has made, and what did the scheme actually return for it?
2. If the execution rate were printed every quarter, what would we want it to be next year — and what would we have changed to get there?
3. Who on this team has never been on the committee, and what would they see in the measure in the first hour that the rest of us have stopped noticing?