Socialism: set the bonus limits and the dismissal panel: 10% of pay in total, 15% for anyone, gain sharing even without a profit, and four of five panelists drawn by lot

Co-Authored-By: Claude Opus 5.5 <[email protected]>
Claude-Session: https://claude.ai/code/session_01QWPs69B8nQZjtPEUXMKzZx

JoshHeaps.Net/Content/Socialism/free-riding.md

@@ -38,7 +38,7 @@ People notice what their co-workers do in teams, not in firms of thousands. The
 
 Where a line of business gets big enough to be its own firm, it can become one, as Mondragon's co-ops did ([When Growing Means Sharing](growth.md)).
 
-The standard bylaws share results with every member every quarter, or every month once a co-op has more than 50 workers, and offer training in reading them. The [federation](federation.md) supplies templates and training, so small co-ops don't have to build their own.
+The standard bylaws share results with every member every quarter, or every month once a co-op has more than 50 workers, and offer training in reading them. The 50 is a judgment, not a finding. In a smaller co-op, most people can see most of the work themselves, and closing the books every month costs bookkeeping time a small co-op may not have. A team can still get its own numbers monthly at any size if the members want. The [federation](federation.md) supplies templates and training, so small co-ops don't have to build their own.
 
 ## Team bonuses the members design
 
@@ -46,16 +46,18 @@ The profit share is split equally per hour worked, and that doesn't change. But
 
 The required rules keep bonuses from becoming a way to reward friends or push people too hard:
 
-- **Members approve the formula before the year starts,** in writing. Managers apply it. They don't pick who gets what.
-- **A team's bonus is split among its members by hours worked,** not by a manager's choice.
-- **The total is capped** at a share of profit set in the bylaws, and it's reported in the co-op's pay-gap figures by gender and race.
+- **Every bonus follows a formula the members approved in advance,** in writing, before the year starts. Managers apply it. They don't pick who gets what. That covers any bonus a manager hands out under [Who Sets the Pay](pay.md). Managers still decide raises within the bands.
+- **Team bonuses, not individual ones.** The study found that bigger individual bonuses went with *less* action against shirking, perhaps because they make co-workers competitors. So a formula pays teams, and a team's bonus is split among its members by hours worked. Managers' own results pay, set by the board, is a separate formula under the same limits and is published by name.
+- **The total is limited.** All bonuses together can't be more than 10% of the co-op's total pay for the year, and no one's bonus can be more than 15% of their own pay. That stops one small team, or the managers, from taking the whole pot. The study doesn't set these numbers, and it doesn't argue for a limit at all. Its finding runs the other way: bigger group bonuses went with more action against shirking. The limit is a policy choice, to keep bonuses from turning into piece rates that push people too hard, or into a way to pay friends. For scale, workers in the study who got profit sharing or gain sharing received a most recent bonus worth about 5% of their pay at the median (4.6% in the national survey, 5.7% in the companies) and 9–12% on average. But that counted profit sharing, and a member's equal profit share already plays that part here. The bonus comes on top.
+- **Paid from a profit, or from the savings themselves.** A bonus tied to the co-op's results is paid only out of a profit on the audited books, and takes at most half of the year's profit before bonuses. A gain-sharing bonus tied to a team's own measured savings (less waste, fewer injuries, less redone work, against a baseline set before the year) can be paid even in a year with no profit, but only up to half of the savings and 3% of the team's pay. If the books are later restated, bonuses paid on the wrong figures are taken back from future bonuses.
 - **Measure quality and safety, not just speed:** work that had to be redone, waste, injuries. Customer ratings can't be used unless they're checked every year for bias by race, gender, age and disability, because customers can rate some workers lower for the same work.
 - **Measured per hour, with protected leave left out.** A teammate's parental leave, medical leave or accommodated schedule can't lower the team's numbers.
 - **How work and costs are split between teams is published,** and a team can challenge its numbers.
+- **Reported.** Bonuses are reported in the co-op's pay-gap figures by gender, race, age and disability.
 
 Bonuses still stay within the approved pay bands and count toward the pay ratio. Bonuses that push pay above the going rate give the reserve its share ([Investing for the Long Run](the-long-run.md)).
 
-Managers need a reason to deal with problems too. The board can tie part of managers' pay, within their bands, to how their units do, and the board, not the teams they manage, reviews them.
+Managers need a reason to deal with problems too. The board can tie part of managers' pay, within their bands and the limits above, to how their units do, and the board, not the teams they manage, reviews them.
 
 ## When a member won't do the work
 
@@ -66,10 +68,13 @@ Holding members to their share of the work has to mean something specific. Other
 **Then a fair, fast decision.**
 
 - **Written charges and the evidence,** at least 10 days before the hearing.
-- **A hearing** before a panel of members drawn by lot, not including the person's own team, or, in a co-op of fewer than 15 members, before all the members except the person and whoever raised the complaint. The person can bring a co-worker or union representative.
+- **A hearing** before a panel of five members drawn by lot, no more than a week before the hearing. The draw leaves out whoever raised the complaint, the person's managers, close family or partners of either side, and anyone on the person's team now or six months before the charges, so moving people between teams doesn't change who can sit. Either side can strike one name, and either side can challenge a panelist for a close tie or open hostility. Struck names are redrawn. **The co-op needs four of the five votes.**
+- **In a small co-op,** there may not be five members left who aren't involved, and the rest may all be close to one side. So in a co-op of fewer than 15 members, or any co-op that can't fill the panel, the [federation](federation.md) draws the five from members of other co-ops, under the same rules. A person in a co-op of any size can ask for that outside panel.
+- **Paid, private and recorded.** Panel time is paid work time. The federation pays outside panelists' time and travel from its dues. Nobody on either side can contact a panelist privately. The hearing is recorded and closed, and the panel sees only what an accommodation requires, not medical records. Interpreters and disability accommodations are provided.
+- **The person can bring a co-worker or union representative.**
 - **Just cause, proved by the co-op.** The co-op has to show it's more likely than not.
 - **A written decision within 30 days** of the charges.
-- **An outside arbitrator on request,** from a list the federation keeps, on appeal. If the dismissal is overturned, the person gets their job back with back pay.
+- **An outside arbitrator on request,** from a list the federation keeps, on appeal. The arbitrator works from the recording and can hear new evidence if the person had no representative or interpreter. If the dismissal is overturned, the person gets their job back with back pay.
 - **Serious misconduct,** like theft or violence, allows suspension with pay while the hearing happens.
 
 Co-ops that hire managers can let them dismiss members directly. The member can still take it to the hearing and the arbitrator, and gets their job back with back pay if it's overturned.
@@ -77,15 +82,15 @@ Co-ops that hire managers can let them dismiss members directly. The member can
 **Protections that can't be waived.**
 
 - **No retaliation.** If a member is dismissed within 12 months of organizing, filing a complaint, reporting a safety problem, running for the board or leading opposition in a vote, the co-op has to prove the dismissal had nothing to do with it.
-- **Quitting under pressure counts.** A member who quits within 60 days after a transfer, a cut in hours or pay, or being left out of a bonus can ask for a hearing, and the quit is treated as a dismissal. That's the same test [When People Don't Stay Long](high-turnover.md#no-pushing-people-out-before-theyd-join) uses for workers on probation.
-- **Probation isn't a loophole.** Workers on probation get a shorter version of the same hearing. Dismissing them for performance still counts in the test against pushing people out before they'd join. Only the narrow reasons listed there, like a client's safety, are excluded.
+- **Quitting under pressure counts.** A member who quits within 60 days after a transfer, a cut in hours or pay, a worse schedule, losing their regular clients, or being left out of a bonus can ask for a hearing, and the quit is treated as a dismissal. That's the same test [When People Don't Stay Long](high-turnover.md#no-pushing-people-out-before-theyd-join) uses for workers on probation.
+- **Probation isn't a loophole.** Workers on probation get the same hearing on shorter clocks: charges 5 days ahead, a panel of three drawn the same way (from other co-ops if need be) that must be unanimous, a decision within 15 days of the charges, and the same appeal. The co-op checks first for a cause it has to accommodate, and any plan to improve starts only once an accommodation is in place and runs at least 30 days. The membership clock keeps running: a worker whose case isn't settled when probation ends becomes a member, subject to the outcome. That makes a three-month probation hard to end early for performance. The model accepts that. The test against pushing people out only sees patterns, so one person's case needs its own protection. Dismissing them for performance still counts in that test. Only the narrow reasons listed there, like a client's safety, are excluded.
 - **The savings are safe.** A dismissed member's [capital account](capital-accounts.md) is fixed on the day they leave, they get a share of that year's profit for the hours they worked, and it's paid on the normal schedule. Nothing can be taken out of it without a court or arbitrator's ruling.
 
 **Published.** Every year the co-op reports warnings, hearings and dismissals by gender, race, age and disability, along with the results of an anonymous survey on workload and bullying.
 
 ## Where the share is small anyway
 
-In low-margin co-ops, like home care, a full profit share is worth a couple of thousand dollars a year, on top of the pay, schedules and say in the work that members get. There, the study's warning applies: a small shared stake may not motivate anyone. So those co-ops can't count on the profit share to do the work. Pay, schedules, training and a real say in how the work is done matter more.
+In low-margin co-ops, like home care, a full profit share is worth a couple of thousand dollars a year, on top of the pay, schedules and say in the work that members get. There, the study's warning applies: a small shared stake may not motivate anyone. So those co-ops can't count on the profit share to do the work, or on bonuses either: half of a thin profit is a small bonus, and gain sharing from a team's own savings is limited to 3% of its pay. Pay, schedules, training and a real say in how the work is done matter more.
 
 ## Measuring it
 
@@ -99,4 +104,5 @@ If co-ops fall behind as they grow, that's evidence the 1/N problem is real, and
 - **Everyday pressure doesn't reach a hearing.** Co-workers who hold each other to account can also pick on people who are different. The protections, the published figures and the anonymous survey make that visible. They can't stop all of it.
 - **The process takes time.** A month from charges to decision is fast for a fair process and slow for a small business with a problem. That's the trade.
 - **Team bonuses can pit teams against each other.** Members choose what to reward, and some will choose badly.
+- **The numbers are first drafts.** The 10% and 15% bonus limits, the four-of-five panel and the 50-worker line for monthly books are judgments, not findings. A stricter panel protects members from a hostile majority and makes it harder to remove someone who really won't do the work. The pilot's published hearings and dismissals are how to tell whether the balance is right.
 - **The evidence is thin.** The best study asks workers what they'd do and what they've done, in conventional firms. The pilot is the first real test of these rules in co-ops.

JoshHeaps.Net/Content/Socialism/open-problems.md

@@ -25,7 +25,7 @@ An honest list of what the model hasn't solved yet, most dangerous first.
 
 8. **Who decides which sectors are "essential"?** *(Partly answered.)* Subsidy authority is price-setting power over a large chunk of the labor market, and every low-margin industry will suddenly discover it is Essential. [Who Decides What's Essential](essential-work.md) takes the choice away from people. A fixed formula decides: work qualifies only if public programs already pay for most of it and it pays badly. The money goes to workers by the hour, measured from records like Medicaid's visit logs, and states whose rates fall behind inflation lose federal Medicaid money in step. The data sources are now named: federal payment records for public money, and Census revenue, with new Census questions on a deadline and rules so status can't flip on noise. Still open: counted properly, hospitals are near the line, which would add their low-paid jobs and a great deal of cost; child care's status is undetermined until the new data exists; other work mostly paid for by families doesn't qualify; employers and owners may still capture some of the money; workers without work authorization get nothing and may be made worse off; and at a first-draft $3 an hour it costs about $16 billion to $20 billion a year for home care aides and nursing assistants alone, more if hospitals qualify ([Paid to workers, by the hour](essential-work.md#paid-to-workers-by-the-hour)).
 
-9. **The 1/N problem.** *(Mostly answered.)* Peer monitoring works at 30 people; at 10,000 your extra effort raises the pool by a rounding error. The answer is culture and structure: co-ops really do push out free riders, and the federation model keeps units small enough for monitoring to bite while pooling risk above them. [Does Sharing the Profit Mean Less Effort?](free-riding.md) turns that into rules: small teams with their own numbers, team bonuses whose formula members set in advance, and a fair, fast dismissal process with protections against retaliation and discrimination. Still open: the evidence comes from conventional firms with profit sharing, not co-ops, and a small shared stake may even make people less willing to speak up; the pilot tracks value added per hour as co-ops grow to find out.
+9. **The 1/N problem.** *(Mostly answered.)* Peer monitoring works at 30 people; at 10,000 your extra effort raises the pool by a rounding error. The answer is culture and structure: co-ops really do push out free riders, and the federation model keeps units small enough for monitoring to bite while pooling risk above them. [Does Sharing the Profit Mean Less Effort?](free-riding.md) turns that into rules: small teams with their own numbers, team bonuses whose formula members set in advance, and a fair, fast dismissal process with protections against retaliation and discrimination. It sets first-draft numbers: all bonuses together at most 10% of pay and no one's more than 15% of their own, and a dismissal needs four of five members drawn by lot, with an outside panel from other co-ops for small co-ops. Still open: the evidence comes from conventional firms with profit sharing, not co-ops, and a small shared stake may even make people less willing to speak up; the pilot tracks value added per hour as co-ops grow to find out.
 
 10. **The pilot's own weak points.** [The pilot](pilot-spec.md) puts the burden of proof on the co-ops, which means roughly a 1-in-10 chance of shutting down a pilot that was actually working. It tests individual co-ops, not the [federation](federation.md) support network Mondragon relied on. Its lotteries test help after the loan and, since the pre-launch lottery was added, help before it ([Help Before the First Loan](before-launch.md)), but only among groups that come forward, not outreach to workers who never think of starting a co-op. The pre-launch help now has a cost ceiling set in advance, $400,000 of total public cost per extra co-op still open at year four, but there's no good benchmark for it, and the lottery is small enough that "not settled" is a likely verdict ([The cost ceiling](before-launch.md#the-cost-ceiling)). Founders now put in a small stake they can pay in unpaid work, but founders who can't afford months of unpaid work still face a barrier. Its comparison group (small businesses with government-backed loans) is biased in directions that partly cancel out, by amounts nobody knows. And market-rate lending based on collateral may mostly reach founders who already have some wealth. Approval rates by race, gender and wealth are published so that shows up, but publishing a gap doesn't close it.
 

JoshHeaps.Net/Content/Socialism/pay.md

@@ -32,7 +32,7 @@ The model doesn't set anyone's pay. It makes sure pay is decided in the open, in
 ### Pay bands, not personal votes
 
 - **Every job has a pay band**, a range from lowest to highest. Members approve the bands, as part of the pay policy.
-- **Managers place people within the bands**, and can give raises and bonuses there, the way any employer does. Nobody's personal salary goes to a vote of the whole co-op.
+- **Managers place people within the bands**, and can give raises there, the way any employer does. Bonuses follow formulas the members approve in advance, within limits ([Does Sharing the Profit Mean Less Effort?](free-riding.md#team-bonuses-the-members-design)). Nobody's personal salary goes to a vote of the whole co-op.
 - **Offers can run for up to three years.** A salary agreed within an approved band holds for the length of the offer, even if the band changes later. So a co-op can hire someone with a firm offer.
 
 ### Everyone sees the bands