Work Hard And Get Rewarded – a parable

“Hi Alice, can I talk to you for a moment?”

“What do you want, Bob?”

“Well, I’ve been here a year, and the business structure doesn’t make any sense.”

“Jesus Christ, it’s a pretty standard company. We make doohickeys and sell them for a profit, which pays our wages. What’s not to understand?”

“The numbers don’t seem to add up.”

“Have you been reading the accounting documents? Because those are confiential, you know.”

“Oh, no, it’s just from what I know of where the money goes, it looks like there’s quite a bit of money missing.”

“Eh?”

“There’s money gone that I can’t see where it is.”

“All right, what are you stammering about?”

“Well, a single doohickey sells for €16…”

“That’s the retail price. We sell them for €12 each and the shops add a 25% markup.”

“Oh, right. OK, so you could say a doohickey is worth €12.”

“You could, yes.”

“Now, the raw materials needed to make one doohickey cost €8, right?”

“At the moment, yes.”

“So logically, the labour required to make one doohickey is worth €4.”

“What are you getting at?”

“If €4 is the difference in price between a doohickey and the materials needed to make a doohickey, the time and work that goes into making one doohickey must be worth €4, right?

“Whaaaat? I don’t follow you at all. Try speaking English.”

“We spend €8 to make a single doohickey and sell that doohickey for €12, correct?”

“Right.”

“So where does that extra €4 come from.”

“That’s just the cost of the effort to make it.”

“Yeah. That’s just what I said.”

“No it isn’t. I don’t know what you were trying to say.”

“I was saying exactly that.”

“Bloody hell. Just… try to speak normally, OK? Can you do that? Do you want to take an English class?”

“… I’ll try. So anyway, now that we’ve established that the labour required to make a doohickey costs €4, I know that a doohickey normally takes six minutes to make. That’s ten doohickeys every hour, which means that by multiplying doohickeys made in an hour by the cost of making one doohickey, a line worker produces €40 worth of labour every hour.”

“Where did you get that from?”

“(10 doohickeys/hour) × (€4/doohickey) = €4/hour”

“No, no, no, that’s totally wrong. You make doohickeys, and we pay you a salary for that. We sell them, which is how we make our money, which is where your salary comes from. Understand?”

“I understand the principle, but my salary is only equivalent to €9.50 per hour. Where is the other €32 gone?”

“Blimey, you’re demanding, aren’t you? Right, you think you should be making €40 an hour do you?”

“No, I’m sure there is a reason I’m making less, I just don’t know why?”

“Right. How much do you think Carol’s time is worth?”

“I’m not sure what quality control gets paid…”

“Does she produce anything?”

“No, she…”

“She stops the crap from going out. Before we hired her, we were getting shipments back every week, and having to pay our customers for the inconvenience. Since she started, I reckon she’s saved us €600 a week.”

“Oh, so she earns €600 a week by preventing bad stuff?”

“No, she gets €450 a week.”

“Huh, OK… So since there are 10 production lines, Carol is paid about one hour and seven minutes of everybody else’s labour.”

“What about David? Do you think we could last long without regular maintenance?”

“Well, clearly not.”

“You say your time is worth €40, but if the machine goes down and you can’t work, so the company is just wasting that €40 an hour…”

“€9.50 an hour. That’s what you’re losing if I can’t work.”

“Don’t interrupt me, especially when you’re wrong. The company loses €40 for every hour the machines aren’t running. David prevents that. All his work saves us that loss.”

“So how many hours of lost production does he save us?”

“I don’t know. But he’s worth another €400 a week. What about transport?”

“No idea.”

“We make three deliveries a week, and pay €100 for each one.”

“Right, so that’s €300 a week.”

“Oh, so you can do maths! Why don’t you show this kind of intelligence in your daily work?”

“There’s also Eve in reception. She takes home another €300 a week.”

“OK.”

“Now, this building and all the machines we use. How much do you think those cost us?”

“Don’t know.”

“You ain’t got a clue, have you? We spend €5,000 a week just on renting them.”

“Wow.”

“Yeah. €5,000 a week just for the privilege of using them. What do you think we spend on electricity, heating, fuel, and so on? Any ideas? No? That’s another €3,000.”

“That’s a lot.”

“You’re telling me! Then there’s certification. How much do you think that costs?

“€500 a year?”

“Close. It’s actually €650 per annum. What about office supplies?”

“Couple of hundred?”

“We spent €250 last year on just office supplies. There ain’t much left after that, and what we do have is reinvested into the business.”

“Right, it’s just that I was chatting to Carol, and she said that we reinvested €1,000 last year. Is that right?”

“Yes, that sounds right.”

“That leaves €850 a week unaccounted for.”

“We also pay €200 in corporate tax every week, plus €50 a week for IT security.”

“Right, so there’s still another €600 left that I can’t account for.”

“That’s my salary.”

“That’s what you get paid to order everybody else around.”

“Don’t insult me, Alice. You’re on thin ice as it is. Do you not think we need somebody to coordinate things, somebody to respond to our customers when they scream at us down the line about how we’ve fucked up?”

“OK, but you’re not actually producing anything, or avoiding loss of production, or even really using your labour for the business. Why do you earn so much more than anyone? And for that matter, why do we pay €5,000 a week in rent? Our renters aren’t making anything, so why do they get such a huge portion of the money from our labour?”

“Right, I’ll answer your second question first. They own those things, and it’s too expensive for us to buy them. Hence, we have to rent.”

“But why do they get to set the price? They own the machines, so why don’t they operate them? Maybe they could hire us and cut out the issue with renting altogether. Or maybe we could make them an offer for the use of their machines, which they can accept or reject. It just doesn’t make sense that they extract money from us for work they don’t even do. We use these machines, so why can’t we decide the terms.”

“Because we’re not the owners, it’s as simple as that. As to your first question, I started at the bottom, just like you. I worked hard, and I got rewarded for it. If you can keep your head down, not be a little shit, you might get rewarded as well.”

“Yeah, about that. For the last three months, I’ve cut my time down to five minutes per doohickey, which means I’m making an extra €8 per hour, but I’m still getting the same as when I was just making ten an hour. Isn’t that the kind of hard work I should be rewarded for.”

“Yes, but you need to work on your attitude. If you can keep up that kind of output, and fix your personality, I’ll consider giving you more of the money you make for this company.”

“But if I’m going to make the same money regardless of productivity, where’s the incentive to work any harder? Also, what if everybody works harder so we’re all working equally hard? Will we all get rewarded somehow?”

“No, only the best people will get rewarded. The incentive is to get a raise or a promotion from me based on how much good you do for the company. Now your break must be over soon, so get back to work.”

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