Someone asked me recently about managing outsourced piecework, where people outside your company are paid by the number of tasks performed. I did this on various projects for over a year with a previous employer. Our trial-and-error approach had quite a few errors, but we did eventually establish a stable system. This is an outline of that successful system, with a few notes about things we tried that didn’t work.
What is This?
This spread sheet is my own attempt to show how the collateral flow to or from a clearing house works. I created it about five years ago when I was working at a bank, and needed to explain the relationships between different quantities, and how they are calculated.
If you have a rough idea of how futures work, and want to see a detailed example, this post might help. If you don’t know what futures are, this won’t help, but Wikipedia’s intro might.
I’ve had this mental model for a while, but it solidified a year ago after explaining it at work, and I wanted to use it again in a Twitter debate shortly afterwards. Twitter’s the wrong place for real explanations though, so here it is.
This model will not solve your disagreements for you, and it’s not a substitute for calculating the NPV of your possible projects. Instead, it’s a quick shorthand that might make discussions more useful, and show you something about your team.