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Employment derivatives: Difference between revisions
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This dispiriting experience, he supposed, was common to the great, dreary sweep of humankind as it clambered blearily across the clanking gears of industry. | This dispiriting experience, he supposed, was common to the great, dreary sweep of humankind as it clambered blearily across the clanking gears of industry. | ||
Received wisdom had it that there was only one way to medicate, and that was catch one of the waves of hysteria that periodically swept the market, and ride it to a better-paying job. This was cold comfort for Barkley. He was no surfer. | Received wisdom had it that there was only one way to medicate, and that was to catch one of the waves of hysteria that periodically swept the market, and ride it to a better-paying job. This was cold comfort for Barkley. He was no surfer. | ||
In any case, that was not the revelation, but this: just as the horde of wage slaves were, severally, at the whim of wanton Gods, ''so too were their employers''. Logically, they ''must'' be: the firms were on the other side of the same option after all. | In any case, that was not the revelation, but this: just as the horde of wage slaves were, severally, at the whim of wanton Gods, ''so too were their employers''. Logically, they ''must'' be: the firms were on the other side of the same option after all. | ||
Firms — particularly boring ones — were short what their servants were long, only at far greater scale. As the hype | Firms — particularly boring ones — were short what their servants were long, only at a far greater scale. As the hype cycle crested and troughed, unglamorous firms bobbed ineptly upon Hysterion’s fickle ebb and flow. | ||
Now, thought Barkley: if a single worker has but one unit measure of this risk the firm she works for her has ''thousands''. | Now, thought Barkley: if a single worker has but ''one'' unit measure of this risk, the firm she works for her has ''thousands''. | ||
A corporation employing tired multitudes to turn its turgid wheels — a good-sized bank, say — is locked in constant struggle with this tide of batty expectation just to stop its [[human capital]] washing away. | A corporation employing tired multitudes to turn its turgid wheels — a good-sized bank, say — is locked in a constant struggle with this tide of batty expectation just to stop its [[human capital]] from washing away. | ||
At fault were the exciting but stupid technology enterprises whose sails the voguish delusion filled. | At fault were the exciting but stupid technology enterprises whose sails the voguish delusion filled. | ||
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{{drop|H|unter Barkley’s experience}} as an [[interest rate swap]]s trader gave him an idea. ''Why not hedge this volatility?'' | {{drop|H|unter Barkley’s experience}} as an [[interest rate swap]]s trader gave him an idea. ''Why not hedge this volatility?'' | ||
Different sectors were “long” or “short” this crowd madness, which he labelled ''[[π]]'', at different points in the cycle. (“[[Π]]” came from the Greek παράνοια, (''paranoia''). It conveyed the pleasing ideas not just of collective madness but circularity, running on a hamster wheel, | Different sectors were “long” or “short” this crowd madness, which he labelled ''[[π]]'', at different points in the cycle. (“[[Π]]” came from the Greek παράνοια, (''paranoia''). It conveyed the pleasing ideas not just of collective madness but circularity, running on a hamster wheel, Ouroboros eating its tail, and so on — all fundamental properties of the employment relationship.) | ||
At its onset, “[[Trad fi|trad-fi]]” firms are [[Short|''short'']] and potty start-ups [[Long|''long'']] ''[[π]]''. Eventually the lunacy levels off, reality sets in and employment relations [[Mean reversion|revert to the mean]], whereupon the ''[[π]]'' curve flattens and then inverts. | At its onset, “[[Trad fi|trad-fi]]” firms are [[Short|''short'']] and potty start-ups [[Long|''long'']] ''[[π]]''. Eventually, the lunacy levels off, reality sets in and employment relations [[Mean reversion|revert to the mean]], whereupon the ''[[π]]'' curve flattens and then inverts. | ||
If one could only match off these long and short exposures across the cycle, firms on either side of the bid could hedge their [[π]] exposure to the betterment of all. | If one could only match off these long and short exposures across the cycle, firms on either side of the bid could hedge their [[π]] exposure to the betterment of all. | ||
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“She doesn’t.” | “She doesn’t.” | ||
“— then why not hedge your respective employment rate risks with a swap?” | “— then why not ''hedge'' your respective employment rate risks with a swap?” | ||
Mälstrom gaped. Dochter fell off her stool again. | Mälstrom gaped. Dochter fell off her stool again. | ||
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This way, Wickliffe Hampton had the cash required to preemptively bid back its restless staff, and lexrifyly could guilelessly piddle its investors’ cash against a wall without troubling the operating resiliency of the banking sector, or an [[Human resources|HR department]] it did not currently have. | This way, Wickliffe Hampton had the cash required to preemptively bid back its restless staff, and lexrifyly could guilelessly piddle its investors’ cash against a wall without troubling the operating resiliency of the banking sector, or an [[Human resources|HR department]] it did not currently have. | ||
If this seemed like a bad trade for lexrifyly at the outset, it was not: firstly, cash was, [[Q.E.D.]] cheap, and lexrifyly didn’t care: what was money but fiat slavery? Secondly, Barkley’s forward curve models suggested that the looney bid could invert in | If this seemed like a bad trade for lexrifyly at the outset, it was not: firstly, cash was, [[Q.E.D.]] cheap, and lexrifyly didn’t care: what was money but fiat slavery? Secondly, Barkley’s forward curve models suggested that the looney bid could invert in several quite likely circumstances: a market crash, hawkish monetary policy or the sudden onset of incipient tech winter. | ||
For these contingencies the employment rate swap was a natural hedge. While wide-scale redundancies and hiring freezes gripped the fintech sector, the boring old banking industry would box on as it always had. A fintech short ''[[π]]'' under an [[Employment rate swap|ERS]] would have a decent cashflow coming in to keep the lights on. | For these contingencies the employment rate swap was a natural hedge. While wide-scale redundancies and hiring freezes gripped the fintech sector, the boring old banking industry would box on as it always had. A fintech short ''[[π]]'' under an [[Employment rate swap|ERS]] would have a decent cashflow coming in to keep the lights on. | ||
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An observable, objective measure of “prevailing startup insanity” approximating “''[[π]]”'' was needed. Barkley supplied it. | An observable, objective measure of “prevailing startup insanity” approximating “''[[π]]”'' was needed. Barkley supplied it. | ||
Under the auspices of the British Human Capital Managers’ Association (BHCMA), a committee of fashionable startups would meet each afternoon in a WeWork in Shoreditch and over kombucha martinis | Under the auspices of the British Human Capital Managers’ Association (BHCMA), a committee of fashionable startups would meet each afternoon in a WeWork in Shoreditch and over kombucha martinis state publicly, in front of a panel of [[venture capitalist]]s, how much they would be prepared to pay an underperforming settlements and reconciliations clerk to join them to “drive customer engagement”. They expressed this as a premium or discount to the equivalent value for the preceding day. The venture capitalists would vote by throwing money — literally, from a stack of bills on the table before them — at the “pitching” start-ups. | ||
The BHCMA would weight the submissions by reference to the volume of cash the venture capitalists lobbed at each startup, trim the top and bottom estimates, average the remainder and compile and publish the trimmed arithmetic mean rate as the [[London Inter-Employer Offered Rate]]. Quickly “[[PIBOR]],” as it became known, became the ''de facto'' measure of ''[[π]]'' and was soon factored into the “floating” leg of [[employment rate swap]]s as standard. | The BHCMA would weight the submissions by reference to the volume of cash the venture capitalists lobbed at each startup, trim the top and bottom estimates, average the remainder and compile and publish the trimmed arithmetic mean rate as the [[London Inter-Employer Offered Rate]]. Quickly “[[PIBOR]],” as it became known, became the ''de facto'' measure of ''[[π]]'' and was soon factored into the “floating” leg of [[employment rate swap]]s as standard. | ||
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{{Drop|S|hort counterparties would}} also be assigned a weighted average “[[credibility derivatives|credibility spread]]” over (or under) the prevailing [[PIBOR]] rate. This was a competence assessment made by independent [[human capital]] rating agencies of the median quality of a given counterparty’s staff, routinely marked to market and adjusted by way of a 360° [[performance appraisal|credibility appraisal]] process. | {{Drop|S|hort counterparties would}} also be assigned a weighted average “[[credibility derivatives|credibility spread]]” over (or under) the prevailing [[PIBOR]] rate. This was a competence assessment made by independent [[human capital]] rating agencies of the median quality of a given counterparty’s staff, routinely marked to market and adjusted by way of a 360° [[performance appraisal|credibility appraisal]] process. | ||
Though HR departments would [[Force-ranking|force-rank]] staff to a curve graded against an internal 5-point scoring metric employee “alpha” could still be mispriced especially over time, as a result of mediocrity drift. Barkley adjusted his model for mediocrity “smile” but the formal grade boundaries and other arbitrary “success criteria” of the HR model still led to arbitrage, especially with the rising popularity of “resource fluidity”. interdepartmental secondments were beset by diversity arbitrage and [[cheapest to deliver|cheapest-to-deliver]] scandals, especially over quarter end. | Though HR departments would [[Force-ranking|force-rank]] staff to a curve graded against an internal 5-point scoring metric employee “alpha” could still be mispriced especially over time, as a result of [[mediocrity drift]]. Barkley adjusted his model for mediocrity “smile” but the formal grade boundaries and other arbitrary “success criteria” of the HR model still led to arbitrage, especially with the rising popularity of “resource fluidity”. interdepartmental secondments were beset by diversity arbitrage and [[cheapest to deliver|cheapest-to-deliver]] scandals, especially over quarter end. | ||
[[Reduction in force|reductions in force]] could be handled quantitatively by reference to the PIBOR forward curve rather than by business need or individual performance. This was not the last unintended consequence of the financialisation of the employment relationship. | [[Reduction in force|reductions in force]] could be handled quantitatively by reference to the PIBOR forward curve rather than by business need or individual performance. This was not the last unintended consequence of the financialisation of the employment relationship. | ||