Thursday, 15 May 2014

Partners Get the Profit, Subcontractors Get the Wage

Once upon a time an agency owner spelt this out for me when I proposed something close to a percentage deal: Subcontractors just get a wage. Profit is for the partners.

I returned the favour — and the gift of a free lesson — by spelling it out for him that it was in the nature of an intermediary to live off of a commission on the fees of those who actually provided the service.

See the difference? The difference lies in the positioning. He positioned himself as a partner and positioned me as his own mere subcontractor-to-be. On the other hand, I positioned myself as the real service provider and him as an intermediary.

In my reply, I repositioned him.

This is what NLP folks refer to as reframing: when somebody gets in that bad frame of mind — or tries to impose that bad frame on you or on your relationship or interaction with that person — you propose a different frame. Or you just simply propose a different way of looking at a problem when you want to get someone out of a rut.

This is also referred to as cognitive reframe, which, in Wikipedia's words: is a psychological technique that consists of identifying and then disputing irrational or maladaptive thoughts. Essentially, you get to the bottom of what's troubling you — which has a lot to do with your way of thinking about that subject — and you treat yourself to a different way of looking at it. If you're stuck in thought patterns which you know don't make sense or are hurting you, you look for a different, more rational or more manageable way of looking at the same issue.

At the bottom lies simply going from A to B (which is just what marketing does, by the way, or a hammer*), but if we put some meat on the bare bones it goes more like this:

Reframing is a way of viewing and experiencing events, ideas, concepts and emotions to find more positive alternatives

(* A hammer gets you from not having nails driven through a plank to having nails driven through the plank.)

Except it wasn't therapy, and I wasn't looking for positive thinking (a half-empty-half-full reframe would have been just that). Rather, I identified the bad thing — bad for me — being the guy's partner/shareholder/owner vs subcontractor frame or pattern — and I found me a more positive alternative: I was the provider of the service, while the agency dude was just an intermediary.

That wasn't about the legal nature of whatever relationship we were contemplating, it was about the thinking about respective roles.

This said, I do regret it comes to such combative witticisms. I'm a fan of collaboration and sharing, and I wish we could both be co-owners of a joint operation (not necessarily a joint venture in a legal sense), and share the fruits of our labour between the two of us. Perhaps this is what I should have proposed, a more constructive solution, and perhaps it would have worked, I don't know. I confess I was being petty to some extent. He'd showned me my place, I had to show him his.

Anyway, the point is that as long as translation agencies — and other outsourcers — are the owners of translation, translators won't be getting much in terms of profit. They won't be partners, they'll be subcontractors or some other subordinate category not entitled to participate in profit sharing.

In other words, capital will prevail over labour. Or will it really?

Capital is not just cash!

It doesn't even have to be anything tangible. Cash is not tangible, to begin with. Coins are no longer lumps of gold or silver with a monarch's stamp, and banknotes, just like printed university diplomas, only representan idea. Pastries and broomsticks and computers are tangible.

Capital can be anything which contributes to the success of the partners' venture, including labour. Heck, even insurance, i.e. a conditional(!) promise of bailing the partnership out of trouble, should it get into any (and we hope it won't), could constitute capital. Telling jokes to keep the other guys in good spirits while they're working also could be capital, but telling jokes actually is labour, so let's get back to insurance.

In this illustration where insurance is capital, nothing goes out of your pocket as long as the company doesn't get in trouble, but you still get a share in the profit. If there is never any loss, then you'll basically only ever gain profits without ever spending a penny. Unfair? Nope. Because if things go down south, then you'll suffer more than the other guys. Your promise makes them safe. You bring in safety.

Things being so, who says cash should be privileged? Cash or the agency's plot of land with a physical office, or production infrastructure (value chain/QA) or sales infrastructure (website, ads, sales reps, client base etc.)? Since when are those things better — or anything else superior grade — than your translation labour, translation expertise and anything else you bring in?

I'm not saying your labour should be privileged, either. I'm not a commie.

Furthermore, it's not unfair if someone offers you a fixed wage for a fixed task! Even if that task happens to be part of his own profit-making operation. Which is how employment works in general.

But who says you need to give them whatever they want on their own terms? (You don't.)

The beauty of the free market is that everybody is allowed to negotiate. You still need negotiating power and leverage to really make it work. This is not to say might makes right — rather,  everybody has the right, so you just need to get the might.

Or you possibly already have the might, except it's dormant and you need to tap it.

You own your labour, don't you? Your labour. Your availability. Your skills, your diplomas and referrals and other cool things which attract translation clients. You own your computer, your software, your books. Just like the agency owns its own computers, its own software, its own books.

You own it, so you make decisions about it, not the agency. It's not unfair if you make those decisions without subordinating your interests to those of the agency.

Nor is it only the agency who's allowed to benefit from the laws of the market or from the way the economy or the legal system works. If your goods are scarce, you can charge more. If their quality is premium, you can charge a premium price. And so on.

What I'm trying to tell you here is that it's not true that the agency is allowed to rely on all sorts of arguments and advantages but you are not. It would be true if it were true that translators, by some sort of law, need to be subordinate to agencies. But they don't.

You don't need to make your capital subordinate to their capital, either. Unless you really need to because you don't have the leverage to command a better price or better terms for your goods or services. But while you may lack the might, you have the right just as they do.

They are right when they say you aren't a partner in their enterprise. In fact, I can respect that: some time ago a group of people assembled and decided to tie their economic lot together, together profit or lose, and together create something. They then created the something and are benefitting from it now. It belongs to them. It does. Why should an employee or (sub)contractor take it away from them?

On the other hand, your business belongs to you. You had the idea, you decided to brave it alone on your own, being your own only partner (unless your parent or spouse or bank was effectively a silent partner). You created it, it works, you can benefit from it. Why should a reseller or agent take it away from you? Or a client?

It's wrong if you propose an unfair arrangement, one that cheats or abuses the other party and imposes an unproportional division of investment, profit and loss. But it isn't unfair if you simply require a higher cut or even a more advantageous — or simply different — compensation scheme.

It doesn't need to be so that your earnings are capped in the low, single-digit cents and the agency's open-ended and growing, getting 30-40 more cents a word that are not yours to think about. That sort of thinking is natural for a business owner, but it doesn't mean you need to agree with it and submit to it if you negotiate with that business owner from the outside.

Percentages or whatever don't matter here. Or even profit shares. What matters is that it isn't true that translation agencies are entitled to push for the highest profit they can while translators should content themselves with blue-collar wage and status.

Yes, it's true they own their business, and you are not their partner. But you own your business, and they are not your partners. Or employers.

Reframe. See your work — and everything else you bring in — as capital. Equally privileged capital.

On the other hand, see whatever work an agency does as equally privileged work. Just as your capital is as good as the agency's, so the agency's work is as good as your work.

Equally privileged does not mean equally valuable. It means equally entitled to be recognized for whatever value it brings in and bring the worker — or the capital owner — his reward. (Without privileging any particular sort of capital or labour. Labour also being capital and capital also being labour.)

If an agency does most of the heavy lifting, i.e. gets some really good and high paying clients you wouldn't hope to get on your own, does the management, the DTP and the technical stuff, does some really serious QA and is ready to step in and hire experts for terminological consultations and reviews, pays you even if the client doesn't pay, and especially if it will eat the loss and not sue you above the value of your invoice for any errors you make, then the agency may well be entitled to a lion's share of the end price. And you're effectively a specialized employee. An important one to be sure, deserving a nice wage, but it's hard to speak about being cut out of profit unless your translation is really unique and critical to the end value.

On the other hand, if the agency basically mediates contacts and payments, then it's hard to see the relationship in the same terms as, say, that of a construction company and a woodworker or bricklayer or glassworker, where the company manages the whole thing and not even the architect can claim ownership of the project. It's more similar to an artist's or sportman's manager or a proper agent.

An agent is someone who seeks out contacts — and sometimes contracts (and sometimes may be authorized to just already sign contracts) — for his principal. And gets a percentage share. This is different from being a salaried trade representative or marketer (many of whom may be remunerated on the basis of a small base salary plus commission anyway, just to motivate them to work and avoid paying for their degrees and certificates and experience when they aren't bringing in any business.)

Wait, so who says people who sell someone else's goods can profit but people who make goods to be sold by someone else cannot?

Again, this is not a proposal of percentage-based compensation model. Rather, I'm saying it doesn't need to be so that an agency charges 40 cents and pays the translator 7, as opposed to the translator getting 33 and the agency getting 7.

Obviously, few agencies would agree to that, and an agency can always walk out. But so can a translator. Why should only an agency be allowed to threaten to walk out ('Unfortunately, we cannot accept (...)') or use my-way-or-the-highway tactics ('We can offer you X,' or forcing you to sign their long contracts in entirety without any change or there's no deal) — but not a translator?

The free market makes the rules equal for both parties here.

People may have the sort of perspective in mind in which whoever gets to get the clients in or issue invoices for them is entitled to 'own' the whole thing. Or that the larger, more powerful company is entitled to 'own' it rather than the small company or freelancer. But, as we've seen by now, there aren't really conclusive arguments in favour of that. With some success, you can argue agencies are, well, agents, and resellers, and the more mediating and reselling they do, the less can they claim to be somehow the owners of the product.

Yeah, they own their businesses. But you own yours. You can be their nameless vendor. They can be your nameless agent. Those are two extremes. Find some sort of balance.

Recap (with a twist):

  • You aren't being exploited just because an agency keeps 50% of the end-client price or more. The product doesn't make the profit. The sale of that product does. The sale is made by the product and the sales effort, combined. Both are labour, and both kinds of labour deserve pay. If it has bothered you so far and brought you stress and mental anguish that an agency which really does a lot of things charges much more from the client than it pays you, you need to change your thinking by acknowledging the labour the agency puts it.
  • On the other hand, your work, skills and everything else you bring in is capital, it's valuable assets, material or not, just like the agency's. It's not somehow less valuable than marketing, sales, taking clients to lunches and writing invoices. Or being a business grad as opposed to a language grad. Or putting one's investment in a translation degree as opposed to a translation agency. You don't need to see yourself as someone who is duty-bound to work for someone else's profit.
  • Depending on the balance of the labour and capital each of you bring in, sometimes you really are basically an employee, but sometimes the agency is basically a glorified salesman. Know the difference.
  • You aren't a partner in their business. But they aren't in yours, either.

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