W01Working Paper 1 · 2026
The Compensatory Load Spiral (CLS)
A mechanism in which compensatory effort keeps output constant while consuming the capacity of whoever produces it, and the allocation rule, which reads only output, raises the load in response.
What the Compensatory Load Spiral is
The Compensatory Load Spiral is an organisational mechanism in which the internal state of a decision maker degrades invisibly while output stays constant through compensatory effort. The allocation rule reads the output and raises the load. The cycle accelerates until failure, which is abrupt because nothing in the output anticipated it.
The spiral
How does the spiral work?
Three elements. A state variable that degrades and is not observable, neither by the organisation nor by the person. An output that stays constant through compensatory effort, and it is that effort which consumes the variable. And an allocation rule that uses output as its criterion and raises the load in response. The system raises the load precisely because the variable is degrading.
The failure
Why is the failure abrupt?
Because the hidden variable crosses a threshold. There is no visible degradation in the records before the event, so there is no warning. What fails is not detection, it is the premise that output informs about state.
The boundary
What separates this mechanism from bad management?
It does not depend on anyone hiding anything. It works with total honesty from the participants and total good faith from the evaluator. A well-intentioned organisation, with defensible criteria, produces the result.
The risk
What does it mean for risk assessment?
The cycle irreversibly consumes productive capacity in the senior layer while reported output stays constant. The organisation distributes results out of capital and books them as income. The effect is not on the expected value of the flow, it is on its distribution.
How to cite
The canonical reference.
Teixeira, H. (2026). The Compensatory Load Spiral (CLS): Hidden-State Depletion and Abrupt Failure in Senior Layers Under Output-Based Allocation. Aurenia Editions Working Paper No. 1. https://doi.org/10.5281/zenodo.22239347Zenodo · CC BY 4.0 · September 2026
Direct questions
What the paper claims, and what it does not.
No. The paper formulates the mechanism and states two falsifiable predictions. The tests are still to be run.
Where to start
Choose the door.
The rest comes after.
The mechanism is formulated and the predictions are stated. They still have to be tested.