Decision Making and Income Risk

Coming in as a freshman, my parents had always pushed engineering as the path to take. All the research has shown that engineers continue to be in high demand out of college, so the path made sense. However, I really wasn't the biggest fan of engineering, only because I wanted to do computer science and not waste my time in chemistry, physics, and advanced math classes. However, I just stuck with it for a while because any other option seemed like a bigger risk and wouldn't guarantee me a job out of college.

However, eventually, engineering and I just didn't click and I wound up looking elsewhere at the university. Business wouldn't work because applying as a freshman was the way in. I even seriously considered moving colleges last winter because of how my classes turned out. Luckily, all of my schooling didn't go completely to waste and I was able to switch to a major that was more interesting for me and carried less of a burden as far as intrinsic motivation goes. Economics has been a great spot for me. Plus, as I've done research, I see the market need for economics majors is quite competitive with the top majors out of college. So, switching to economics really didn't decrease risk from a starting-out income perspective.

Something I have also always been interested in is sports writing and sports analysis. This is evident in my recent blog posts, but I am currently doing work for a few websites in the sports journalism game. I knew coming to college and pursuing a journalism major would put great risk on income out of college. ESPN, Sports Illustrated, and other companies have laid off workers over the past year which is concerning for people in the field and future employees in the field. I definitely would like to pursue a career in it, but I am not decreasing income risk by pursuing it on the side. If an opportunity opened up, I would be willing to take the risk knowing I have the economics degree in my back pocket should the market take a hit and I would lose my job.

With an economics major, a CS minor, and sports writing on the side, I am setting myself up well and covering many bases. My unique diversity in experience and knowledge certainly will come in handy down the road.

As far as tuition and debt goes, my parents worked extremely hard to be able to pay for my college. However, after four years of payment I am on my own for paying. So, with an extra semester, I will accumulate a small amount of debt. Sticking with the economics major is important because of where I will stand after I graduate. I will likely not pursue something in journalism until that debt is paid off.

Over the past few summers, I worked at a factory near my hometown that made parts for windows and sliding glass doors. This has helped me even though I am not looking to be in a position like that. That job has showed me that working hard and getting a degree that limits income risk is important so that I am not searching for a job for very long after I graduate and I end up working somewhere not related to my major or my interests. I also interned a bit with my dad over this past summer. He is an independent computer consultant who goes to clients all around the country and finds work there. I helped him with lower level coding and SQL over the summer, which only widens my base of knowledge in my computer science minor. Getting hands on experience opens the door for internships in computer science but also for economics in those same organizations due to connections I am lucky to have. Those possible internships could help reduce my income risk right out of college.

Unfortunately, I haven't had a sibling go through what I am going through yet. I am the oldest in the family. However, learning from my parents and their route in college has showed me that practicality in a major will certainly reduce income risk because of the demand for positions in those more practical fields.

My goal going forward is to have an internship for summer of 2018. I am not limiting myself to any single field but will pursue one in all of my interests. Should I intern for a sports journalism company, great. If it's in economics or computer science, even better. Having a lot of bases covered certainly helps my odds and will help in the future.

Connecting The Dots

As I go back through my posts thus far, I see a few common themes. I did write about a couple different organizations in my first few posts. I wrote about a media company that I currently am working with and their issues with transaction costs and opportunism. I also discussed my summer work in years past and the organization of the team that the company put together. The biggest theme to take away from the posts themselves thus far is the idea of transaction costs. We see the final product of corporations, but we don't see all the interior costs that go on behind the scenes. The ideas of commitment and information come into play with those transaction costs, and they are something that seems to be in play with the class going forward.

The bigger picture with all of these posts comes down to management as a whole and the idea of identifying inefficiency in organizations. As we have discussed in class, it's more interesting to discuss the problems that arise in organizations rather than studying the well-functioning ones. Discussing transaction costs, opportunism, organization, and the idea of Illinibucks has showed me the value of good leadership and management. If a company does not have an effective leader at the top, the company can suffer in a multitude of ways. These past few posts have ultimately shown that.

As far as my process goes, I think that I have definitely evolved through the first few weeks. I actually have enjoyed talking about my own experiences and was definitely able to draw a lot on the transaction cost post. With the turmoil going on there over the summer, it really helped out my writing and let me expound on multiple parts of the issues with transaction costs. With opportunism being everywhere, it was easier to come up with examples. The same goes for the organization of teams in the following post.

However, I think it was more difficult for me to do the hypothetical. Maybe it is because I am not drawing as much from the book as I do from discussing things in class. If so, I need to put more energy into reading the books and taking away the major concepts and applying them to hypothetical situations.

Going forward, I would like to see a mix of hypothetical prompts and prompts that you can draw experiences from. I definitely like drawing from my own experiences because it lets you see the economics of an organization from your own eyes and opens them. That helps you look for the concepts and issues in organizations when you are actually in them. Hypotheticals are also good to have because they test your knowledge and application of the concepts. I am excited for this going forward.

A New Illinibucks Program

Just for kicks, let's say that the University of Illinois is planning on starting an "Illinibucks" program for 2018. The idea of this is quite interesting. Obviously, it is assumed that the university will set the price of these, and that the price will ultimately come down to the quantity that is demanded by students enrolled at the university.

These Illinibucks could be used for a multitude of things. For one, freshmen and sophomores would love nothing more than to use their Illinibucks to move up in priority to select classes. Some class, such as ones in computer science and business, are often very difficult to get into and aren't a guarantee no matter when you sign up.

Another big use for the Illinibucks could come from returning students picking their housing for the next year. If a sophomore wants to be at the Ikenberry commons in the new dorms, or they want to be at ISR near the engineering library. Having those bucks could get them priority for picking dorms.

Also, advising appointments can be pretty hard to get at the beginning of the semester and during the class selection period. Using Illinibucks to reserve a spot with an advisor would be beneficial to students trying to get into classes along with trying to work their schedule for the upcoming semester.

Another probable use would be for food. Jumping the lines to get food in a pinch would be a nice option for students who are in a rush for classes or who need to get food early because of evening commitments.

Another one that may not be as obvious is reserving space on the turf fields. Often, it's hard to find spots to practice or just be able to play sports. During the early autumn months, being able to reserve time to play football, soccer, volleyball, or even some softball would be a great add on for some who enjoy staying active.

The allocation of Illinibucks is the interesting concept in all of this. Giving out the same amount to each student wouldn't really fix any of the issues above. So, how does that happen? You add incentives in order to spike interest in the Illinibucks and being able to move up and reserve spots for the listed items above. One of the easiest ways to create incentives would be to use GPA as a determinant. If students want the Illinibucks, the GPA incentive would create intrinsic motivation for students to study harder and would possibly raise the average GPA across the board at the university. Creating that competition for those incentives would surely benefit students and faculty in certain ways. However, there could be an issue with grades being a determinant. Removing the enjoyment of your major could put some students in a GPA frenzy and possibly ruin their experience here. It surely wouldn't affect too many students, but it is something to consider here.

Determining the price of these Illinibucks would certainly be a challenge. You need to find the right price in order to make the bucks scarce and create the competition for those incentives. Setting a low price would not work well. The idea of moving up for classes wouldn't make sense because if prices were low, everyone would have a similar amount and moving up wouldn't help a student. However, if the price is high, then students would treat them as scarce resources and would use them sparingly. If a student really needed to reserve an advisor meeting or really wanted to register for a certain class, the high price would turn off the opportunity for some students while other would use them when a big need arises. The amount of usage would also be very low with high prices, as students would hold on to them and use them in a desperate situation. High prices also could create a market where students trade those Illinibucks for other necessities.

Team Organization

In the three summers previous, I worked at a small factory near where I lived. This factory produced a number of different products involving windows and sliding glass doors. I simply worked putting parts together and sometimes on this machine that would assemble a part in three steps.

While the work was often boring, this company surely had a successful team in place. It definitely brought about some of the simple structures described in Bolman and Deal. When I started there three years ago in the summer, there was a very hierarchical structure in place. The two guys at the top, who started the company, reported to the middle manager, who happened to be one guy's daugher, who then set us up with what we would be doing during the day. The work could consist of sitting in a desk and putting parts together all day.

It also could mean working on one of the two machines that was set up for these certain parts to make. They were the most demanded products, so two teams of three would sit on the machine and run it to make the parts. This part of the day to day work would fit more with the circle structure. Each person would deal with the other two in different ways. I was often on housing, which was the "shell" of the product. I put the pieces on a belt that would move them up to be put in the two slots rotating around the machine. Then, the person to my left would have the inner part which consisted of springs. They needed to make sure that two of those parts would be sitting in the right spot for the machine to pick them up. Then, the same would happen with the last part, the "cover". It was much like the previous step in that two needed to be ready to be picked up. Also, I was in charge of catching the bad parts before they ended up in the boxes that would be packaged. So, the person in charge of the machine who applied the third part would trust me to see and catch the bad parts.

However, things began to change in my third summer there. They started adding on more people for the desk jobs and others to take calls, manage inventory, and lay out the product scheduling for the week. The person who used to be the middle manager earlier in my time there moved over to head the inventory and product scheduling part of the business. Then, for us working in the factory to put parts together and for the small group of guys working the plastics machines, a new guy was put in charge to manage that. So, over time, a dual authority started to take shape at the company.

From the perspective of Katzenbach and Smith, the team structure was set up well. One of the big parts of the company was that there was a manageable size. Overall, with two guys at the top, and the dual managers of each section, the entire company totaled 18 people. Some people would work the machine for parts. Other would put parts together in desk chairs. And, the group making the parts with the plastics machines would continue to make the products needed.

The other part of Katzenbach and Smith that applied to this workplace is the idea of being versatile. Most of the workers were able to perform more than one task and could be helping the company in multiple ways. If one or two workers are unable to show up, other workers could take their place in certain spot. Many people could do multiple spots on the machine, which was important because some of the people didn't work every day of the week.