Final Thought

I found this class to be very different than any class I have ever taken before, but in a good and enjoyable way.  As I am an accounting student, the content of the class was obviously different from the majority of what I had taken at college, however I have taken other economics classes at the university, so it was nice change of pace in that regard. However, aside from the content, the most unique thing about this course for me was the structure.  While I have taken courses that involve posting topics on discussion boards, this is the first one I have ever taken that incorporates extensive blogging.  I think aside from the educational content this will prove to be beneficial down the road as our exposure to blogging will help as it continues its ascent into the mainstream.  I liked being able to offer my opinion on topics in a freer and less restrictive environment, and I think the open-ended nature of the blogs made for better insight.

I felt that the excel homeworks were helpful in seeing graphically and mathematically how the applied concepts affected the market.  The visuals provided by the graphs really helped me the impact of certain factors on the market which really helped reinforce topics to me.  My biggest complaint with the excel was simply the physical layout and formatting. On some of the homework assignments, a few of the spreadsheets had so much written information on them in such a small space that it made it difficult to retain some of the information.  While I understand this is a very petty complaint, it is one that I also think is easily fixable for the future by either formatting the document differently or breaking up the homework into more parts splitting up the written text.

My favorite topic we covered was the theories on management and how management styles can affect an organization economically.  It was interesting to compare and contrast the different techniques and makes assumptions about which style is best for certain situations.  This is a topic that applies all across the business world and is very important to keep in mind for all future career endeavors.  The trickle down effect from management styles is simply something that cannot be ignored.

Overall, I thought this was a beneficial class and one that I was happy to have taken.

Reputation

A reputation is one of the most important things a person owns, and while intangible, can play a major role in influencing the happenings in a person's life.  Reputations are built up over time based with past performance or actions playing the most vital role in the formation of a reputation.  The most accurate reputations are the ones that have formed over an extended period of time as the result of many different actions, whether they be good or bad.  However, one of the most important characteristics of reputations is how fragile they can be.  While this is true much more so with good reputations than bad ones, one mistake can ruin a person's reputation forever.  With that said, it generally comes out after the fact that the individual can has had similar transgressions in the past that remained private and a track record of poor decisions or performance can uncovered.  A perfect example of this is the reputation of former Penn State football coach Joe Paterno.  For almost all of his life, Paterno was held in the highest esteem by the American public for his values and good deeds, as well the fact that he was an exceptional football coach.  However, after his former assistant Jerry Sandusky had been arrested on child molestation charges, it was uncovered that Coach Paterno had helped try to cover up Sandusky's horrible actions.  As soon as the cover-up became public knowledge, all of Paterno's good work in his career had become completely overshadowed and tarnished.  As more details unfolded, it turned out that the cover-up had gone on much longer and was much more detailed than people thought.  While it only took one mistake to completely damage Paterno's reputation, looking back a precedent had been set earlier in his career for acting in this manner.

As far as my own personal life, one place where I greatly value my reputation and I like to think that it is fairly strong, is with my family.  While my reputation has been built up over many years, I am aware that one mistake could unfortunately change it entirely.  I have a reputation within my family of being very dependable and reliable.  This came from years of completing any action that I said that I would do, and stepping up, whenever possible, to help or do a favor.  I know that my family members have great confidence in me to fulfill their expectations if they ask me to complete a task.

The one time I "cashed in" on my reputation was when my parents went away for a weekend and left me at my house to take care of my dogs and stay at the house for the weekend.  My parents expected that I would essentially treat the house in the same way as if they were still there based on my reputation of being dependable.  Instead, I took advantage of the opportunity and had some friends over at my house when this would not have been okay with my parents had they known of this.  Unfortunately, when my parents returned from their trip, they realized that I had had people at our house and were very disappointed in me. My reputation certainly took a hit at the time, but I was able to recover partially based on the goodwill I had built up in the past, and future acts of reliability I demonstrated in the future.

Triangle Problem

The triangle problem involving principal-agent relationships is one that agents struggle with in many different situations and circumstances.  Agents in client-serving roles have to contend with the best interests both long-term and short-term of their client, as well as the best interests both long-term and short-term of their employer.  This problem can be applied to many different circumstances, such as the example of the law firm associate given in the prompt.  It can be very difficult to manage the best interests of both parties, and many times these situations can lead to negative results for one, or both, of the parties involved.

A high profile example of this triangle problem that differs from the problems facing a law firm associate is the situation facing the commissioner of the major American professional sports leagues.  For example, Roger Goodell, is appointed to his position by the owners of each franchise in the NFL.  Because his appointment and ultimately his employment status, is determined by the owners' satisfaction with his work, he has great motivation to act in the best interests of the owners when determining how to govern the league.  Was this his only principal, Goodell would govern the league in a way that generated the absolute most profit possible for the NFL, with no other concerns.  However, Goodell also has a responsibility to maintain the good-standing and reputation with the fans supporting the league and players playing in it. Goodell acts as the disciplinarian regarding fines and suspensions for all player issues, and while owners would certainly prefer their star players not missing games, Goodell must enforce necessary consequences required by the rules and regulations of the league.

Lately there has also been a large outcry about increasing player safety within the NFL as well. While these measures certainly will not increase profits for ownership, Goodell has implemented new safety regulations and the league is constantly in the process of researching ways to improve player safety.  While an argument can be made that every decision Goodell makes ultimately is in the best benefit of the owners and therefore the triangle problem does not exist, this simply is not the case.  An example of this was decision not to expand the regular season to 18 games.  Owners would prefer more games as it allows for more revenue opportunities, however it would greatly impact player safety as more and more players would get hurt over the course of the season.  Many of the owners are older in age that are only concerned with making short-term profits and not the state of the league 30 years from now.  Goodell shows that by not expanding the season, he is not governing solely in the best interest of the owners. but also with the reputation and well-being of everyone involved with the league in mind as well.

Goodell is forced to walk a thin line as he needs to appease the owners enough to stay employed as commissioner of the league, but also not to cave to all of their demands in order to act in the way he feels best protects of the entire league as a whole.

Teamwork and Conflict

I have had the experience of working as part of a group many times throughout my academic career, as well as my brief professional career.  Some of my experiences have certainly been better than others, and no two situations are ever exactly the same.  With that said, reflecting on my experiences I have definitely noticed certain traits and nuances that generally exist within most of the groups I have been apart of where we accomplished our goal and worked together successfully.

One of most important characteristics of a successful group is for each group member to understand their role within the group and perform the requirements of their role in a satisfactory manner.  If every member of the group works on each aspect of a project, it is an inefficient usage of time.  Breaking down major projects into smaller tasks and responsibilities, will help group members focus their time better, while also allowing for a greater attention to detail.  This method can also help team morale, by catering to the strengths of each group member, and allowing each member to make a contribution to the success of the group.  Ultimately roles are created and defined by the interpersonal relationships of the team members. Distributing work requires trust among the team that each person can successfully fulfill their responsibilities.  When this trust is broken, conflict, or at a minimum tension amongst group members, is likely to arise.

An enjoyable group experience that I had was during my senior year in a Business Administration class.  There were 4 other students in the group other than myself, and this was a group where everything just seemed to fall into place.  The project consisted of a 5 page paper and 20 minute presentation but we were able to split the work evenly, and in a manner that each member felt suited their individual strengths well.  This led to a successful project, and a feeling among the group that each member really contributed to our overall success.  For example, I feel very comfortable giving presentations, so I handled a majority of the speaking responsibilities, while other members who felt more comfortable writing shouldered greater responsibility in that area.

A group experience that I did not find as enjoyable was working at my internship this summer.  I was a new intern working on one of my first client engagements, yet our group was patched together in a very unusual manner.  I was filling the role of a full-time staff member, and the only other members of the group were two managers who came to the firm as experienced hires and had never worked with an intern before. From the start, there was miscommunication over our expectations of each other. They thought I would know more about the required tasks, and I was expecting to receive more hands-on guidance from my group members, considering it was one of my first-ever engagements, and based off of conversations with other members of the firm.  While it ended up working out in the end, it certainly was not without obstacles, and led to a much more stressful working environment than intended.  Better communication from the start of the engagement would have likely prevented many of the issues.

Shared Rewards

I really enjoyed the article "How to Get the Rich to Share the Marbles" by Jonathan Haidt as I felt that it perfectly encompassed people's attitudes toward sharing.  People, generally, are much more willing to share an object that was acquired through team production if they feel that everyone pulls their fair share.  If no one else contributed to your achieving something, you are much less likely to want to share the rewards and benefits.

This is evident in school all the time with group projects.  When students feel that everyone contributed equally they are happy to share the credit received for the work.  However, when one or two students loaf or slack on the assignment, the students pulling more than their fair share of the weight are much less enthusiastic about having to share the rewards.  While they may not actually punish their fellow students, it will certainly change their opinion of them going forward and they will be much less likely to want to work with the loafers on future assignments.

Another area where I think the team production is evident in an indirect way is when looking at the salaries or wages of members of a team.  For example, all workers on an assembly line in a factory or plant earn essentially the same wages as each role on the assembly line is judged to have equal importance to the final outcome of a production.  However, if you look at professional team sports such as a baseball team, the players that are viewed are contributing more to the success of the team earn higher salaries than other players.  Sometimes it does not always work out this way as players can over or under perform their contracts, but the amount paid to them generally is based off of how much management feels they can contribute to the success of the team.

I also really agreed with Haidt's conclusion at the end of the article and I think it does coincide with my past experiences working with a team.  For example, on sports teams coaches frequently make all people complete grueling conditioning exercises, even if certain players are in better shape and may not require the extra work.  This helps build a camaraderie amongst the team and creates a feeling that everyone on the team is in together and worked hard at trying achieve their ultimate goal.

I think politicians would also be much more successful in pitching policies if they punished or rewarded the American public as a whole, not just as individual groups.  Rich people would have much less to complain about getting their taxes raised, if everyone had their taxes raised, and poor people would be able to understand the philosophy that everyone has to pitch in their fair share.  Unfortunately some people are in "cahoots" as Haidt says, with the rule makers and that does cause problems with the sharing mentality.  The rich people, in many cases, did not have to go through the team production in receiving their reward, so they do not own the shared-sacrifice mentality when it comes to what they possess.

Illinibucks

I think the idea of introducing Illinibucks to the student population is a very interesting concept and would make for a great way to study and evaluate how students value and prioritize things here on campus.  It would provide campus officials and administrators with a great insight into what kind of places students care the most about, and not only the kind of places, but of those places, which ones are the most highly valued and thought of by students.  It would also be beneficial to the establishments themselves as they would have a direct way of comparing themselves to their competitors from a student's perspective.  The Illinibucks would also obviously provide a great benefit to students themselves as they would be able to apply them at places of their choosing enhancing the utility received from the Illinibucks.

The type of places that I would expect to be candidates for use of Illinibucks are bars, restaurants, bookstores, grocery stores, and other retailers.  These are all types of places that accrue lines and students would be able to allocate their Illinibucks however they pleased at any of the establishments.  Some of the places could require more Illinibucks to cut line based on popularity and traffic.  The frequency with which Illinibucks were turned in at each place could be used to determine the amount of Illinibucks at each location.  As for the administered price, the university could stagger pricing on the initial Illinibucks sold so that they could determine at what point people would stop paying for them.  If they are administered at a price too low, too many Illinibucks will be issued making them virtually worthless when trying to be used.  If they are administered at a price too high, not enough Illinibucks will be sold, and the university will lose out on valuable revenue.

For my personal usage, I would use my Illinibucks to get out of waiting on line at bars.  Lines can be as long as 30 to 45 minutes at some bars on busy nights, and being able to use the Illinibucks to skip those lines would be of great personal value to me. Many of the lines are manufactured on the outside by the bar to make it seem as if it is very crowded on the inside, even if it is not the case, and I would greatly like to be able to avoid those lines.

Opportunism

Being an accounting student, I am very familiar with opportunism in the workplace, and more specifically looking at areas where opportunism may exist too easily within an office.  Instituting controls and testing controls that prevent the possibility of fraud or material mistakes from occurring is a crucial part of the job of an accountant.  Fraud is an example of opportunistic behavior, albeit a very extreme one.  While the occurrence of fraud is much rarer than most people believe, when it occurs it can be absolutely devastating to an organization.

However, with that said, there are many companies that simply cannot afford all of the necessary control measures to ensure that fraudulent behavior cannot take place.  This presents a situation for an opportunistic individual to act in his or her own favor by committing fraud if he or she feels that the act can be perpetrated without getting caught.  Fraud investigators are taught that in order for fraud to occur the three components of the Fraud Triangle must be present. One of the components, along with motivation and rationalization, is opportunity.  People commit fraudulent acts because they are acting opportunistically in their own favor.

This past summer, I worked at an accounting firm and one of the engagements I was assigned to was determining how much money an employee had stolen from a company fraudulently, and how the employee was able to keep his act going, undetected, for so long.  The company was not very big and as a result did not have the financial resources that would allow them to put in place all of the necessary controls for preventing fraud.  An opportunistic employee took advantage of these lack of controls, certainly to a much more extreme level than commonly found, and acted very beneficially in his favor with no regard for the well-being of the company.

While this was an example of one person acting very opportunistically, there were also many engagements we worked on where it was clear that people were in situations where was opportunism was readily available but they chose not to behave that way for what could have been a number of reasons, whether it be strong moral compass, loyalty to their employer, and so on.  These companies lacked many of the appropriate controls for preventing, due to lack of financial resources, manpower, or various other resources, yet the employees did not act opportunistically and exploit the weaknesses of their own company.  Some of the employees even knew where the company was most at risk as they highlighted in our discussion yet still chose to not act opportunistically.

I think most of the reasons why people would not act opportunistically ultimately amount to the same thing: doing the right thing.  There are situations where acting opportunistically is the right thing to do and in those cases people generally take advantage of the opportunity, but if people feel uncomfortable about the opportunity that is presented, that is when they hold off.

Organizations

While I have not had much experience in dealing with major changes in the organizations I have been apart of, I have been fortunate enough to be a part of organizations with various different structures and sizes.  So far in my professional career, I have worked at a law firm that contained just 2 practicing attorneys, a small accounting firm, and then recently, one of the biggest accounting firms in the entire world. These experiences have allowed me the opportunity to compare the similarities and differences between how big and small organizations operate.

The law firm I worked at provided a great insight into the very basic economics of an organization.  As a professional services firm, there were no production costs in the traditional sense. It really was a way to understand the basic economics of an organization with very few fixed costs, outside of basics like rent, supplies, and a few administrative salaries. The compensation of the two attorneys was determined solely by the amount of work they were able to bring in, and due to the nature of the firm and their client base, there were very few transaction costs outside of licensing, filing, and legal fees.

The small accounting firm had a slightly more complex organizational economic structure.  This was again a professional services firm so there was no production or manufacturing, but now more employees had to be factored in to the mix. Things such as travel had to be factored into the budget as well, causing much higher overhead costs than the law firm I worked at.

The large accounting firm definitely had the most interesting and complex organizational economic structure of all the places I have worked. Employing hundreds of thousands of workers led to a much more complicated economic structure. As a massive international firm and market leader, the overhead costs were enormous.  Fixed costs were much higher as well. However the firm's size also allowed many economic advantages.  Having offices and employees all over the world allows the firm to handle engagements much more efficiently and effectively.  The firm also had many different service lines giving them the capability to handle many different needs for a client, greatly increasing their clients.  Not having to outsource certain tasks allowed the firm to save greatly on transaction costs, and prevented any competitors from chipping away at their market share.  

Christoper A. Pissarides is an economics professor at the London School of Economics in London.  Originally born in 1948 in Cyprus, Pissarides studied at the London School of Economics (LSE) where he earned his Ph.D in Economics in 1973.  Pissarides has been employed at LSE since 1976 where he is currently the Norman Sosnow Chair in Economics at the Economics Department, as well as the Director of the Research Programme on Macroeconomics at the Centre for Economic Performance.

Pissarides specializes in labor economics and in 2010, Pissarides, along with fellow economists Dale Mortensen and Peter A. Diamond, won the Nobel Prize in Economics for their work analyzing why buyers and sellers have trouble finding each other and applying it to the labor market.  He studied why the labor market does not always reflect the overall state of the economy, as even in good economies with jobs plentiful, unemployment can remain high.

I believe his work is very relevant to our class as it deals greatly with the structure of both organizations, as well as markets and economies as a whole.  He has written extensively about job creation and destruction in relation to overall unemployment, a topic that is very relevant to the material of this class.

Sources:

http://www.nytimes.com/2010/10/12/business/economy/12nobel.html?_r=2

http://www.nobelprize.org/nobel_prizes/economics/laureates/2010/pissarides.html

This is a test.