Organization Experience

For three summers I worked as a camp counselor for a Chicago Park District. Although the organization of the entire park district is huge, I only worked for one small park, which itself worked as a smaller organization. The only connector between the parks and the organization was one person that would overlook all parks in a certain area. This manager would rarely visit our park and would visit just to ensure there were no major problems with the camp. Although there is little coordination between the park and the organization, the organization mainly cares that the campers have a safe summer, and the managers of the parks are able to strive for this without much need of further talk and coordination. There is however coordination between counselors and the managers at the park, although there is very little transaction cost from this. We all know are rolls and there are set themed days determined by the manager, and there is a schedule in advance that tells each group where they need to be when. One small example of a transaction cost is when some counselors get a little upset about the schedule. Some counselors like different areas of the park more than others, so when you are scheduled for more difficult areas than others it can feel somewhat unfair. However, some counselors like those areas more and we are able to trade spots most of the time to make all out schedules better for us.


The manager of the park directed two full-time employees of the park to run the summer camp, and they were our direct bosses. Each counselor had a group of kids to manage on their own, and other than ensuring the safety of the kids, that they participated in appropriate activities, and that the manager knew where the group was in the park, each counselor could mostly do any activities they wanted and manage their own group how the wanted. For this reason the experience of the camp could change not only from park to park, but also from group to group. This is a very good example of an experience good, as the parents and campers do not know exactly the experience that they are going to receive by enrolling into the camp until it happens.


Over this last summer I was also able to intern for CME Group. In my department, one of the daily operations is to take calls and emails from firms that need help with something. In this case we the employees were the buffers for the customers. There was no set single lunch break time for us, so that we could always have some amount of people at their desk in case an email or call came in.


The organization also reduced transaction costs by having standard contracts for futures. Instead of both sides needing to negotiate all aspects of a contract to trade with one another, which could often lead to disagreements, futures contracts are standardized. There is a set amount of a good, date when the contract will expire, set strike prices for options, and more. This way, customers only need to offer a price and whether they want to buy or sell, and they will be able to be matched with an opposite side with no negotiating. There is still a way for two customers to agree on a non-standard contract, usually making the asset much more specific, which requires more coordination and creates more transaction cost.


The size of the exchange also allows it to hold-up firms at times. Although this hold-up happens on a regular basis and increases transaction costs, it benefits all customers involved as a whole. Firms are required to have a set amount of collateral held in accounts that CME can use in the case that the firm needs to default. This collateral ensures that the firms customers that are trading will not lose money if the firm has to default. If a firm does not have enough collateral in these accounts they are not able to trade through CME, and are held up until they fix this. This requirement ensures that customers are protected, but it only allows the biggest of firms, like Morgan Stanley and JP Morgan, to have accounts that trade through CME.


The exchange as a whole is also very large with many departments and employees. A lot of different departments do not even know what other departments might be working on or what department to even talk to to solve a problem they may have. My department was actually one that would connect other departments. If somebody in another department had an issue that they did not exactly know how to go about solving or needed to contact someone in a different department, they would be able to ask us and we would direct them to the right place. In essence, part of my departments job was to improve coordination in a large organization and to reduce transaction costs.