Organization Experience and Transaction Costs
Over the Summer, I had the opportunity to intern in the Corporate Real Estate department at First Midwest Bank. This position required interest in the field of real estate; however, it also required financial and data analysis skills. Although my major is in Economics, I am double-minoring in Informatics and Business Administration. These minors have allowed me to obtain financial knowledge and technical skills, which were needed for the internship. I also have had a strong interest in real estate and was pursuing a real estate license, which ultimately got me the job.
My internship consisted of tracking and analyzing various metrics and financial data for the bank’s properties. This included creating financial spreadsheets for mergers and acquisitions of properties, analyzing the branches that should be shutdown, and researching other bank branches to potentially acquire in the future. In addition, I worked on a project throughout the entire summer that could make the financial data easily accessible to the entire corporate real estate department by implementing a new software, Microsoft Power BI. This was an issue for the company because the information regarding various properties was scattered in various files and excel documents, making it difficult to find and understand trends between the properties. I worked on this project almost everyday of summer during the second half of my day and tried to retrieve lost information. During the second half of my internship, I started watching tutorial videos for Microsoft Power BI. I eventually uploaded a very large excel file that I created, which had thousands of statistics about the properties that First Midwest Bank owns. I used this file to create various dashboards, algorithms, and show current trends. My boss eventually presented this to the CFO of the company, in order to have it implemented for our entire department.
Although I did a lot of work on my own, I also had the chance to work with the other interns on a group presentation about our experiences at the bank. The company hired a total of 17 interns, but only eight worked at the corporate headquarters in Chicago, while the rest worked at bank branches. I was at the Chicago location, so I only got to see the interns from the branches on “intern days”. These days were planned by our hiring manager and were used to promote professional development skills in the interns.
I would say that “intern days” were a transaction cost for the company because it took away from the interns working on their daily duties; however, I believe the company did this for the possible increase of productivity in the future because some of the interns may return to the company after graduating. In addition, another transaction cost was that every intern was assigned to a “buddy”. Although we all had to report to our own managers and check-up with them, we had buddies that taught us how to do our daily tasks. This allowed managers to not waste too much time out of their day training the interns, but it did result in our “buddies” having to delay their work. Similarly, this transaction cost can payoff in the long run if the interns return to the company because they will already be trained. Contrarily, if none of interns return, the employees will spend double the time training new employees which will decrease productivity. Another transaction cost that I personally faced was having to commute to Chicago everyday, which took almost two hours out of my day. In order to arrive at my job and get paid, I had to pay for either the train or gas, which was not reimbursed by my company.
I'm acknowledging seeing this. I will read it for real later today.
ReplyDeleteThis was a reasonably good first real post. You might have said something about whether you'd want to return to this company should you be offered a job there. It would have helped to understand the story better.
ReplyDeleteI think on the notion of transaction costs - you are not getting the idea. So let me flesh out the idea some. If the cost would be incurred even if everything was done correctly, then that cost is a production cost. Your commute to and from work is in that category. To consider transactions costs, you need to ask - could the transaction go wrong? If so, how is that prevented? The prevention is the transaction cost and things going wrong is evident that the transaction cost wasn't incurred fully.
Consider that huge Excel file that you delivered. Sounds like a lot of work on your end. How would your boss know whether there are any mistakes in it or not? What sort of checking is necessary to say the file was done well. That checking is a kind of transaction cost. Similarly, since you said you worked alone quite a bit, how could the company tell that you were doing the job the whole time and not goofing off. (I'm not saying you were goofing off, I'm simply asking how the company would know this.)
There are definitely transaction costs involved in recruiting new employees and verifying they are a good fit for the company. One reason for internships is to lessen those transaction costs. But it seems to me that not all companies are diligent in learning about the interns, so just use them as cheap labor instead. I'm not sure which it was in your case. But it is something to ponder.
Now some advice about the rest of the posts. During the fall, students were supposed to comment on my comments. I think now, in the interest of you getting through this, you should just use my comment as fodder for your next post.