Organizing Teams

Throughout my college life, I have been in a number of different teams both for academic purposes and extra curricular activities. The structure and dynamics of every team is different and thus some teams are better coordinated than others. Teams can be organized in many ways and the optimal structure for a particular team depends on the function of the team, its goals and objectives, communication level, number of people, etc. Some of the common organizations of teams include one boss, hierarchical structure, circle network, and all channel network.

To further discuss the organization of teams, I will talk about my experiences in the consulting organization OTCR Consulting. OTCR is a student run consulting organization providing pro bono work offering solutions to the client's unique business problems. Being completely student run, the organization structure was very transparent with the senior members informing the junior ones, about key decisions making processes that impacted the firm, especially related to budgeting. The firm was headed by two partners, one responsible for the internal operations and the other for external operations. Under them was a team of engagement partners, each one who had a special chair or duty. Some of the special chairs for example were Recruiting Head, Social Chair, Project Sourcing, Alumni Chair, etc. In this hierarchical structure, under the engagement partners were the project managers, then the senior consultants and then finally the consultants. This is the top down structure of the firm. Depending on the number of projects we get we staffed into different teams.

Each team in OTCR handles one client and thus one project for the duration of the semester. A team constitutes around 4 to 5 consultants and one project manager. The engagement partners oversee and check in with the project managers to ensure smooth functioning and that project deliverables are being met. The structure of this team has an all channel network wherein each group member communicates with one another to get the work done. This is only possible because of the small size of the team and type of work which needs to be done. In consulting, teamwork and interdependence is extremely important. Often times the work involves brainstorming and cannot be done separately. Thus all consultants in the team share a connection, with the PM (project manager) being in charge of us. The PM is thus our supervisor who directs how are work should go. He is also the single point of contact to the clients for updating them on the progress and asking any questions from our side as well. This structure works, because the client can not individually schedule time with all consultants if the need arises, thus it is channeled through the PM for ease of communication.

Describing the team from the viewpoint of Katzenbach and Smith's, we did exhibit features of a high functioning team. Our top managers, provide training and standard guidelines and then let the PM's handle their teams how they see fit as long as the requirements are met. This gives more freedom, which leads to creativity and energy. We are given set work-streams which are due every week and reviewed and edited the following week. Thus keeping us measurable for our work in a short period of time. Our team is also small, 4 to 5 people thus keeping us at a manageable size. OTCR consulting constitutes of approximately half of its students from the college of engineering and the other half from the college of business. This makes us have a good mix of expertise. We have both the the technical aspect of a business with the business aspect giving us a complimentary and holistic skill set. All members are students who are some of the brightest students in the campus. We all thus share a common commitment to working relationships. We all are seeking to gain experience and grow our network both professional and social. Although OTCR does receive money from the clients, individuals do not get any money. The reason for working is as mentioned above, because we want to, thus I feel every member holds themselves accountable for doing their work and contributing to the team.

I think being a good teammate means to contribute both individually and to the collective good of the team and its members. This encompasses all aspects of a good teammate for me. You do your own work, the specific task you were assigned to do. But also help out other teammates if you can, collaborate with them efficiently and effectively. This will help the overall objective get achieved more smoothly. I think everyone wants to be a good teammate because they want to contribute. They want others to like them and think that they are intelligent, smart, or otherwise contributing in a significant way.

Opportunistic Behavior

Once when I was walking by the street, I found a wallet with a lot of cash and credit cards in it. If were to act opportunistically I would have taken the money and left the wallet where it was. Instead of leaving the wallet and taking the cash, I brought the wallet to the police station and gave it to the officer. The street was empty and no one was walking nearby, so it would have been easy for me to pick up the wallet unnoticed and take the cash. It was morally incorrect to take the wallet, despite the age old adage of "finders keepers" and thus I returned it. My actions in this situation were driven by the emotional side of me, trying to be a moral good citizen. Humans are not efficient creatures and our decisions can be irrational at times, or not always the most opportunistic one. This is because we prioritize the human interaction and moral values instead of always acting in profitable ways.

In this particular example, acting in an opportunistic manner was through unethical behavior. Taking a something that does not belong to you is unethical. However, opportunistic behavior does not always have to be unethical. For example, you found an opportunity to sell some goods for which you had a competitive advantage. This action is you taking advantage of your resources to make a profit. Acting opportunistically here was both ethical and rational.

Instead of opportunistic behavior just being unethical it is also illegal in many situations today. There are large number or rules and regulations which deter people from acting in an unfairly opportunistic way. Insider trading would be a prime example of this. Although one would deeply benefit from insider information, this act is illegal. Thus people do not act in an opportunistic way and give information which would benefit them. Most opportunistic behaviors today are thus highly regulated by the government.

Some people also do not act opportunistically because they believe in “karma” or that good things will happen to them if they wait and be patient. I do believe in this myself as I had also lost my wallet once. Similarly, my wallet was returned to me without any money or cards missing. Thus, having returned it once before, I was lucky enough to get it back myself. This brings up an interesting topic of how, if both parties acted opportunistically they would both have been worse off.

Detailing the above scenario. If both me and the person who found my wallet, kept it, instead of returning it. We both would have a different wallet, problems with the card, etc. but if both returned we would have been better off. This is a similar scenario to a prisoner’s dilemma wherein both parties can benefit by acting opportunistically, and the benefits of corporation. I feel people should act in an opportunistic manner if it benefits them and the other parties involved.

I think these explanations are all the same, since the way you act, opportunistically or not is dependent on your utility function or what you value. If a person wants his image to look good then he would not care about opportunistic behavior, but rather being a good citizen. If the person’s goal was maximizing profit without other regards, then he might partake in the opportunistic behavior even if it is unethical or illegal. Thus I feel these various explanations do amount to the same thing. 

Organization Structure

This summer I worked at a small private equity firm as an intern and gained some unique insights into how an organization runs and its structure. Since the firm was small, the atmosphere of the entire office was more casual than expected, but at the same time interactions between the analysts and managers was much more frequent. There was a centralized structure in place with the managers having most of the power and they tightly controlled and reviewed all operations. Based on my own experiences, this structure was well suited for the organization as it was relatively new and manager input was required for decisions. Thus the centralized structure led to fewer errors and better quality of work in accordance to the managers expectations. On the flip side however, if an employee hit a roadblock, he would not have the authority to make a decision, but would need to ask the manager. This led to inefficiencies as employees would waste time.


During my short internship period, I saw the firm add another three people to its team. This was due to the expanding nature of the business and the increasing work required to be done. Seeing the hiring process, I want to talk more about it and the transaction costs involved. Transaction costs are the expenses incurred when buying or selling a good or service. In order to buy a service, ie employ a person the organization incurred many costs. Firstly, the costs paid to the various HR firms and job portals to actually post the job and find the necessary candidates. The opportunity cost of the time of current employees and management to interview the potential candidates. Other costs such as communication costs, informational cost of finding, transportation, out of pocket expenses, etc should also be taken into account. Thus even to simply hire another person there are a lot of transaction costs involved which people may sometimes overlook. These are still fundamental to consider and eliminating these costs would improve market efficiency.

**Edit based on comments.

Yes, I worked as a business analyst intern. Most of my work involved valuing potential companies based on its financial data. This valuation was done using financial techniques such as discounted cash flow models, precedent transaction models, comps, etc. The basic principle in these valuation techniques is to figure out the future cash flows of the companies and then discount it back to present value. Tho other techniques involve using ratios from similar company or transactions in terms of industry, operation, size, etc to value the target company. 

The other part of my work related to economics was running risk analysis. This was run through statistical regression models, scenario analysis and also conducting more fundamental qualitative analysis on the company.

I was not involved with the sell side work of the firm and thus do not know about the process for finding likely candidates to sell to. This work would also definitely involve a lot of financial analysis, but mostly would be regarding how to get the best price for the company being sold. 

The employees deal with the roadblocks differently depending on many factors such as the importance of the work being done, other work remaining, availability of boss, etc. Mostly, the employees are sufficiently busy to perform other tasks until the manager asks for an update, which he does periodically once or twice a day for 5 minutes with each employee. Here the employee would ask further clarifying questions and doubts. If the roadblock is significant then the employee will speak to the manager immediately to resolve it. Once the manager was stuck in a meeting for a couple of hours and one of the analysts was stuck doing nothing as he could not progress without needing the manager. I feel like this aspect of the firm could become more efficient, but would have to be gradual process as the employees understand how to run their duties better. 

I was interning along with two others. Yes, i think the long term better process would be to hire large interns and then give offers to the best performing interns. However the firm was hiring for more experienced people and thus was required to look from outside the intern pool. Transaction costs would be lower as searching for a candidate would already be done and the candidate would already be familiar with the office and people thus lowering the learning curve as compared to a new employee.

As a small company, hiring needs vary by position and there may not be so much work to have a large intern pool. Specially in a private equity firm, which is generally smaller and consists or more experienced professionals. Maintaining a large intern pool might be expensive in terms of wages and their productivity may not be what is required. Hiring just a couple of individuals with specific skill sets for a smaller company would thus be more cost effective through outside methods than having an intern program to give full time positions

Armen Alchian Biography

Armen Alchian was born on April 12, 1914 in Fresno, California. In 1932 he attended Fresno State College, and transferred to Stanford in 1934. He obtained his B.A. from Stanford in 1936. He continued at Stanford as a graduate student, finishing his Ph.D. dissertation on "The Effects of Changes in the General Wage Structure" in 1943. In 1940-41 he was at Harvard, and in 1942 he was an instructor at the University of Oregon. He served in the U.S. Army Air Forces from 1942-46 doing statistical work. He arrived at UCLA in 1946, becoming associated with RAND at the same time. He became a full professor at UCLA in 1958. He as received numerous awards and honors over the years, and became a Distinguished Fellow of the American Economic Association in 1996.

Alchian is the founder of the "UCLA tradition" in economics, a member of the Chicago school of economics, and one of the more prominent price theorists of the second half of the 20th century. He is the author of pathbreaking articles on information and uncertainty, and the theory of the firm. Through his writings on property rights and transaction costs, he is a founder of the new institutional economics. Alchian's writings have touched on topics conventionally viewed as macroeconomic: money, inflation, unemployment, and the theory of business investment. His writings are characterized by lucid witty exposition and a minimum of mathematical formalism.

Alchian is known for the impact he has had on generations of UCLA graduate students, largely through his first year course in microeconomics. His best known student is William F. Sharpe, who received the Nobel Memorial Prize in Economic Science in 1990 for his work on finance.

I did not know about Armen Alchian or his work in the field of economics prior to being given his alias. His work has been especially important for the progression of Economics as a subject. Being the founder of the UCLA tradition in Economics his work is extremely relevant for us to study. The UCLA tradition emphasizes that individual behavior is self-seeking and "rational" and that this has many unanticipated consequences. It recognizes that "rationality" is the outcome of evolution and learning, and emphasizes the frictions such as uncertainty that act as brakes on individual's ability to make decisions and coordinate with one another. This is an essential topic for us to learn from as well as Econ 490, the Economics of Organization with recognizing rationality.

Links:
https://en.wikipedia.org/wiki/Armen_Alchian
http://newsroom.ucla.edu/faculty-bulletin-board/in-memoriam--armen-alchian--founder-of-the--ucla-tradition--in-economics
http://www.econlib.org/library/Enc/bios/Alchian.html
http://www.dklevine.com/general/alchian.htm

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