I'm the president of an organization on campus called the Illini Investment Group. Every Wednesday, when we meet we talk about the financial markets, business news, and facets of the financial world, like stocks and bonds to options and derivatives. I founded IIG in the Spring of 2011 and we were operational the fall of the following semester. Founding an organization and trying to lead it is an immense responsibility and task. The first order of business was to find partners, or an "executive board", not in the least because the university required it for my organization to exist in the first place.
Since I started my organization so early, there haven't been any leadership changes per se. I have remained on board as President and the two other people who I recruited as Treasurer and Tech Chair/Webmaster have also stayed on since the beginning. We have only made additions to our team, adding a Vice President as well as a board member specializing in Economics and its theory applied to real world finance. So we went through some changes in terms of adding members to the exec board, but we also went through other changes. In the beginning, the first year we were active, we didn't have any fees or dues. We wanted it to be a free, open club so that our members could completely enjoy it without incurring any costs. We quickly realized, however, that our options for social activities, like movie & pizza nights or game nights, outside our meetings every week were limited if we did not have some income to spend on extracurricular outings. Even the SORF office can only provide so much funding, especially if we wanted to do something like a trip to Chicago for a day. I used to be against dues because I thought paying was unnecessary but after spearheading this organization, my views have changed. Every enterprise has some sort of expenses and even though us exec members aren't paid, we still need some funds for the payment of equipment or bowling/billiards, and other activities in that vein.
I have also had experience interning at a large financial company for a couple summers. It is a historic and venerable firm, but it is also a very complicated organization that requires thousands working in management. As one can imagine, it is also steeped in bureaucracy (through no fault of its own). A start up or new company is quick, nimble, and agile, able to respond to market changes easily and is groundbreaking or industry-shifting in some way, especially technology companies. But as time goes on, and the company hires more and more personnel, layers of bureaucracy and "management" that weren't there before suddenly appear and take up time, money, and other resources. This phenomenon can be seen across industries where phrases like "corporate behemoth" to describe Microsoft, Exxon, Walmart are regularly used. (As a side note, at least none of these companies are as bad as the U.S. government in terms of bureaucracy.) Maybe some companies can survive this, but adding layers of bureaucracy and becoming a huge organization is a double-edged sword, especially for tech companies: it is a testament to their success but could also lead to their downfall as younger, savvier start ups create products, services, processes or technologies that disrupt and displace established ones.
I point all this out because I feel like organizational structures inherently lend themselves to transaction costs through bureaucracy and red tape - any (economic) inefficiency is a transaction cost. Time, money, and resources are being used up in ways they shouldn't be but seeing as human beings make up these organizations, that is only to be expected. Perhaps the best way to deal with this is to just simply minimize bureaucracy, red tape, and any other inefficiencies as much as humanly possible. If left unchecked, these inherent transaction costs can be dangerous.
I think that is amazing that you were the founder of the Illini Investment Group. I have heard a lot about this organization, prior to reading this blog, so it is interesting to hear your perspective/challenges with starting it. I imagine that setting dues early on did not seem necessary but with increase in size and demand I do understand your dilemma that you are currently facing. Especially if the size of the organization is growing to the point where creating a team environment is necessary for the success of the organization, events such as bowling, pizza nights, etc. are almost required. It is also great to hear that members have consistently remained in their positions since that keeps the transactional costs at a low. My question for you is have you looked into the possibility of pursuing corporate sponsors to help fund some events? I believe they could be beneficial and since there are so many large financial institutions that would be interested in creating close relationships with Finance students at the University of Illinois to make their recruiting efforts a little easier.
ReplyDeleteI learned from the TV show the West Wing that "red tape" was first used as a concept after the American Civil War, when wounded veterans came to Washington to get reimburse for their medical expenses. Their files were wound in red tape.
ReplyDeleteIf the U of I is any indicator, large organizations are awash in it. Much of it emerges, it seems to me, as a way to reduce liability and the chance of being sued. It is not so much concerned with making performance better as it is with blocking the egregious error that can devastate the organization. Large organizations have deep pockets. So they are a more likely target in a lawsuit than a startup, just for that reason.
This next point is about the blog itself. Could you possible switch to a different template. It took me six or seven reloads of this page till the comments appeared. I was beginning to think they wouldn't show up at all. That should happen the first time around.
This was a very insightful post in regards to the RSOs on campus at our school. It's great to hear the experiences of people that are involved in these types of organizations, especially the ones that have higher level positions such as yourself. I just had a few questions about your investment. club. When did you initially start this organization and what sort of process did you have to go through in order to get it approved? Furthermore, I'm also very interested in start up companies because I love entrepreneurship and being able to have control over your own business. Being an economics major, I want to keep my options as open as possible and I definitely think that starting my own business after college would be a viable choice for me instead of working in the corporate world.
ReplyDelete