Friday, September 9, 2016

Experience with Organizations and Transaction Costs

I am a personal trainer at the Campus Recreation. My job is providing professional guidance and suggestions to clients based on their specific needs. Before joining the team, I need to get certificates from NASM to become a qualified trainer. Moreover, CPA certification is also required.
Clients are randomly assigned to me by the system after clients signing up on the website. Usually I will have an initial meeting with my clients before our first training session. During the initial meeting, I will gain a deeper understanding of my clients’ life behaviors and exercise preference. After knowing the exercising goals of my clients, I will come up with specific plans. I will also set up a fixed schedule with my clients during the initial meeting.

Normally, a training session will last for an hour. The first 10-15 minutes I will ask my clients to warm up and do some active stretches. Then, I will spend around 35-40 minutes to do strength training. The rest of the session will contain cool down and stretching out.
The organization structure of our team is simple. The Campus Recreation has about 20 personal trainers, and 2 senior coordinators. The 2 senior coordinators are responsible for clients’ distribution and equipment renew. There is a full time supervisor who is in charge of the policy and costumer complaints.

In economics and business, transaction costs are the costs we incur when we make economic exchanges during the purchase of goods and services. The theory of transaction cost economics is a concept developed by Ronald Coase and refined by Oliver Williamson. The theory states that organizations like firms may distribute resources more efficiently than an imperfect or limited bargaining system, like a market.  As far as I am concerned, the higher efficiency in organizations is due to the low transaction cost. Take my job as an example, when clients come to our facility and sign up for a session. All he needs to do is show up and follow my guidance. If he tries to work out by himself as a beginner, he may spend lots of time digging exercise information online, and maybe waste a bunch of time making the move in a wrong form. These are the transaction cost.  

1 comment:

  1. There are several things you could have added in this piece to better explain the environment. You said there were 20 personal trainers. You didn't say how many clients an individual trainer might have at any one time. For the sake of the discussion here, I'm going to make up a number here, just to illustrate the type of arithmetic that needs to be one in the background. Let's say each trainer can take on 10 clients. So the capacity for the system is 200 clients (200 is 20x10). What about demand? There are thousands on campus who use Campus Recreation. How many of them want a personal trainer? If it is more than 200, what happens then? More generally, you need to explain somewhat how supply and demand are brought into line for this service. Is there a fee that the client pays for having a personal trainer that other users of Campus Recreation don't pay?

    The next question is about how much the supervisor monitors the training sessions. Is the supervisor aware of that initial meeting you mentioned? What about the subsequent sessions? Is the schedule you determine with the client made known to the supervisor? Put a different way, you talked about the team but you didn't discuss at all how this is a team activity rather than an individual activity, other than the up front training that you need to qualify for the work.

    Likewise, you might have talked about whether trainers ever spend time together comparing notes, discussing issues, and in general collaborating on the service. Does that happen at all? It's hard to tell from what you've said here.

    And what about the facilities for the training? I'd imagine that they can congest so scheduling would be an important group activity (That is a transaction cost.) How does scheduling get done. Is it first come first served or is it something more systematic?

    Finally, you might talk about your own motivation for doing this. I assume this is paid work, not volunteering. Is that right? But there might be other reasons for doing this apart from the pay. Can you discuss some of those?