The main incentive for a company to offer tuition reimbursement is the expectation that employees will expand their knowledge within the field and give a better performance for the company once they have obtained the degree. As the book states, the problem that the principal faces are that the agent has different incentives than the principal, this is called incentive conflict. In this particular example, the company is wanting employees to further educate themselves and so offer the incentive of tuition reimbursement in the effort this will improve the performance of the individual, however, the individual may be wanting to earn the degree for different reasons, such as leaving and moving to another job once they have gained these qualifications for free.
The company needs to be able to control the incentive conflict and need to understand the trade-offs associated with various solutions. Once you give the employee the authority to make decisions you want to be sure that they are motivated to make the choices in the company's best interests. Setting the mark at a grade 'C' or above could be seen as a weak incentive by the employer as a C grade can be obtained going through the motions and could result in the employee not really gaining the knowledge and experience the company is wanting them to achieve. I think holding the employees to a particular standard that is set by the company could help in eliminating some conflict as it would result in employees knowing they have to reach a certain grade to gain the reimbursement and likewise puts the company in a position that they are gaining the education and knowledge they are wanting to help put them ahead of competitors within the market.
Question:
Please comment on this post and answer the following question.
How do you feel about those who obtain a D? Who you want to hire them?
The main incentive for a company to offer tuition reimbursement is the expectation that employees will expand their knowledge within the field and give a better performance for the company once they have obtained the degree. As the book states, the problem that the principal faces are that the agent has different incentives than the principal, this is called incentive conflict. In this particular example, the company is wanting employees to further educate themselves and so offer the incentive of tuition reimbursement in the effort this will improve the performance of the individual, however, the individual may be wanting to earn the degree for different reasons, such as leaving and moving to another job once they have gained these qualifications for free.
The company needs to be able to control the incentive conflict and need to understand the trade-offs associated with various solutions. Once you give the employee the authority to make decisions you want to be sure that they are motivated to make the choices in the company's best interests. Setting the mark at a grade 'C' or above could be seen as a weak incentive by the employer as a C grade can be obtained going through the motions and could result in the employee not really gaining the knowledge and experience the company is wanting them to achieve. I think holding the employees to a particular standard that is set by the company could help in eliminating some conflict as it would result in employees knowing they have to reach a certain grade to gain the reimbursement and likewise puts the company in a position that they are gaining the education and knowledge they are wanting to help put them ahead of competitors within the market.
Question:
Please comment on this post and answer the following question.
How do you feel about those who obtain a D? Who you want to hire them?
