On Education and Agency Problems

The Agency problem in management has been defined as ‘the managers maximizing their personal benefits at the cost of the share holders’ cost’. The cases of agency problems in education systems are as prevalent as in any other business, though have not been studied in such details so far.

Let’s take a case of a school created somewhere in rural area. Almost in all the cases, schools are born due to the vision of some committed individuals. In our country where need for educational institutions, of primary education or higher education, is wide spread. In such situation, it is the efforts of a few committed individuals, some local leader or influential person, whose efforts create school in a location preferred over equally deserving other places.

The owners lobby with the Government for posting of teachers in their backward area and if the school is a private one, they search for teachers on their own efforts. Managers and administrators are appointed for day to day governance as well. However, soon when the hue and cry subsides and the excitement reduces the agency problems begin to surface.

1. City based teachers gradually start commuting, to and fro, from city to village. They can be seen on ‘Intercity Expresses’ more often then in School. Soon they develop an apathy to the problems of the school and are more than happy if someone else is willing to share their responsibilities

2. Then gradually as the supervision reduces, the absence from classes (responsibility) sets in. But since this can be easily identified, role of teaching is often times sublet.

3. The responsibility of conducting the classes and running the school ends on the shoulder of quack teachers who gladly accept this difficult role. These quack teachers could be local unemployed youth or other caretakers

4. Over the time the quacks learn their importance to the school and the dependence of other stakeholders upon them and gradually they fill in the other vacuums. They soon realize that beyond teaching, they are also important for say selecting the students for a few scholarships or for grading of students. Owing to their position, many students may be willing to take private tuitions under them for better grades or position on merit list.

5. The managers too, assured of their salary, turn a blind eye to such events. Since I believe that they are too holy to share the booty with the quacks, it must be that they try to improve their earnings in the form of ‘leisure time’ by caring least for the problems of the school. ‘Leisure time’ after all is what the workers trade for money beyond a limit.

6. This continues as inspections are few and informed. During inspections the genuine teachers report back on duty and the quacks to their normal roles and the authorities are given an impression that everything is excellent.

7. The pass outs from such schools show strange deviations from their performance records when they enter the real world. For example a board topper from Agra, who got admission in a premium engineering institute on basis or her board marks, was soon dropped by the engineering college due to her poor performance in academics. She though had over 90% marks in her board exam while other students in the engineering college had much lower marks.

8. The reason for rise and fall of such students are the ‘quacks’ that distorted grading and inflated their marks. For example in the school examinations if a student not enrolled for tuitions would top, quacks helped their favourites (when they got the answer wrong) for following the ‘right approach’ in attempting the question and giving them full marks. Let’s say they created a plus 6 marks of advantage for their tutored by this. In the next exam when their student was better prepared they may pull other student down for not getting the exact answer by giving them a flat zero while they still deserved six marks for the approach.

9. Over a series of exams, the gains and losses of neutral students even out (Case of a drunkard moving a step forward and then backward and staying at his place), but for those for whom these benefits are aligned move many steps ahead just by ‘policy decisions’. In the worse form of agency problem, policy could be aligned to pull some one down as well, when the competition is high and the rewards like scholarships few.

10. These events don’t go unnoticed. Once people believe it is luck, then they assume it is coincidence and by third time most ‘give up’. Those who still try to report the things are branded as the ‘disturbing factor’. A few of such individuals may be seen trying to reach the DM or the DIoS for solving the problems.

11. Many (though not all) good students still reach the positions where they deserved to be- though after a lot of struggle. Most of those handicapped birds who reached the top of the tree by help of bull s*** end up being shot down. The real loser is the school as its product loses credibility in long run. The deserving students lose their good will for their school.

And the saga of education and the agency problems there in, goes on.