Question: Working In the Firm's Best Interest
Each year, public schools are rewarded with bigger budgets for achieving a rating of "excellent" or "recommended" and are punished for rating "needs improvement". These ratings are based on meeting thresholds on a broad set of measures such as attendance rates, graduation rates, standardized test scores, SAT scores, and so on. Discuss the incentives for school principals (who are the agents, in this case) under this scheme and how you might improve them.
In chapter 1 two of Froeb's problem solving skills were: 1) think about the problem from the organization's point of view; and 2) think about the organizational design. As your examine this week's question consider the following, who does a Superintendent work for, i.e. what is the organizational design?