I am currently a Program Lead (PL) at HackCville — a company that teaches primarily UVA students different technical skills. A PL is essentially a teacher, and I am the PL for a course called Storyboard which teaches students the fundamentals of videography. HackCville has a Chief Operating Officer (COO) who pretty much runs HackCville and therefore acts as the "principal", and the PLs for all courses (including me) are considered the "agents".
Recently, I noticed that the COO kept pushing students to fill out mid-course feedback forms which asked them to evaluate the performance of their PLs and how much they're learning in their respective courses. I didn't understand why this was such a big deal to the COO until I realized that at HackCville, there exists a Principal-Agent Problem and he was trying to find a solution to it through these forms since customer (student) feedback is a way to evaluate employee performance. The COO's (principal's) main interest is to ensure that the company makes as much money as possible. This translates into him wanting all students learn a lot about the skill that the course they paid to enroll in is supposed to teach them so that, by the time courses end, the students feel like they learned a lot and want to recommend HackCville to their friends or sign up for another course, thus resulting in higher enrollment and therefore more profit for HackCville. The PLs (agents) however, have different interests. We don't really care about how much money HackCville makes and instead mostly care about having fun with our students and fellow PLs — not making sure that our students learn as much as possible about videography or other skills — which causes us to shirk by wasting teaching time by talking about random stuff with our students, letting our classes out early, etc. Because the PLs' (agents') interests do not align with those of the COO's (the principal's), there is a Principal-Agent Problem.
In order to guard against the PLs' shirking, the COO created these feedback forms. By having students fill out these forms evaluating our performances and course content, the COO was increasing his information by monitoring the PLs' job performances. From this information, the COO could determine which PLs were acting in his (principal's) interests and those who weren't. Simply knowing that the COO could now determine which of us were shirking instead of working automatically decreased our respective levels of shirking since we did not want to be fired. Along with these feedback forms, our COO has another tactic of guarding against PL shirking: short contracts. PLs only teach for a semester at a time, so they have to reapply to the position each semester if they want to continue teaching. By instituting these short contracts, the COO can determine in a short amount of time which PLs shirk the most and then can decide whether or not to re-hire them the following semester. This decreases PL shirking because PLs know that they have to prove that their interests align with those of the COO if they want to be re-hired, so they act accordingly by teaching as much material as possible so their students learn as much as they can, thus increasing profits for HackCville.
Recently, I noticed that the COO kept pushing students to fill out mid-course feedback forms which asked them to evaluate the performance of their PLs and how much they're learning in their respective courses. I didn't understand why this was such a big deal to the COO until I realized that at HackCville, there exists a Principal-Agent Problem and he was trying to find a solution to it through these forms since customer (student) feedback is a way to evaluate employee performance. The COO's (principal's) main interest is to ensure that the company makes as much money as possible. This translates into him wanting all students learn a lot about the skill that the course they paid to enroll in is supposed to teach them so that, by the time courses end, the students feel like they learned a lot and want to recommend HackCville to their friends or sign up for another course, thus resulting in higher enrollment and therefore more profit for HackCville. The PLs (agents) however, have different interests. We don't really care about how much money HackCville makes and instead mostly care about having fun with our students and fellow PLs — not making sure that our students learn as much as possible about videography or other skills — which causes us to shirk by wasting teaching time by talking about random stuff with our students, letting our classes out early, etc. Because the PLs' (agents') interests do not align with those of the COO's (the principal's), there is a Principal-Agent Problem.
In order to guard against the PLs' shirking, the COO created these feedback forms. By having students fill out these forms evaluating our performances and course content, the COO was increasing his information by monitoring the PLs' job performances. From this information, the COO could determine which PLs were acting in his (principal's) interests and those who weren't. Simply knowing that the COO could now determine which of us were shirking instead of working automatically decreased our respective levels of shirking since we did not want to be fired. Along with these feedback forms, our COO has another tactic of guarding against PL shirking: short contracts. PLs only teach for a semester at a time, so they have to reapply to the position each semester if they want to continue teaching. By instituting these short contracts, the COO can determine in a short amount of time which PLs shirk the most and then can decide whether or not to re-hire them the following semester. This decreases PL shirking because PLs know that they have to prove that their interests align with those of the COO if they want to be re-hired, so they act accordingly by teaching as much material as possible so their students learn as much as they can, thus increasing profits for HackCville.
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