The Employee Defection Game
A Company is developing a critical product, but it is afraid some of its Key Employees might leave and work for the Competition. The Competition has been trying to lure away Key Employees with offers of raises and bonuses. If Employees leave, however, it will derail the new product, which would be costly to the Company. The Company has decided upon several options to incentivize Key Employees to stay. The Company doesn't know which of the options would be most cost-effective in convincing them to stay.
For a full write-up of the situation, see An Example of Game Theory in Risk Management
The Sexual Harassment Game
One employee (the Accuser) files a claim of sexual harassment by another employee (the Accused) with Firm Management. Faced with an accusation of sexual harassment, Firm Management believes that:
- The Accused is guilty of sexual harassment with some probability α.
- The Accused is not guilty of sexual harassment with some probability β; the Accuser simply misinterpreted the actions of the Accused.
- The Accused is actually a victim of sexual misbehavior on the part of the Accuser with some probability (1 - α - β). For example, the Accused regretted the affair after-the-fact or the Accused used sex to get a part or a raise.
- The Accused is a high-value employee of the Company.
- A reputation for condoning harassment could cost the Company
- Increases in employee turnover,
- Losses in investment,
- Losses in revenues, and/or
- Losses in future potential hires.
What should the company do?
The answer is, of course, it depends.
For a full write-up of the situation, see Playing the Sexual Harassment & Misbehavior Game