I am a corporate sponsored student from Japan. My sponsor covers my tuition and I am obligated to work for the sponsor at least 5 years. Before leaving Japan, I met my HR manager and signed an informal contract that states my obligation last for 5 years unless I pay back all the cost to study here in the US.

I believe the contract is based on mutual agreement between the sponsor and myself, and it actually allows me to quit the current job as long as I can pay back all the cost.

Since we have a mutual agreement, is it still ethical for me to search for a new job?

I feel that this would fail the generalization test, because if everyone decided to seek a new job, then companies would stop sponsoring their employees to study abroad, and therefore I would not have opportunities to study abroad with sponsorship.

Contributed by HH.

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About John Hooker

T. Jerome Holleran Professor of Business Ethics and Social Responsibility Tepper School of Business Carnegie Mellon University

6 responses »

  1. RL says:

    I believe they key to this question is identifying the reasons which the generalization test is to be applied to, while maintaining a broad enough scope.

    If employees choose to leave their sponsored companies upon completion of their education, companies would not bother with the trouble of financing their employees’ education in the first place. After all, sponsorship is a form of investment, and if companies cannot reap the benefit in the future, they have no incentive to spend in the first place. Thus, this fails the generalization test.

    However, we can narrow the scope and identify a reason for this action. Let’s say employees leave their sponsored companies because of better opportunities, what would the companies do then? Some may argue that this will yield the same result, but what if they are losing employees to their competitors? In order to retain high potential employees, companies may sweeten the post-graduate compensation and/or position so that they are not perceived as inferior in the industry. They will definitely continue their sponsorship programs as they represent enterprises’ stability, profitability, and commitment to employee development. So I believe in a competitive landscape where qualified resources are scarce, it is ethical, and expected by companies, that sponsored employees seek for new jobs during their study.

    We can even further narrow the scope and argue that employees leave their sponsored companies because of they are no longer interested in the opportunities that await them upon graduation, and better opportunities came up. This should not deter companies from sponsoring future employees, but may encourage them to implement a more rigorous screening process for their sponsorship programs.

    • YY says:

      RL, although I agree with your conclusion, I think your generalization test was not correct. The sponsorship contract is a mutual understanding, and both of Hiroshi and his employer knew its a promise for the MBA education, not an investment.

      My generalization test is if HH chose to join a new firm after graduation, since this potential result have been already considered by his employer and incorporated in the contract, it will not deter the employer to continue its sponsorship to future employees.

      Unlike Jennifer’s case [discussed in this video, transcript here], his employer has no chance to know that she has a potential offer from New York. And they didn’t incorporate this situation into the contract. If Jennifer chose to quit, her action will frustrate the employer and become more conservative to recruit new graduates. HH’s decision to leave is more like an ordinary job switch. No ethics should be considered here.

  2. NH says:

    I agree with RL. Generalization would not work for the case and companies also should make effort to prevent employees who studied abroad from leaving the company.

    For sponsorship of MBA study abroad, I think most of companies require mutual agreement with employees to return the cost of studying if employee quits the job within few years after MBA study. I, however, do not think this is a fundamental solution because of freedom of occupation. Most effective way to prevent such a career switch would be to provide attractive jobs commensurate with their abilities after MBA studies. Instead, right after the getting back to the company, he should be required to make commitment to management about what he got on his MBA study and how to utilize it for the company. The results of the work of the next few years after MBA study should be strictly monitored by human resources division.

    For the admission process, the company should strictly choose the sponsored person from the perspective of “someone whom the company wants to let go” rather than “someone who wants to go”. Before sending, company needs to focus their strategic area where MBA candidates are expected to enhance and make sure mutual understanding. For those who study abroad, if their mission is clear, the effect of study would be much greater.

  3. ZL says:

    HH, I don’t think it’s unethical to [leave] your previous company if you find a new job. First, it did pass the generalization test. As it’s an open contract, you don’t have the obligation to return to your previous company. If students who signed such contract is seeking job in the market, I guess that’s what the current fact is, it would not prevent companies from stopping supporting their employees because not all those students are able to find a new job providing better packages. And it also passes the utilitarian test. With higher education and more sophisticated technology, a graduate student should be placed in a more senior level to take the most advantage of his ability. It’s obvious that a new company is more likely to provide that condition. By doing that, the whole society would benefit from it and it really increases the overall utility. Moreover, it passes the virtue test too. Family is a core issue in Asian culture, especially in Japan where husbands are likely to be the once financial resource, as in your case I think. It’s no excuse to reject pursuing better life for your family. It’s the most important and life-long obligation to you.

  4. HT says:

    I think that in this case the generalization test would fail and HH does not have to worry about his ethical problem. Actually, I also have a sponsorship from my company and when I signed an agreement with its HR department, I found that there has already been a judicial precedent in Japan. In the precedent such an agreement between an employer and its employee about his or her MBA sponsorship is regarded as a loan agreement with a special condition which will require the employee to pay back tuition to the company if he quits the sponsored company, or will exempt him from the loan (tuition), if he continues to work for the company over several years. On the other hand, in the case that there is no agreement between an employer and its employee who has also a sponsorship from the company and when the employer requires the employee to pay back tuition to the company because of his resignation, this company’s action will be illegal because the Japan’s Labor Standard Law Article 16 says that “a company must not require its employee to pay a penalty for breach of their labor agreement”. Therefore, I think that in this case there is no ethical problem and it’s much more important to think how he or she feels emotionally when they plan to take an internship and quit their sponsored companies.

  5. John Hooker says:

    On the face of it, there is no ethical problem because HH doesn’t propose to violate his contract. He would only use the escape clause that allows him to refund the tuition money.

    Furthermore, as YY points out, using the escape clause in this contract is not like Jennifer’s use of the escape clause in her employment contract (see this video, transcript here). In that case, using the escape clause whenever convenient is not generalizable because it would undermine the job market on which Jennifer relies to secure a job.

    Leaving the company probably passes the utilitarian test as well. Conceivably, leaving could do more harm to the company than it benefits HH, but nothing in the case suggests this is true.

    Nonetheless, HH thinks there may be an ethical problem. He is concerned that using the escape clause in an educational contract is not generalizable because companies would stop sponsoring study if employees jumped ship whenever they wanted (and refunded tuition cost).

    We really don’t know what companies would do, but we don’t have to know. The test is whether one would be irrational in believing that companies would continue to sponsor students. This belief is probably not irrational, in which case leaving the company is generalizable.

    HH’s situation, however, is different because he works for a Japanese company. ZL states that family in important in “Asian” culture, and HH should put family first. But there are many Asian cultures, all different. In particular, Japanese business culture places a high value on loyalty to the company, probably more so than any other culture. This is probably why HH is torn by this dilemma in the first place. Perhaps universal disregard of company loyalty would undermine the cultural mechanisms that make Japanese business possible. If so, leaving the company would be ungeneralizable and unethical in HH’s case, even if he refunded the tuition cost.

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