Trevor - this is a difficult issue, especially for profit-based schools who rely on retention directly for funding.
However, all Academic Institutions, both for-profit, and state-funded must rely on standards to succeed and to attract students.
The higher a University standard, the higher the caliber of the graduate, and the more likely the student will get hired. This process creates a positive reputation for the school, and helps the students to succeed once they become employed.
Because employers will never lower standards, we must not harm our students by lower our standards.
In cases where students might fail due to a lack of participation or a lack of comprehension, it is often best for that learner to retake the class, learn the material well, become better prepared for employment, and become more competitive as a potential employee.
I explain this to students who might "beg" to pass a class that they simply did not pass. For the most part, they understand and retake the class. I often remind learners that the larger goal is employment, not a letter grade per se.
I know what you mean. However, you can give a different approach to the matter without lowering standards. Getting to know the students and their level can help. I teach composition courses, which often entails instructing to many different levels of knowledge. I tend to assign more and be kinder when it comes to grading to balance this out. This way it is the work they put into it. I know this is much easier in the English field than a field in science or math.
These practice has been seen among colleagues at different institutions around the world. What keeps me from going into this practice is the fact that each student that passes my class wears my name in the field I pass them in. So when that student gets to another professor and asks, "Why dont you know this," I dont want to be that professor the students says,"I didnt learn that in Mr./Ms. so-and-so's class."
I will not lower standards ever. Our job is to raise the students to our level of standards, no matter what.
I believe this is a real problem, as the push for retention of students who may not be truly capable of doing the work continues. I guess one must play it by ear, and try to maintain some kind of academic integrity. I think we should always focus on the fact that we are trying to prepare them for the real world, and are then doing them a disservice if we pass them simply not to hurt their self-esteem.
So far as standards are concerned, I avoid grading my students against a set "ideal" or against each other but attempt to grade them against themselves, or against an earlier diagnostic assignment.
This works for me, perhaps, because I'm in a slightly more subjective field (writing). I try not to judge students' essays against other students' work. Instead, I ask "is this piece a significant improvement over the previous one?" and grade according to the answer. This allows me to hold students to high standards, but be flexible in the standards I hold them to.