Grade inflation refers to the phenomena of getting an "A" despite having what used to be a "B" or "C" level of knowledge.
If an institution gives grade A based on some objective criteria and students getting the grade C turn out to be successful then methodology of the institution will be considered flawed by the vast majority. Soon, the institution will lose its relevance.
If the institutions have to stay relevant, they'll have to make sure the grades are correlated to successful people in some way even if it means handing out grade A to any student!
If an institution gives grade A based on some objective criteria and students getting the grade C turn out to be successful then methodology of the institution will be considered flawed by the vast majority. Soon, the institution will lose its relevance.
If the institutions have to stay relevant, they'll have to make sure the grades are correlated to successful people in some way even if it means handing out grade A to any student!