51/100: Profits and Quality in Private Sector Higher Ed

I am in Private Sector Higher Education in Britain and my work makes me explore the ways to reconcile the profit maximization motive, central to any private business, with the need to deliver a high quality (whatever that means, for the moment) education experience.

For a start, capacity utilization is seen as the key profit driver for education business. So, it is down to things like how many students in the class, how many hours does a tutor spend teaching, how much does the student pay and what does the institution have to pay the tutor. The perception of quality is seen in terms of experience - in the For-Profit Education world, the student is the customer - as in the quality of infrastructure, conformance to the implicit and explicit needs of the students (a job, it is presumed), quality of instruction etc. This is straightforward, except the fact that quality of instruction is often perceived to be better if the tutors are teaching lesser number of hours and there are lesser number of students in a class: That way, what looked like a simple set of statements often become a complicated debate on the class sizes and the nature of academic work.

What seems to complicate matters more is that the two sides of the debate seems to come from two different worlds. Often, the proponents of For Profit Education come from the world of professional training, which thrive on standardized instruction and squeezing the efficiency of the classroom. The business of For-Profit Education is built on their alliance with the academics from the publicly funded world, where the discussion is often about creating capacity rather than utilizing it to the every last bit, about freedom rather than format, and of creation of new knowledge rather than living within the boundaries of disciplinary body of knowledge. There is so much lost in translation between these two groups that the compromises are often found in fuzzy terms, like 'long term' profits and student 'experience', and, in mis-equating the purpose of education with making the students employable.

It is somewhat easy to understand some of this, like the tyranny of employability. In much of the literature, education is about freedom: It is designed to free you from the circumstances, from the boundaries set by your own experience. However, this is not in sync with the idea that education only prepares you for your dream job. The dream job, by definition, is set by the limitations of your experience. Besides, it is impractical to assume that an education, which plays out over a number of years, can prepare you for a job, which exists here and now, in this rapidly changing world. Indeed, what education can do, and often does, is to prepare you for your father's dream job.

However, despite these apparent contradictions, much of the discussion in For-Profit education world centers on employability. This is because the students pay, what is central to pricing of education is the individual pay-off, how many years would the student need to recover the investment made in education. One can see the reductionist tendencies of such a discussion, but this is often the only discussion in For-Profit education - and this puts measure-ability at the core of the discussion about quality in education. However, this has clear limitations, we indeed only measure what we want to measure (See Good Education In The Age of Measurement), and this reduces the quality of education down to the cleanliness of toilets and receptionists' smile, important but all-pervasive elements of a students' life.

In a way, in the student-as-consumer world, what should matter is what matters to the students most. This may indeed point to employability, one may argue, looking at various surveys that gets published. To take one most widely available, the Sodexho University Lifestyle survey in Britain, the key reasons for going to the university for British students are:

To improve job opportunities 74%
To improve salary prospects 60%
To improve knowledge in an area of interest 58%
To specialize in a certain subject or area 47%
To obtain an additional qualification 46%
Essential to my chosen profession 43%
To experience a different way of life 41%
It's the obvious next step 40%
To have a good social life 31%
My parents expected me to 24%
I didn't want to get a job straightaway 23%
I didn't know what else to do 18%
All my friends are going 14%
Can live at home and still go to university 9%

However, this is a one-to-one world, and defining quality in employability terms will surely not be enough for those who wanted to gain knowledge and expertise (58%), a different way of life (41%), defaulted on it (40%) or didn't want to get a job (23%). For these various groups, education is a service delivering various different experiences, and the simple factory business model, where better capacity utilization determine profit, and outcomes determine the quality, is not appropriate.

There is also another problem with too much focus on employability. Education is a life-changing experience, and good education may mean a shift in expectation. So, an education, if it delivers its promise, will ensure that the goals the student start with is not the same she has at the end, because the process of education would have altered her expectations about her own life. Hence, education that sells itself on the employability plank has an inherent problem: It is designed to disappoint most of the students anyway.

This brings us the need to revisit the issue of pricing and profit from education. The central point, that the process of education is at least as important as its outcome, and the students come to the classroom with different requirements and hence a good education must be designed to offer different outcomes through different pathways, defeat the assembly line (shall we call this 'value chain') model of education. Hence, the assumption that profit will arise from squeezing efficiencies may actually be misplaced, and the focus on processes rather than people, and on capacity rather than content, may actually be counter-productive. I shall argue that the principal driver of profit is bound to be design of the educational intervention, as it would be in a similar high contact service setting. Indeed, the process efficiencies are needed, tutors must know what they are talking and must add value, and the infrastructure must be up to scratch, but what people will pay and whether the institution can turn a profit is dependent on whether the services are delivered in an appropriate manner (not at the cheapest cost), whether the intervention is seen as worthwhile (not just in pay-off terms), and whether the institution is able to balance the various needs of its stakeholders or constituents (I love to see students as constituents rather than customers).


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