Wednesday, September 22, 2010

The Whole Article on What For-Profits and Maybe not-for-Profits Need to Learn

I received a number iof requests to pull the whole article together so it can be more easily shared. So here it is.

If We don’t Learn From Why There are Federal Hearings, We are Doomed to Repeat Them

Neal A. Raisman, PhD
President, AcademicMAPS

The real issue with the Congressional hearings on for-profit education is not the particulars of possible legislation or regulations, but how did career colleges sector end up as a focus of the US Congress? Why are legislators singling out career colleges for special scrutiny? Why are they even thinking about new rules for them? How did we get to this point? And what can be learned to try to keep this from becoming an on-going activity for them and all higher education?

The answers actually come from two areas. The first is where we always look – the operational side, being for-profit and what that entails and causes. Sixty Minutes anyone?  But that is actually the lesser of the two core issues. The really significant source of the current situation is the human element, or for some schools and companies, the inhumane element. It is in the way we treat the people who work in the schools and the way we do not treat our customers – students – that is the real problem that brings all else into the public. Furthermore, it is the human aspects that are actually at the source of most all the concerns including the operational ones.

We begin with the lesser of the evils – operational concerns; how the schools operate. First, being for-profit in a not-for-profit world makes the schools stand out since they must operate differently than public and private not-for-profits.  Selling stock to support expansion or operations is an obvious difference that causes some significant operational issues. Career colleges that are publically help must be answerable to their stock holders though for the most part the stockholders are passive investors who just want a good return on their investment. There have been few cases of public shareholder/ company issues going public.  I can only recall one. But that aside, being beholden to actual shareholders and thus needing to try to maximize profits does change operations causing some of the issues Congress is looking at. 

Schools need to focus on bringing in new sales to “grow the business”. This means ever-increasing pressures to expand population, increase tuition and fees, reduce operational costs, and maximize revenue.  This calls for marketing aggressively, focusing on initial enrollments (sales), introducing new programs that could sell, maximizing Pell and Stafford federal money, firing employees to reduce costs, cutting programs to cut costs, reducing the number of sections to cut costs, and so on. All to show a good set of numbers and talking points for quarterly calls. Even if a school is not publicly traded, they tend to operate as if they were perhaps hoping to go public at a later date.

Yes, much of what is above is similar to any college or school, for or not for-profit i.e. marketing, initial enrollments, offering popular programs and major, cutting costs and people, etc. In fact, the major difference between a good not-for-profit is an accounting system – fund balance versus cash accrual. But there are differences in four significant areas – the people who run the schools and who carry out the operations, the way people are compensated the intensity of the efforts, and how the operations are accomplished.

For the most part, the people who run the companies and the individual schools are drawn from the “school business” not from education. There is a difference. Yes, career colleges focus on learning and training and some do it exceedingly well and have done so for quite a while, others, if we are honest about it, do not do a very good job.  They do not understand the larger $470 billion sector of higher education and do things that call attention to how career colleges are different and even some questionable. In my personal history as a chancellor and consultant to career colleges, I have observed some leaders of companies, schools and departments doing things to make numbers that were to be polite, questionable yet rewarded for doing so. I, and some of you, know of “shaving the edges” of the rules to hit financial goals with little regard to how this would affect student learning or the industry at large should the “shaving” draw public blood. Granted, this is not the behavior of everyone in career colleges. Not at all but because the leaders of companies, schools and departments do not see their function as furthering the education of students and their success, some do things that put finances over learning and that’s when trouble, the media and politicians strike.

If the people acted to better the education and success of students that would be a powerful reason for doing what they did and would be lauded by others rather than written about in newspapers, for radio and TV and by Congressional staffers. So why do they do that? Simple. If they succeed, they will hit numbers and get their bonuses.  Further, they may have a vested interest to see share value rise if they are also stockholders. Those in not-for-profit education generally cannot get money bonuses for doing their jobs and they certainly cannot have a financial interest in the success of the school’s stock.

They get a promotion or a raise for doing a good job but not a separate check and admissions people certainly cannot get a cash bonus. That would be getting awfully close if not on top of the federal regulations on bonusing admissions people.

The cash bonus creates an incentive for people whose base salary is often not all that high in comparison to that of parallel positions in not-for-profit to hit their numbers. That is why there are bonuses after all but the bonus thus also becomes something that must be obtained and some people will do almost anything to make sure they hit their bonuses. They are almost always the ones who cause companies and schools major problems when they are uncovered. They are the ones who Congressional critics use as examples that paint all career colleges with the latest color of blame and shame. 

Yes, when uncovered, one of two things happens to these people. In the many well run, ethical schools and colleges the person is either let go for violating procedures or policy or more often, if the violation is not major, corrected and trained to do things correctly, Too often they are congratulated for coming up with a new way to shave the rules and their approach is quietly conveyed to many others as a way to go. But when they shave a bit too much, cut into the skin and the school bleeds in the media and into Congress’ attention, they are fired.
The Human/Inhumane Reasons for the Hearings
Human and inhumane issues are the cause for 96% (yes, I reviewed  a year’s worth of complaints and this is the percentage) of bad press, web-based complaints, internet and twitter  postings and person-to-person Malthuisan angry accusations that grow into “facts” that make it to the ears of State and Federal staffers. If one looks back at the reasons for large settlements to the federal government or to individuals it will be seen that two major categories of poor treatment and customer service arise. One is in the way we treat students. The other the way we treat employees. Since I have written extensively on academic customer service to students I will be brief here and focus on poor customer service for employees.

Creating Angry Students
The most common complaints that arise from students and go to the media and into congressional records is misrepresentation of programs, careers and costs. To attract students for example, advertisements run on TV promising “careers in criminal justice” and showing a police officer in action making it appear that graduates of the program at the school will become police officers. Not what the program does and the result is angry students and graduates. Many students drop out when they discover that they will still have to go to a police academy to become a police officer and that they are qualified for…… The students walk away, tells at least twelve others who tell twelve more and so on until it gets to the press, state and federal officials and leads to propose regulations.

Another extremely common scenario has to do with financial aid and funding. Here is a clip from an on-line complaint site as a quick example. There are hundreds more.  

I went to the school and found the education to be Jr. College like. I was tricked and told not to go to any of the surrounding community colleges or universities, only to find out that the instructors were going to the same very colleges where they steered us away from. Some of the instructors were still in training and would ask the students for help. An instructor even explained that he would get a bonus after we all do good, and times are hard so he would "help" us.
I left the school before 30 days and was told that I could come back to continue where I left off at. Than I began to receive calls from collection agencies demanding money, even though I had a student loan. The so called hands on education was not hands on. We ended up doing work over the computer, which means that we would teach our selves at least one full course. The recruiters lied about receiving commission or incentives for their work. I was told that there was no money out of the pocket! The school has custom published books to save money! They advertise way to often! Teachers complain of being under paid and ward off good friends from becoming entangled in SCHOOL’S mess. I owe money and I wasted time.

Weak to poor teachers is a common complaint but the one that pushes people to call their representatives is the false representation of financial aid and costs leading to higher bills than anticipated followed by the relentless pursuit of payment.  At a college I worked at, it was corporate policy to have someone walk into a class, pull out a student who owed money. Then push as hard as is possible to get money out of him and not let him back into class until he paid. So, it was likely that he would miss a week of classes and fail because of violation of the school’s attendance policy. A perfect horrible customer service catch – 23. You can only go to class if you are paid up and when you are paid up you cannot got to class because you missed too many classes.  No wonder a very common complaint is “all you care about it the money!”

I did not enforce that and other policies that were student and retention negative. They were not just anti-customer service but stupid financial policy. A student who quits is going to be a loss to the revenue flow. Next, if he or she were treated as poorly as the student above and by corporate policy in this company’s schools and most all career colleges, That is money due that will almost never be fully paid. If it goes to collections that is a sure reduction of any moneys received by anywhere up to 50% fees of the agency. And the aggressive approaches of the school and the agencies will very often drive a student to file a complaint which ends up…yes, easily searchable on-line, in the media and legislative hearings.

Instead of pushing students out the door by pulling them out of class, we waited until a class was ended and sat down with the student to try and figure out a way to get the bill paid. We even set up payment plans based on a personal IOU. Yes, we did lose some money but we gained most of it and did not end up as evidence of career college malfeasance or in a hearing. And yes, the folks in the corporate office were not happy when I told people to violate policy but they loved the “cash cows” status of the schools I oversaw.
There is much more that can be said about how poor academic customer service turns students into complainants and witnesses at hearings but the even larger issue is found in the way they treat employees.

Making Ex-Employees into Witnesses  
Career colleges in general do not pay the field hands, the ones working at the schools all that well. The people who run, teach in and manage the schools where the revenue is generated are paid less and having much greater pressure and level of demands to deal with. This makes the bonuses all that more necessary and important. The corporate “seagulls” are paid better, fly into a school, do what seagulls do and fly off leaving the field hands to clean up the mess. For some reason, the “seagulls” seem to have a belief that if they can bully people, the field hands will respond and do better even if the people at the school know the goals being set cannot be met, or the new program will not succeed in the school’s area, or the demanded reductions in staff will only reduce the ability to perform and meet the goals set. This all creates anxiety, anger and antagonism which builds until field staff explode all over the pages of the local newspapers, TV and yes, in legislative hearings. ( I should mention that this does not apply to everyone of course. There are some intelligent regional managers or area directors. In fact, there are some who should be used as role models for others. One such person I have heard about and spoken to is a man named Vinnie Marino with CEC.)

The result is that one day, the school president pushes back and says no to the seagull and ends quitting in anger or being fired. (To those who wonder, no I am not talking about me.)  The turnover in senior-level positions is quite high and the damage these ex-employees can and do is very high so the school often needs to complete a non-disclosure agreement with the recently ex-employee. That is an additional operating cost.  I was once an observer at a corporate annual meeting where a very self-consumed corporate seagull looked out over a room of about 50 campus directors and presidents. “All of you who have been here ten years or more, standup.” One person did. “Okay five years or more.” Two people stood up/ “Okay then, three or more.” Four more stood up. “One and two years or more?”  Seven stood up. He finally had some sense and stopped. Thirty six of the campus leaders there had been with their schools less than a year. This was not a training session for new campus leaders either but a corporate annual meeting. And I knew for a fact that at least two of the many recently fired presidents were complaining and talking about their experiences with people outside of the college and company.
Another way we create witnesses for hearings is the way we do let people go. It is common procedure to just call someone into an office and let him or her know “we are letting you go but it is not for performance. We just have to make hard decisions because of fiscal situations.” That means the president has been told by the regional seagull that if you don’t reduce staff, you will miss your numbers and forget your bonus.” And of course his own too.

So a person is let go/fired and then is told he or she has to be out of the building within thirty minutes. And a security person accompanies the ex-employee to make sure he or she does not damage anything out of the anger we all know is there from being let go not for performance issues.
These are the people who are not just angry but humiliated by the process. They are turned into the ones who go right to the media and hearings with all the inside information that makes for headlines and great political fodder. They may have heard or even been told to d things that could be damaging not just to that department or school but to the entire sector since it is always assumed “what one does the others will too.” This may be right. It may be wrong but it is a fact of political hearings. 

Many “whistle blowers” are created by schools too. Many schools do not realize that our employees are our customers too. They need positive attention and good customer service. But since too many schools and especially companies see employees as a cost and easily replaced, they are not given the service and respect they deserve. Some schools and companies may try to keep the faculty happy and show some recognition with things like “Faculty Member of the Year” awards but staff…Not so much. Ina fact, staff are seen as expendable too often and are thus pushed to do and achieve without appropriate reward and recognition.

This is especially so of one group of staff that has become a stalwart contributors to all the media and hearings – ex-admissions counselors.  And I am not talking about the Sixty Minutes undercover that exposed some highly inappropriate activity but how we treat admission reps such as uin the segment. I had the unfortunate experience of hearing a corporate executive yelling at all the admissions people at a school. She was screaming at them during a conference call telling them they are a disgrace, failures, do-nothings, losers who should all be fired and likely will be if they miss the start goal. And that was the nice part of the discussion. I had the pleasure of kicking an admissions seagull of a campus and banning him from coming back because of the way he was working with the staff.

Admissions people are pushed to achieve unrealistic numbers. They are told “this is not something you should do but…” They are constantly threatened with dismissal, being written up and put on probation if they do not hit their application or phone calling and admission goals. Then to keep their jobs, they feel they have to get students no matter how while their managers look the other way and just applaud reps who get applications even if they are “pity aps” completed because the rep begged the student to just complete the application “so I can keep my job” or the such. The applications fail to lead to actual shows. The school does not hit enrollment and the lowest achieving reps are let go. And they go with resentment and anger building within because they gave their all against a goal they knew was unrealistic. And many gave more than their all. They may have crossed ethical lines that haunt them. They could know they misled students to get the application. They may realize they compromised themselves and hurt students just to try and keep a job they really hated anyhow because of how they were treated. So given the opportunity to assuage some guilt, they open up to the media and legislators about what they were forced to do that they now know was wrong. 

They tell all and more since they know and observed all. They were there when a misguided admission’s director told them how to get more applications. How it was all about “getting butts in the seats”. They know the rep who was rewarded for putting in false applications and others had to have known because no application fee came with the form. They are there when the rep who got students to apply by misrepresenting the actual offerings, cost or the student’s possibility of actually succeeding is rewarded and promoted while they do the job as it should be done and just get harassed for not doing as well. They are there when the highest achieving rep gets a cash or material award or the highest achieving reps get a vacation at a Hawaiian hotel which will be called “a professional training meeting” or the such which is illegal under Title Four. And when they get let go as they will eventually, given the fifteen minutes to clear out and walked off campus by security, they are low hanging fruit for those who wish to pit the sector in a negative light.

What To Do To Avoid Problems Going Forward
It is important to re-emphasize that the examples given and the problems cited may not apply to every school and company but they do for too many.  And these examples are the sort that are easily found on the internet, websites, the media and hearing evidence so the must become important even to the schools that do not do them. It is important that the sector stop patting itself on the back all the time and be real about some of the players within it. It is necessary to take the whispering at meetings like CCA and do something to stop the offenders from harming and maybe even destroying the whole industry. We all know there are issues yet little is done about them by the Career College Association, its members or the accrediting agencies who could bring pressure since if they don’t, the federal hearings and rules will. 

The sector needs to hire more leaders who have had experience in both the for-profit and not-for-profit sectors. A college is an educational institution first that makes money through its successful recruitment, teaching, retention. customer service, graduation and placing of students. Students must be treated as what they are – our customers. That does not mean giving the what we think they want such as high grades for little work but real academic customer service. This includes good classroom experiences, training that does apply to the real world by professors who can teach, class sections that are offered without sudden cancellation, equipment that is up-to-date and appropriate to the learning, good tutoring when needed, an environment that is both academic and attractive and most important, people who care and value them as students.  

This means that people all the way through the student experience must provide good academic customer service that is also within the rules and regulations that govern colleges. That means being honest and upfront on all issues and trying to help resolve them to the student’s and schools benefit. Remember a dropout will not register for more classes. For example, it includes when a student is behind in tuition payment we do not just send dunning letter and pull the student from class. What we do id sit down with the student and try to help him or her find ways to make the payments. If we do that, even if the student finally has to leave, she will feel the school did all it could to help out and be complimentary rather than a potential hearing complainant. It means listening a lot more and demanding a lot less. It also means that people need to be trained in academic customer service so they can treat students correctly.

The campus president or director should have the care and feeding of students as her primary job. She should think of herself at the DoCS, the Director of Customer Service.  It should be her obligation to deal with and resolve any and all student issues before they become complaints. If she is in her office too much, she is not working with and in the student body enough. She must also be the DoCS for the staff of the college and become an advocate for them with corporate or whomever she reports to.  She should make sure everyone knows the 15 Principles of Good Academic Customer Service and lives by them
Academic customer service training is also needed for the employees especially those who have any sort of HR function which is really everyone. Too many school rely on an HR person to take care of the hard stuff like firing even after that original manager made the situation not just hard but destructive. Managers, directors and senior staff need to realize there is a reason G-d gave us two ears and one mouth. She was trying to tell us to listen twice s much as we talk. And everyone must realize that everyone in the school is their customer and needs to be treated with dignity and value. 

The bonus system needs to be made more egalitarian. Everyone contributes to a successful or failing school so bonuses should not just focus on the senior leadership but everyone. Everyone should get a bonus id the college succeeds. But the entire bonus system should probably be ended and replaced with a better base salary plus a salary scale increase system so successful people get promoted and/or salary increases regularly. Bonuses just push people to possibly do things that cause the college problems later.

The whole industry needs to just settle down and realize that it is not possible to keep growing at rates that are outpacing the market every quarter. There was a time when that was possible when the sector was still newish in the 1990’s with a huge market and not all that many players. Now the sector is crammed with  what may be too many schools for all to be successful. There are so many career colleges out there that even the small markets are over-crowded.  But the investors want a good return so even weak schools need to perform somehow. That how is what gets too many school in trouble and the entire sector the target of federal hearings.

Someone needs to regulate the industry from within or it will be done from hearings, new federal rules and on the State and Federal level. Someone needs to be the watchdog and sniff out issues before they become obvious to everyone.  Someone needs to have the authority somewhat like an accrediting agency using something like a Sorbanes/Oxley desk audit of all activities and functions and for the sector and be able to tell a school or company that it may not do certain things, over market, promise what they cannot deliver, etc. It may be that schools should be under a regulating/accrediting agency not for academic programs but sort of as a Good Collegekeeping seal of approval that can be given for meeting and performing or taken away until the school is back in line. Perhaps this should be one of the roles of the CCA though I do not see it doing this. But it needs to come from within if at all possible or it will come from outside.

Everyone just realize that everyone in the school is their customer and needs to be treated with dignity and value. 

Finally, since there is no such regulating body, individual colleges and schools need to police their own activities. They cannot permit anyone, admissions, financial aid, bursar, anyone from the President on up to engage in any deceptive practices, claims, or actions that will harm students even if it means that some number is not hit. Better to miss a start for example than to start a federal hearing.

The author Neal Raisman, PhD is the leading consultant and solution provider for academic customer service, administrative leadership and retention solutions. He has assisted over 400 schools, colleges and universities in the US, Canada and Europe. His presentations at CCA are always well attended and rated and his book The Power of Retention: More Customer Service in Higher Education (available from The Administrator’s Bookshelf) has been called a must read by Career College Central. He can be reached at

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