Management Practice Bulletin

Defining the Niche for Proprietary Education

Management Practice Inc. (MPI) has recently conducted a significant benchmarking and profitability improvement assignment for a major public company in the business of for-profit education. Far from the image of auto mechanics and beauty schools, we found a vibrant and Professional group of highly-skilled and motivated educators, who have a major role to play in the retraining of America.

The advantage to the student of vocational for-profit or proprietary education is that it focuses on the objective of earning a living or enhancing the student's value to a potential employer A proprietary school cannot usually afford to teach general academic skills except as required for a particular trade, whereas the not-for-profit institution is charged with educating the whole person.

As a result, proprietary schools spend a smaller proportion of the tuition dollar in the classroom than a typical college. The "for profit" curriculum is more focused to achieve a specific result within a short, concentrated period - - often a state or federal license or skill-specific certification. The rigidity of teaching for a specific purpose facilitates the use of computer-aided training because the curriculum can be programmed. This reduces the depth and knowledge required of the classroom instructor.

The niche for proprietary education is defined by its ability to quickly train and retrain the population to meet the job requirements of potential employers. In 1993 alone, over 10 million employees or nearly 10 percent of the U.S. work force wilf be made redundant through economic reverses or technological developments. All of these in some way or another require training. Proprietary education is a cost-effiective way to provide it.

To understand why requires a basic comprehension of how proprietary schools differ from other institutions of higher education. Those differences are illustrated by the "River of Students" shown below.

The SEA OF APPLICANTS is much larger for non-profit than for proprietary schools as the need for general education is omnipresent. For proprietary schools, the applicant population is confined to only those who are focused on a specific course of study. To find these students proprietary schools spend more for promotion and marketing than their non-profit colleagues.

ATTRITION SWAMP is more perilous to the proprietary school student than to one from fee non-profits. The dropout rate may reach as high as 4 percent per month, reflecting the vocational student's lack of commitment, financial resources or inability to master the required academic disciplines. Vocational courses such as aviation, computer operations, and electronics often require a knowledge of math and physics beyond the capability of the proprietary school student.

After crossing GRADUATION DAMr a student may become backwatered in AWAITING JOBS LAGOON, an undesirable place for any graduate, but even more so for students from proprietary schools who chose a school, and borrowed substantial funds, to obtain a better job. A proprietary school's economic success is often dependent upon its placement record. Graduates lingering in the lagoon quickly result in a discontented student body, defaulted loans, and the inability to recruit new students. Furthermore, the Department of Education requires that a proprietary school maintain a 60 percent placement rate to be eligible for federal student financial aid. Without aid or corporate sponsorship, virtually no student could afford to attend a proprietary school.

Reaching PLACEMENT POND is, of course, the objective. A well-paid pool of graduates is the surest way to find new recruits. In addition to regular placement services, many proprietary schools offer long-term placement counseling for all their graduates no matter how old through the DELAYED PLACEMENT CANAL. Such services add to the reputation of the school as a referral point for employers seeking experienced personnel.

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MPI believes that for-profit, proprietary education has a major place in the American economy. Its advantages of clear focus, targeted teaching, and abbreviated learning cycles fill a need in an age when constant retraining is essential.

 

© 2002 Management Practice, Inc.