The business of vocational education – introductory thoughts

This is the start of an occasional series of posts I am going to be writing on the delivery and management of vocational education.

For a very long time, since I first dipped my toes in the world to training, way back in the late 80’s, doing internal sales and compliance training for a financial services company (if you think there are issues in the financial sector now you should have seen it then, it was like the wild west, which is in the long run why I got out), I have held the belief that training and education is a business or at the very least should be treated as a business.  Whether this is from the perspective of organisational L&D or from that of public or private education in schools, universities or the VET sector, we do the delivery of education and the outcomes it brings a serious disservice if we don’t think of it as business.

Now I know that there will be people out there who will jump at this statement and say things like education is a social or public good, it is this kind of business thinking that has got us to where we are today.  To those people I say you are right and you are wrong.  Learning and education are a social and public good, there is not a question about that, however there is nothing incompatible with holding that position and thinking that we can improve the way in which deliver that social and public good, by applying business models and principles to it.

When I first started in this industry and whenever in have been involved in projects or roles around organisational learning in particular, the concept of return on investment (ROI) has always been thrown around.  Now this and other post around this subject will not be about how to apply ROI to training (there are plenty of books, institutes and consultants out there who will do this) because how this is done isn’t what interests me, what interests me about ROI is what lies underneath it.

Essentially all the concept of ROI is saying to us is that if we invest a sum on money in the education of people, be those people staff of our organisation, school students or members of the public, there should be some kind of return for the money that is invested.  Now that return may vary from something very tangible, like an increase in sales revenue to something more intangible like a populous what are better able to critically think about issues and information. However it seems that we should expect that there is some return, the money that we spend on all forms of education should not simply disappear into a black hole and not return something back to whoever is spending it.

This to me also points to the idea that the delivery of education and educational services are going to work better if we think about them more like a business.  I am often reminded of a conversation I had more than a decade ago with a then school principle who is now in charge of one of the states largest public schools.  We were talking about the stress on teachers,  how schools were run, administration and a range of other topics and he said to me I had always been amazed by the number of people in the education world who didn’t treat what they did as a job or recognise that essentially what they were part of at a school was a business.  Even when I was first starting teaching I treated it like any other job I had had, I spent 8 hours at school.  I didn’t leave just after the kids left, I stayed there until five and I tried not to take work home and I have done that all the way through my career, he said.  Now does this mean that he didn’t think of his various roles in education as vocations, or careers, but rather like working in retail or at a supermarket, of course not.  He was and still is a deeply committed educational professional who has over the years created great outcomes for his students and other staff.

I have often suggested that things like non-attendance time and term based delivery for example, are detrimental to the ability of those providers who deliver under antiquated conditions such as these to meet the ever more demanding needs of their students who now more and more want their educational institutions to be available to them at times that suit them.  With more and more competition across the entire educational market survival business models which meet consumer need  are the only ones which are going to survive.

Clearly though it is the case that some of the business models which have been adopted, particularly in the private sector have been badly flawed and have led to damage to the sector, students, and to the businesses themselves.  Again the underlying reasons why these models have not worked are as with the previous example mostly to do with not meeting the student needs and demands as well as failing to provide a reasonable, or in some cases any returns an investments.

There is also a significant argument to be made that one of the reasons why various models have failed or not been as successful as they could have been is that perhaps their focus has been not as centred on what should be integral parts of any VET sector business as they should have been. Additionally this seems to also have led at least in some cases to questionable and in some cases possibly unethical behaviour.

What needs to be the central part of the focus of the delivery of vocational education and part of any ethical, useful business model for the sector is the outcome for students. It should be noted that by student experience I don’t just mean a piece of paper I mean a worthwhile educational experience which leads to a worthwhile outcome.  What a worthwhile outcome might be is something which I will explore later in this series, primarily because there may be valuable and worthwhile outcomes for students which do not directly connect to employment or workforce participation which also create a return on investment.

It seems likely that if these ideas of educational outcomes for students and return on investment for money spend on training, regardless of whether this money comes from government funding, individuals pay for their own training of other sources, are the central core components of a delivery and management model, we should be able to develop ethical business models which meet the needs of students and other stakeholders while still being profitable and cost effective.  It is this idea of what ethical, cost effective, well managed business models look like which will be the subject of the continuing posts in this series.



About pauldrasmussen
Paul Rasmussen is one of Australia’s most widely read Vocational Education and Training Commentators. He provides deep, unbiased analysis and insights not only on topical issues, but also on the underlying structure and policy which supports the industry. His writing and analysis has been praised for its uncompromising and thought provoking style and its ability to focus on the issues of real importance to the sector. He has advised various government departments and ministers, training providers, public and private organisations, not for profits and small to medium enterprises on the VET sector and the issues and opportunities facing it. He is one of Australia’s most awarded learning professionals and a regular speaker at a range of conventions and forums. His extensive experience in vocational education, and learning and development coupled with formal qualifications in philosophy, ethics, business and education management allow Paul to provide a unique view of the road ahead and how to navigate it.

3 Responses to The business of vocational education – introductory thoughts

  1. Craig Westwood says:

    Nice post Paul….I have long held the belief that the biggest single change we could make is to allow employers to amortise the investment in workforce skilling especially if we expect skills to degrade if not maintained, and/or be replaced when skills have reached the end of their economic life. Amazing that we can capitalise the investment in equipment but not the investment in educating someone to operate it!

  2. Neville Coward says:

    Agree as well Paul. Though I think that being able to open and operate an RTO is far to easy – for the smallest all they require is a Cert IV in TAE to get going. Both public and private sectors have profit targets and need to make these to survive. Therefore they are all trying to treat all, or components as a business. One of is not the biggest issue – the incredible lack of educational capability in the sector means that far too many just do not know how to develop and deliver quality vocational educational services and outcomes. They focus on the bottom line only – too tempting when funding or loans are available with very little, or no, accountability for outcomes required. ROI is often less for the consumer (whatever form it takes) and more for the business owners bank account.

  3. Pingback: The business of vocational education – introductory thoughts – how much do you know about VET IN AUSTRALIA?

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