Stop Giving Public Education the “Business”

Should we run our schools like a business? Many business leaders and free market privateers are “all up in our business” asking schools to be more business-like to achieve results. But I wonder if a company CEO actually could lead the average public school district any better? I doubt it. There are some powerful differences that might make the average titan of industry fail as an educational CEO. Here are twenty ways that running a school district is a lot harder than running a business:

1.     No Investment Capital

Capitalism depends on capital. Return on Investment (ROI) means you spend enough money first and then see if it pays off. Investment yields return. In education, our incentive programs are the complete opposite ― Investment on Return. We mandate that schools achieve certain rates of improvement and then we promise to give them more money. As a superintendent, the corporate CEO would have to use promised incentives instead of concrete investments to get results. But chronic underfunding of education (NCLB for example) has shifted ROI to IOR which actually means IOU to an educator. “Show me the money!” isn’t the quid pro quo in public education that it is in the private sector. In fact, our only incentive is to avoid the sanctions. Corporate leaders throw money at their problems. Educators don’t have that option and, in fact, society has been systematically de-investing in its public schools as a percent of personal income or GDP.

2.     Educators Can’t Niche Market

Businesses succeed when they find their market niche and focus all of their energies on perfecting their products or services in that market. The education marketplace is demanding, comprehensive, and diverse. The push-me-pull-you between state and federal standard-setters, parental demand, and what districts can actually provide as a well-rounded education causes tremendous tension. Science, the Arts, Social Studies, History, PE, Health Education, and Career Tech take a back seat as we are judged primarily on English and Math proficiency. Yet the consumer base still demands services in all subjects. Taco Bell doesn’t serve pizza, and Pizza Hut doesn’t serve filet mignon. However, our menu needs to be all encompassing or our customers get upset. They want mass personalized public education ― a private tutorial on a public school dollar.

3.     The Customer Isn’t Always Right

There’s a false axiom in business that “the customer is always right.” That simply isn’t true. Sure a business wants customer satisfaction, but if a business can’t satisfy the customer or its customer is too obnoxious or demanding the business cuts them loose. They give them a refund check and show them the door. Companies can pick and choose their customers and abandon the difficult “unprofitable” ones. Public education has to serve everyone. We don’t have a refund check to give them and if we tell them to leave they come back with a lawyer. Business leaders can be a little disingenuous when they advocate that parental choice is the answer to education’s ills. For a corporate CEO, that model would only work if they could also choose their parents and students. Educators can’t and won’t do that. We take them all whether they are tough to serve or not.

4.     Simultaneous Over-Regulation and De-Regulation

Many business leaders complain they are forced to move out of state or off shore to survive because of government over regulation. At least they have the option to leave. Public schools labor under a comprehensive, contradictory and complex set of regulations. The California Education Code contains over 20 million words. For example, myriad regulations and exacting standards mean the only facilities more difficult to build than schools are hospitals or power plants.  Of course, you’re a lot safer in a public school classroom during an earthquake than you are under a freeway overpass, in a corporate office building, or in a Wal-Mart. Some construction firms won’t work on schools because of all the delays and hoops they have to jump through.

The Chamber of Commerce annually issues a list of “job killer” bills pending before the Legislature. Maybe educators should do the same.  The Ed Code and the state budget come to mind since they certainly have been a “job killer” for educational personnel. Business CEOs aren’t used to having government regulators second-guess their business decisions; school superintendents are.

At the same time, quick-fix politicians and born-again educationists think if we infuse competition into the public schools it will force improvements. Over-regulating and under-funding the public schools as you force them to compete with charters, private schools, vouchers, parental choice, and online classrooms is a formula for failure and creates the unlevel playing field that private sector CEOs abhor. Corporations complain loudly to Congress when we don’t subsidize American companies and farmers struggling to fend off foreign competition. How is education any different?

5.     Revolving Door Leadership

One of the biggest differences between private and public sector leadership is that, in business, management stays the same while the workforce is constantly rotating out. In public schools our workforce stays entrenched (tenure and ineffective evaluation systems) while our management structure is constantly churning. The average shelf-life of a California school superintendent is less than three years. Many don’t even finish the term of their first contract or strategic plan. Transitory leadership can kill a business because it lacks consistency, confidence, and coordination. Apple Computer had revolving door leadership that almost drove it under until they re-hired Steve Jobs and regained stability. The same holds true for public education. We need leadership stability and continuity for a change. At this writing, nearly two-thirds of the students in California are being educated in systems led by superintendents who have been on that job less than three years. Now, this is a lot better than the private sector where 90% of the businesses that incorporate go bankrupt within the first two years. Private sector CEOs can walk away from failure; educators cannot not ― the state won’t let them.

6.     Lack of Control over the Bottom Line

The bottom line is crucial for a business CEO as they balance income and expenses to yield a profit. To do that the corporate leader must be able to control costs and prices. By contrast, the education leader only controls half the equation. In California, school districts receive most of their funding from the state so superintendents have very little influence on the revenue side of the ledger. They spend their time poring over expenses to glean every ounce of productivity so they can stay in balance. And, state law requires them to demonstrate solvency for at least three years even when their funding level is highly unpredictable. We are balancing 2012 budgets on 2000 levels of income. Ninety percent of our budget is spent on people so we have very little wiggle room to avoid layoffs and service reductions to stay in balance. For the past five years we have been doing Donner Party Budgeting in California as we cannibalize our workforce to stay afloat. Imposing a price hike to maintain quality services, staffing and “products” is not an option for a superintendent, but it is for a corporate CEO.

7.     Support for Employee Training and Renewal

In its prime, one-third of the IBM workforce was in some form of management, sales, or technical training. And it was done on the company’s dime. Contrast that approach to public schools where we are lucky to have one day at the start of school to get classrooms and work areas ready for the next term.  Professional development is a dying commitment in most school districts because of budget cuts. If our employees are to remain current in their fields, we ask them to pay for it themselves on their own time after the school year is done. Great businesses invest in their own employees, public schools can’t afford to any more.

8.     Marketing, Communications and PR on the Cheap

Most businesses spend a lot of money on Marketing, Communications, and Corporate Relations. Not including the cost of sales, it can range up to 30% of a firm’s operating expenses, with an average of about 7-10%.  In public education we grudgingly spend about 1% of district resources on school communication, community outreach, civic engagement, and public/media relations. Getting your message out to consumers is stock and trade for a corporate CEO. It’s a luxury for a school superintendent. Yet the number one reason a superintendent is hired, fired or gets a better job is their ability to communicate with consumers, school boards, employees, and stakeholders. Corporate CEOs, like educational leaders, would find it hard to survive with the paltry amount we spend to get our message out.

9.     Our Customers are Co-Producers

In business, the customer is the recipient of a product or service. In education, our customers (students and parents) are actually co-producers of our product called “learning.” Imagine if Ford Motor Company’s success depended on a car buyer helping on the assembly line and then on how well they drove and maintained their car over time? Each driver would define Ford’s product based on their own interaction with it. In public education, our Product is Learning and our Profit is Performance. Our customer’s involvement in making our product is integral to our profit margin in a way that would confound most corporate CEOs.

10.  Everyone’s an Expert on What We Do

Most people think they know how schools should operate because they went to one. In most industries the consumer accepts a company’s perceived expertise. We don’t tell our dentist how to fill a cavity, the CPA how to prepare our taxes, or the surgeon how to remove the tumor. If we are unhappy with the quality or value of that transaction we vote with our feet and choose someone else. In education, our customers feel entitled and knowledgeable enough to tell us how to run our business. Just because you were a student doesn’t mean you can be a teacher or administrator.

11.  Schools are Change Resistant

Businesses can change and transform themselves at will. “My way or the highway” is the ultimate hammer CEOs can use to impose change and compel adherence to new directions. Because of tenure and civil service, superintendents need to “sell” their staff into accepting change as a good thing. In a corporate environment, you will never hear, “That won’t work; I’m not going to change.” An ingrained workforce would drive the private sector CEO nuts! They would have to be much more adept at building coalitions, alliances and teams because they could not compel allegiance. It’s pretty easy to be a company team builder when you have the power to trade players at will.

12.  Unions Hold a Trump Card

Only about 10% of the American workforce is unionized anymore. Most unions are in the public sector; primarily education. Companies bargain with unions over pay and benefits and the occasional agreement around hours of employment and vacation/leave policies. Their working conditions are just that, working conditions. They don’t negotiate over what their product or service should be. In public education our working conditions are actually our teaching and learning conditions and over time union contracts have begun to define our educational product. Contracts constrain management rights to call meetings, enforce collaboration among teachers, curriculum and textbook adoption processes, school governance and advisory systems, hiring processes, etc. Learning is a process and when the union contract limits the engagement of adults in that process it has a huge impact on our product.

13.  Shared Decision-Making Isn’t Just Lip Service

Most good businesses encourage employee involvement in setting policies and practices that will improve company profitability and performance. It didn’t always operate that way, and in many cases is still doesn't. In business, shared decision making was, “I make the decisions and share them with you.” By contrast, public education has a rich tradition of collaboration and collegiality. We have scores of advisory mechanisms for people to provide input, criticism, and feedback to leaders. Some of those are mandated and some are voluntary. In one communication audit for a moderate sized school district I discovered that the superintendent had 17 advisory bodies reporting to her. Even she didn’t realize that. Processing decisions is anathema to most private sector leaders who want the flexibility to take advantage of targets of opportunity, changing market conditions, and innovations. Shared decision making in public education almost assures that we will not be nimble enough for most corporate CEOs.

14.  Schools are Under-Led

Public schools keep getting accused of having a “Bureaucratic Blob.” Myths, stereotypes and lies about how much money is “wasted” on overhead and administration abound, usually spread by private sector leaders. Yet if you examine the facts, public education has a leaner management structure than almost any other business.  I’ve reviewed Bureau of Labor Statistics figures comparing the number of managers/supervisors to rank and file employees by industry and the data are conclusive. Business has almost twice as much overhead management as public schools. We average about one administrator (including principals) for every 30 employees. Other industries like communications, retailing, media, manufacturing, transportation, construction, etc. have ratios of 1:12 or less. I would suggest that we need more, not less administrators and specialists to lead us forward as an industry. The corporate CEO is used to delegating to a multi-tiered staff structure. The superintendent doesn’t have that support system.

15.  Public Schools Must Be Transparent

We must do the public’s business in public and offer accessibility and transparency in the process. Each financial transaction, agenda item, policy change, and email is potentially subject to a Public Records Act request. This alone would cause most corporate CEOs to cringe. Imagine if stockholders, competitors, and customers could access every email, document and record kept by your company? The cloak of corporate secrecy just doesn’t wear well in the public schools.

16.  Society Drops It’s Problems on Our Doorstep Every Day

I can’t think of any other industry that has to contend with so many challenges from its customers. Kids come to school hungry; we feed them breakfast and lunch. Kids can’t get to our place of business; we give them a bus ride. Kids are abused, neglected, and homeless; we take them in and nurture them. We inoculate them from disease, and provide health care when they’re sick and hurt. In a society filled with incivility, double-standards, and double-talk, we have to teach them tolerance, manners, work ethics, and countless other basic life skills. If they are obese we make them exercise. If they have learning disabilities, psychological problems, or substance abusing parents we have to provide them a haven and hope.  Could the CEO of a retail department store chain even comprehend addressing the magnitude to those challenges for every customer who came in just to buy a pair of jeans?

17.  Our Product is on the Production Line for 13 years

The quarterly balance sheet is the yardstick for a business leader. For an educator, our success is measured in decades. Our first goal is to get all students to graduate and our ultimate end product is a well-educated young adult with the skills and temperament to succeed in college, a career, and citizenship. Educational leaders need to be patient while maintaining a healthy impatience with status quo performance. As we invest so much time in each child’s future, it might be hard for a private sector CEO to stay the course for over a decade when they have come from a “fiscal year” frame of mind.

18.  Education is Dominated by Isolated Generalists

Businesses tend to run on specialists working in their own silos ― production lines, departments, product teams, etc. Schools have a lot of generalists, but they also work in silos. We still operate in a “sage on the stage” environment where the teacher’s classroom is his or her domain. Collaboration is not a condition of their work product or craft; it is something we have to induce them to participate in. Sadly, we also expect a teacher to come into the profession with all of the classroom management, content expertise, interpersonal techniques, and workplace savvy to handle any classroom situation or subject. That’s just unrealistic and unfair. Schools can’t afford meaningful in-depth orientation, induction, and mentoring programs to bring these generalists up to speed quickly. We push them into the pool and make them learn to swim in their own lane while the crowd at the swim meet is yelling for them to go faster.

19.  Pay for Performance vs. Pay for Presence

Two frustrating concepts for business leaders is that in public education we can’t pay good teachers more money than bad teachers and that we have such trouble identifying and removing poorly performing teachers once they reach tenure. Private sector CEOs achieve results by offering incentives when a person’s performance contributes more to the bottom line. It’s a form of profit sharing, and it works. In a variety of forms, reformers have been trying to ingrain the concept of pay for performance into public education. Good concept, but difficult to realize since the devil is in the details. Do we pay more for test scores, subjective evaluations, graduation rates, etc?  Most corporate CEOs would find our ambiguity about what makes for exceptional performance difficult to administer. Superintendents certainly do.

20.  Schools Are An Old-Fashion Institution

Public schools are a tremendous societal tradition that has endured over the ages. We drive by the old school with fond memories. Our grandchildren are taught in the same classroom we were in as a kid. And that is the problem. Sadly, unlike most businesses we’re still working in the same facilities as we did 50 years ago. We have patched them up and tried to renovate their infrastructure, but our education facilities are definitely old school. Corporations pride themselves on state-of-the-art technology and modern manufacturing plants. Trying to deliver a world class education in a second rate learning environment would certainly pose a huge impediment to a corporate innovator who wanted to change the public schools.

Some final thoughts . . .

Public schools can certainly be more business-like, but to say that a business model is the solution doesn’t wash. I say we ask businesses to run like schools for a year and see how they like it!

The security of our nation depends heavily on developing a highly-educated population that is smart enough to see past prejudice and complacency to create a better future. Public education is still the cornerstone of our democracy, our national security, and our economic future. In 2009, we were all scared into supporting a massive government bailout of the insurance, investment banking and home mortgage industries. They were too big to fail we were told; the negative consequences would be too devastating and immediate.

I suggest that our public school system is hovering at the same precipice and we are also too big to let fail. Instead of condemning public education, corporate leaders should become true partners to help restore the education industry to its former place of world prominence. Instead of mindlessly signing an anti-tax pledge, they should be signing on to help public schools with a massive investment of badly needed venture capital. The American auto industry is surging back because we had the public and corporate will to make it so. We put our money where our mouth was as a nation. Will we be able to say the same for public schools so that an education “Made in America” is once again the standard for the world?

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"In fact, to every young person listening tonight who's contemplating their career choice: If you want to make a difference in the life of our nation; if you want to make a difference in the life of a child - become a teacher. Your country needs you." ― From President Obama’s State of the Union Speech

© Copyright 2012 by Thomas K. DeLapp, President, Communication Resources for Schools