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A question of economics
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John Hall



Joined: 16 Mar 2004
Posts: 452
Location: San Jose, Costa Rica

PostPosted: Sat May 26, 2007 10:02 pm    Post subject: Reply with quote

waxwing wrote:
That's why to me it makes perfect sense to go with low qualified and low paid teaching staff.


...so that they can get almost nothing for their hard-earned money? What a rip-off!
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Justin Trullinger



Joined: 28 Jan 2005
Posts: 3110
Location: Seoul, South Korea and Myanmar for a bit

PostPosted: Mon May 28, 2007 12:37 am    Post subject: Reply with quote

Quote:
The teacher is viewed as a tool



THanks for that- I laughed outloud. Very Happy


Quote:
When someone starts throwing around terms like "profit model", "sustainable/unsustainable" and "feudal times" together, I tend to think that someone took his Marxist Studies class a bit too seriously.


Never took a course in Marxist studies. Marx has figured in my free reading, of course- but then, so has practically everybody else. One could talk this to death- care to?



Quote:
Intentionally reducing the margin is impossible


Untrue- many successful businesses were built on exactly this. And many now-nonexistant businesses went down the tubes because an unsustainable margin priced them out of the market...

Quote:
banks won't lend you the money to start up if you walk in with a model like that, and should you not be protecting the business for future problems you're going to have serious issues should you nned to update something e.g. computers.


WHoa there- banks will lend you money if you have equity to borrow against, or if you have a plan that looks (to them) like a sure thing. Margin high, Margin low, you can borrow if they believe you can pay it back. Which is no problem if you actually have reasonable, reliable market studies indicating that your model (whatever margin you choose) is going to work...

And double whoa- how in heaven's name do you make the connection between low margins and not protecting the business for the future? we agree that a primary responsibility of management in any kind of organisation is that of putting aside for a rainy day, and I have never said otherwise.


Quote:
You may believe that paying teachers better money means more returning students, happier students and a better reputation so more business in the future


I do, in fact. And base my belief on my own experience of the moment, but perhaps more significantly on the experience of others, before I decided how to approach my current job.

By the way, about 10% of our students were here 3 years ago- which aint bad going considering about a 4 fold increase in student numbers...

Often, though, the students aren't paying the bills- their employers are. And the relationship with these organisations (our students employers) are much more stable, and need to be.

I want to be clear- paying teachers more, and charging students less, is not the only factor in the equation. But it helps. It's all part of a fundamental idea that I hold, too uncommon in the modern business world- if you do a good job for a good price, you do more business.

All the best,
Justin
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John Hall



Joined: 16 Mar 2004
Posts: 452
Location: San Jose, Costa Rica

PostPosted: Mon May 28, 2007 5:59 pm    Post subject: Reply with quote

Justin Trullinger wrote:
I want to be clear- paying teachers more, and charging students less, is not the only factor in the equation. But it helps. It's all part of a fundamental idea that I hold, too uncommon in the modern business world- if you do a good job for a good price, you do more business.


Right on!

In fact, with so many Private English language institutes taking up the idea that teachers should not be paid more (in order to increase profit margins), that means there is a lot of really pathetic English teaching going on all around the world. Keen students are aware of the "conversation school" mill, and want to get better value for their money. So, there is a new demand opening in some markets for teachers who really can teach effectively, professionally. We get to charge more, because the demand is high for us. We may never live as well as our compatriots back home, but we are certainly living much better than those who continue to grind it out in conversation schools.

And some of us are even turning English-teaching into a respectable, life-long career--at least for ourselves!
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stillnosheep



Joined: 01 Mar 2004
Posts: 2068
Location: eslcafe

PostPosted: Mon May 28, 2007 10:38 pm    Post subject: A question of econmomics Reply with quote

"A question of econmomics"?

More a question of spelling, or at least spellchecking, I'd say.
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GambateBingBangBOOM



Joined: 04 Nov 2003
Posts: 2021
Location: Japan

PostPosted: Tue May 29, 2007 6:03 am    Post subject: Reply with quote

All the OP is doing is describing why teachers at private language schools in English speakng countries as well as in foreign placements are getting screwed over.

It really shouldn't be a surprise to anybody that management's ability to drive a BMW is more important to them than their teachers' ability to eat. that's why paying teachers late and saying "Gee, we really wish we could pay you, but there just isn't the money [after I take my pay] this month" isn't unheard of in places like Toronto. And it is pretty common knowledge that if you want to make a career out of teaching English, then you should get out of eikaiwas or language schools and into goverment programmes for teachers or private high schools/ universities etc. and also that the amount of buying potential possible in an English speaking country is going to be far less than the amount of buying potential in a non-English speaking country when you teach English.

The situation will not change because there are always going to be people willing to work for very little money, often because they simply don't need money for whatever reason (usually a highly paid spouse).
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waxwing



Joined: 29 Jun 2003
Posts: 719
Location: China

PostPosted: Tue May 29, 2007 9:32 am    Post subject: Reply with quote

GambateBingBangBOOM wrote:

The situation will not change because there are always going to be people willing to work for very little money, often because they simply don't need money for whatever reason (usually a highly paid spouse).


This is true but it is more like a proximate cause than an ultimate cause. To see what I mean, just consider the question of why this argument doesn't apply to other jobs. It only applies to jobs where people with little or no skill or qualification can make a fair fist of doing the job, and where it is not at all easy to objectively measure the difference between an excellent and a mediocre end result. TEFL/TESOL fits this perfectly.
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John Hall



Joined: 16 Mar 2004
Posts: 452
Location: San Jose, Costa Rica

PostPosted: Tue May 29, 2007 5:35 pm    Post subject: Reply with quote

waxwing wrote:
GambateBingBangBOOM wrote:

The situation will not change because there are always going to be people willing to work for very little money, often because they simply don't need money for whatever reason (usually a highly paid spouse).


This is true but it is more like a proximate cause than an ultimate cause. To see what I mean, just consider the question of why this argument doesn't apply to other jobs. It only applies to jobs where people with little or no skill or qualification can make a fair fist of doing the job, and where it is not at all easy to objectively measure the difference between an excellent and a mediocre end result. TEFL/TESOL fits this perfectly.


In Costa Rica, English-speaking upper middle class housewives as volunteers could not possibly meet the demand for serious English teachers.

Also, there are ways to measure fairly objectively the level of proficiency in English of students; it is just that they are not applied widely. Certainly, it is not difficult to detect "the difference between an excellent and a mediocre end result."
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ls650



Joined: 10 May 2003
Posts: 3484
Location: British Columbia

PostPosted: Tue May 29, 2007 7:10 pm    Post subject: Re: A question of econmomics Reply with quote

stillnosheep wrote:
"A question of econmomics"?

I was wondering when someone would eventually whine about that typo.
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madison01



Joined: 01 Sep 2006
Posts: 40

PostPosted: Wed May 30, 2007 4:29 pm    Post subject: Reply with quote

Thanks to stillnosheep for pointing out the typo, Doh!

I get the feeling that this post annoyed some people. I'm sorry if that is the case. I have now moved away from EFL teaching as a career for the simple reason that I would never earn enough money to buy a house, get a pension and have a family.

I understand that some people have posted other options and business models here and whilst I don't disagree with some of them, to a point, I think some people missed the point of the post.

A large proportion of private language schools, in the UK and abroad, are owned by single owners or Ltd companies; a large proportion of that large proportion are profit driven businesses. There are, of course, a lot of factors that determine how successful a business is, however, the single goal of all of the businesses that fall into this large proportion is to make as large a profit as is humanly possible.

I am not condoning the reduction in quality which inevitably comes about when teachers are paid little and changed annually for less qualified cheaper teachers. I am merely pointing out, that the business in which you work is, chiefly, a profit driven business.

And please, before anybody points out that there are other alternatives, take note of this; as far as the school owners are concerned, the only alternative is one that makes them even more profit.

The model I posted a few days back works for many schools and is unlikely to change unless there is much stronger regulation on private schools and far fewer new teachers enter the market on a monthly basis. Even then, inventive owners would find some way of circumventing these.

I do believe that teachers of English with the level of education experience and professionalism that schools want should be paid more, however, I also believe that it is highly unlikely happen.
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John Hall



Joined: 16 Mar 2004
Posts: 452
Location: San Jose, Costa Rica

PostPosted: Wed May 30, 2007 6:25 pm    Post subject: Reply with quote

How about a temporary reduction of profit in the short term in order to pay good teachers better wages, build a better reputation than your competitors because of it, and make more money in the long run by doing more business in the future?
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madison01



Joined: 01 Sep 2006
Posts: 40

PostPosted: Thu May 31, 2007 7:54 am    Post subject: Reply with quote

John Hall wrote:
How about a temporary reduction of profit in the short term in order to pay good teachers better wages, build a better reputation than your competitors because of it, and make more money in the long run by doing more business in the future?


Again, you seem to be forgetting that the model works, the owners aren't going to put a dent in their profits in order to attempt to make more money in the future, which may or may not work.

I'm sorry to keep saying this, take a look at the owners, they are in it for the cash (I'll reiterate that this is a majority of not all of) if the model works delivering 25% of all turnover as profit they'll be happy.

Plus, you won't necessarily make more money in the future, 2 years down the line, you've got a great reputation, then some large franchised or heavily backed school enters the market and undercuts you. You've got less money in the bank to help you survive the sudden drop in student numbers because you've reduced your margins, and you can't cut prices because you've already reduced your margins or you'd have to cut teachers salaries, and as it has been pointed out better salaries = better teachers, Which is what this whole discussion is about. protecting the margin is vital to these owners, that is the long term strategy.
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shuize



Joined: 04 Sep 2004
Posts: 1270

PostPosted: Thu May 31, 2007 11:05 am    Post subject: Reply with quote

madison01 wrote:
Again, you seem to be forgetting that the model works, the owners aren't going to put a dent in their profits in order to attempt to make more money in the future, which may or may not work.

I'm sorry to keep saying this, take a look at the owners, they are in it for the cash (I'll reiterate that this is a majority of not all of) if the model works delivering 25% of all turnover as profit they'll be happy.

Plus, you won't necessarily make more money in the future, 2 years down the line, you've got a great reputation, then some large franchised or heavily backed school enters the market and undercuts you. You've got less money in the bank to help you survive the sudden drop in student numbers because you've reduced your margins, and you can't cut prices because you've already reduced your margins or you'd have to cut teachers salaries, and as it has been pointed out better salaries = better teachers, Which is what this whole discussion is about. protecting the margin is vital to these owners, that is the long term strategy.

Once again, a perfectly reasonable explanation that I'm sure will go over the heads of the "just pay the teachers more no matter what" crowd.
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John Hall



Joined: 16 Mar 2004
Posts: 452
Location: San Jose, Costa Rica

PostPosted: Thu May 31, 2007 4:41 pm    Post subject: Reply with quote

shuize wrote:
Once again, a perfectly reasonable explanation that I'm sure will go over the heads of the "just pay the teachers more no matter what" crowd.


Well, I hope you are not suggesting that I am one of those, because I am not.

I am actually speaking from experience. Here in Costa Rica, among places that hire teachers for company classes, there has been something of a "wage competition" to hire teachers. Those who pay higher wages tend to get teachers who stay with them. Those who pay lower wages tend to lose teachers as soon as they find out that they can make more money at the other places. Not being able to hang on to your teachers is a pretty good way to lose clients. So, although not extraordinary, there has been some increase in teachers' wages over the last few years.

Some of the company class providers who have entered the market more recently (and which are run by former teachers) have taken the strategy of hiring better teachers and paying them a better wage. Some even pay in U.S. dollars. Although they have not been able to grab the major share of the market yet, they still have their piece of it, and have been either able to keep it or, in some cases, keep increasing it.

Yes, anything could happen in the future, but if you still continue to offer an inferior quality of service to your customers, you are still quite likely to lose quite a number of them. Quality does matter.
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Justin Trullinger



Joined: 28 Jan 2005
Posts: 3110
Location: Seoul, South Korea and Myanmar for a bit

PostPosted: Thu May 31, 2007 5:34 pm    Post subject: Reply with quote

Quote:
I get the feeling that this post annoyed some people.


Quite the contrary, Madison01. I appreciate you bringing this up- and I think a lot of people do.

And I want to be clear- You're not wrong to describe this model, and you describe it well. And, for a large number of private language institutes, your description is perfect.

I would argue, though, that a lot of other possibilities exist. You chose to leave EFL (good luck with whatever's next!) based on being tired of this model. Others, though, have stayed within EFL, and still left this particular work situation behind. (By working in other situations that private language institutes, such as universities, private or public high schools, etc.)

I'm in a kind of unique situation- as I work for a non-profit that, amongst other activities, is in the "business" of giving English classes to the general public. This means that while we aren't a for-profit business, we're in direct competition with them.

This is probably a privileged position (that of running an English department without answering to an owner or shareholders- though the board of directors can get a bit hairy at times...), I realize. But it's one possibility. There are a lot of other possible alternatives to the situation you describe.

Even within for-profit business, there are a lot of possibilities that offer more to the teacher, and the client, than the one you describe.

Several points- you seem to believe that by reducing margins, one automatically has less money in the bank, and therefore is unprepared for unexpected expenses, or for the vagaries of the market. My experience has been that nothing could be further from the truth- if you adjust margins intelligently, in such a way that you increase volume to compensate, your bank balance looks better. This is why a company like Jaguar (high margin, very low volume) gets into more trouble than a company like Honda (Much lower margin, extremely high volume).

This is not, by the way Shuize, a marxist idea. Ask Wal-Mart about the wisdom of reducing margins to expand volume. (And I am not a Wal-Mart fan- but their business model, while deplorable in terms of worker treatment, demonstrates that protecting the margin at all costs is NOT the only way to go. Wink )

Reduced margins and a lot of business has put more in our bank balance for rainy days than high margin, low volume, high turnover ever did.

You also seem to believe that high student turnover is an inmutable fact of life, like gravity. Again, I disagree. My experience is that in the situation you describe, client turnover is high, because clients realize that A) they are not learning anything, and B) they are being robbed. (In the sense of paying high prices for substandard services.)

Clients who realize that they are learning, and are paying a fair price for a good service, might not return, but in my experience are exponentially more likely to. And many do.

A word on "when the big chain school comes to town." You're very right to identify this as a big problem for any small organisation. (Business, NGO, or whatever.)

Quote:
then some large franchised or heavily backed school enters the market and undercuts you. You've got less money in the bank to help you survive the sudden drop in student numbers because you've reduced your margins


I've already mentioned that in my experience, reduced margins have meant more money in the bank. We could survive a temporary drop in student numbers quite nicely, and have. But having enough money to survive while you regroup is one thing- having a strategy to fight back is another. If you're working in the business you describe, what will you do next?

This topic is near and dear to my heart, because at least weekly, I get calls telling me how much some organisation liked the bid we put in to offer them English, but that they are worried by how much more expensive we are than XXXXX. (Where XXXXX equals a well known international franchise with a great publicity budget and computer based learning system) And I always respond the same way. I do NOT offer to match their prices. I suppose you're right, that with our current salaries, and our current margins, I can't. Instead, I tell them WHY we are more expensive. I head straight over to their offices (or boardrooms, or whatever) and I show them where the money goes. (To teachers. Our teachers. Who have a LOT more experience, qualifications, and commitment to being in Ecuador than anyone you can find at XXXXX. To facilities, which they will benefit from. To complying with the law. To being recognised by the ministry of education. etc.)

And it doesn't always work. But often enough, it does. And it only needs to work some of the time...

I guess where we differ, Madison01, is that you're describing what you've seen. (and I definitely know that it exists, exactly as you describe it.) Let me ask you this- is this the only way it could exist? What alternatives might be possible? I know you've chosen to leave EFL behind, due to this situation. But I wonder if there are any alternatives you could propose? Because I don't like the situation you've described any better than you do-and I'm looking for alternatives.

And Shuize- maybe you have something interesting to add? Maybe you disagree. Feel free- we'd all be most interested in hearing your views. But if you wouldn't mind, the insults are a little out of place. I believe I understand something about the viewpoint that you and Madison share- and I disagree. This doesn't mean that it's over my head. It doesn't mean that I took my Marxist studies too seriously. It just means we disagree. And if you believe so strongly in your view, argue for it, by all means. But the "it's over your head because you don't agree with me" attitude is tiresome.


All the best,

Justin
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John Hall



Joined: 16 Mar 2004
Posts: 452
Location: San Jose, Costa Rica

PostPosted: Tue Jun 05, 2007 7:56 pm    Post subject: Reply with quote

Long posts tend to kill threads, but Justin's comments here, I think, are really worth paying attention to. Perhaps he scared the others away?

With regard to turnover and returning clients, one thing has been overlooked. And that is that students when they finish an English program are probably not going to return to it later, unless they go for a long period without using English, and then need a refresher course. The focus then should not be on getting the same students to return, but to have graduates who are extremely competent in English, and who let others know where they studied English. Obviously, a young student's brothers or sisters could be attracted to the same school, but also, the new employee who speaks English better than the older employees who need to improve their English will recommend that school to the older employees.

It would appear to me that Madison's school did not regard the idea of having a good reputation academically as being a positive selling point for the school. But this does work, and can even eliminate some of the need for advertising. I know of a company here in Costa Rica that has done "corporate language training" at a higher level than anybody else for over twenty years, and yet they have never advertised!
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