Budget & Finance Opinion

Is the Private Sector Qualified To Reform Schools?

By Alex Hernandez & Matthew Mahoney — September 18, 2002 7 min read
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At a recent education forum in Los Angeles, an M.B.A. defended the private sector’s role in school reform, saying that “business people know more about productivity, and are better at attracting talent.” Although his remarks stung the roomful of dedicated educators, he voiced a common view that public schools can benefit from private-sector practices.

The idea that business practices can solve education problems has become increasingly common, yet distrust still lingers among educators.

Districts are becoming more receptive to business solutions for education problems as public patience with school reform wanes. Several large urban districts have hired superintendents from the business world who have no education background. Philadelphia recently handed over 45 of its schools to outside managers, including 20 to Edison Schools Inc., a for-profit school management company.

Is the private sector qualified to reform our schools? It is hard to argue with entrepreneurs who helped build the world’s leading economy. U.S. companies have consistently delivered valuable products and services to their customers—why should business be any less successful in education?

The truth is, the private sector struggles to manage service organizations in much the same way that educators struggle to improve schools. And its track record here is spotty. Growth in U.S. service productivity slowed significantly after 1973, and consumer satisfaction with services fell in the late 1990s, even as the economy boomed. In spite of all the evidence that poor service can cost companies dearly, businesses still manage to aggravate millions of customers each year. Companies that get service right, such as Southwest Airlines, Federal Express, and Wal-Mart, are the exceptions, and they conspicuously stand out among their many less successful competitors.

Professional service organizations (as, for example, in consulting, health care, and education) are particularly challenging because people are the service. In other words, these organizations rely exclusively on people to use their expertise and judgment to serve the customer: Teachers create learning experiences for students; lawyers develop legal opinions for clients; doctors diagnose medical conditions for patients. In each case, the firm is only as good as the professionals on the front line.

But it is false to assume that front-line workers are exclusively responsible for a professional service organization’s success. Managers can make or break service organizations through the policies and cultures they develop around their people. In fact, teachers are all too familiar with organizations that can frustrate employees to the point of no return, literally. Teacher turnover in schools, a proxy for job dissatisfaction, exceeds the national average for all U.S. businesses.

Successful service firms typically have a dual mission: Develop their professionals and deliver outstanding service to clients. Both goals are quite difficult to achieve in practice. People do not have dials and switches that can be adjusted to make them better professionals. Service is a set of learned behaviors, and behaviors are acquired over time and are resistant to change. Achieving high service levels involves giving people the training, support, and incentives they need to commit to the organization’s success. Educators call this commitment “buy- in,” and it is as difficult to achieve in companies as it is in schools.

Business researchers acknowledge that traditional management tactics can actually thwart efforts to improve service. Consultant Tom Barkin succinctly summarizes the service-management dilemma in this passage from The McKinsey Quarterly:

"[Business] strategies usually advocated may be counterproductive in a service context. Bring in a new management team? Better make sure you can do so without wounding the confidence of front-line employees. Reduce costs? You could, but you risk undermining morale, which will impair product delivery and disappoint customers. Establish tight control over day-to-day operations? Easier said than done when your key front-line employees are remote from management.”

Given these trade-offs, it’s no wonder that improving service organizations is considered one of the “supreme challenges” in business.

We believe that the hard lessons learned in the private sector about service turnarounds are relevant to schools. Several observations follow:

  • K-12 schools are professional service organizations in the purest sense. Schools are groups of professional educators that design and deliver learning experiences to students.
  • The challenge of running a single school well is severely underestimated. Service organizations frequently underperform. For all the criticism educators have endured from the private sector, most businesses are struggling just as much to get service right in their own organizations.
  • Many business- supported school reforms currently sidestep the issue of service in schools. Blunt policy instruments like vouchers and high-stakes testing have wide appeal among business people, but these reforms fail to address the actual service provided by schools. Without concrete ideas on how to improve teaching, structural reforms will not boost school performance in the way they are intended.
  • A generic management approach to service in schools can do more harm than good. Education policies that fail to consider the needs and concerns of teachers have little hope of adoption. Teachers are inundated with such mandates year after year, a situation that breeds frustration among professionals and ultimately undermines service to students.

Innovative thinking about improving the core service of schools— teaching—has not sprung from the business world, but from education research. A respected voice in that domain, Linda Darling-Hammond, states the simple but powerful idea that “no other intervention can make the difference that a knowledgeable, skillful teacher can make in the learning process.”

Without concrete ideas on how to improve teaching, structural reforms will not boost school performance in the way they are intended.

There’s a growing realization that improving teaching—that is, developing the people who deliver the service—is the key to school turnarounds. This idea has refocused many educators on the important issues of service in schools: professional development for teachers, instructional leadership for principals, authentic assessment for students.

A service-centric view of K-12 education helps reconcile teaching in the classroom with how schools are managed as organizations. Teaching is a premium service involving deep expertise. The complex skills involved are learned over extended periods of time through feedback, reflection, and internalization. Education leaders must learn to manage this ongoing professional-development process to help teachers have greater impact on student outcomes.

Paying lip service to “supporting teachers” will not get the job done. School leaders must take concrete actions. This could mean redesigning teachers’ jobs, so that professional-development time is an integral part of the workweek, or fostering a culture in which professional collaboration is a common practice, not just a theoretical curiosity. There is no silver bullet to improve schools. What works in one school may fail miserably in another. Successful schools will distinguish themselves by aligning operational, financial, and human-resource decisions in support of teachers.

The one thing business people and educators can agree on is that service turnarounds—even the successful ones—are painful, tumultuous processes. Frankly, this is a decent start. The private sector has many valuable ideas to contribute to education reform, very few of which have anything to do with profit-inspired greed.

Focusing on improving the core service of schools—teaching—can help the private-sector be more thoughtful about which reforms make sense.

For example, the business researcher Rogelio Oliva argues that service quality deteriorates when companies put too much pressure on their professionals. Many public schools struggle to provide good service to students, he argues, because teaching professionals are overwhelmed by having too much to do in too little time. These pressures can lead to burnout in even the most conscientious teachers, resulting in poor classroom teaching. Mr. Oliva’s views would certainly resonate with teachers, but are at odds with generic business prescriptions to increase pressure on educators through competition and accountability.

Growing and managing a service organization is difficult for everyone, whether they’re professional managers in the classroom or the boardroom. Focusing the debate on improving service in schools can help business people be more thoughtful about which reforms make sense—and more sensitive about the accusations they make against educators.

Better communication between the two camps is a must. With hard work and good faith, the cultural chasm will narrow as the quality of contributions from the private sector increases, and the distrust educators feel toward business people subsides.

Alex Hernandez, an alumnus of Stanford University’s joint graduate-degree program in education and business administration, is an education volunteer in Burbank, Calif. Matthew Mahoney is a management consultant who advises Fortune 500 companies and New York City schools on innovation.

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