« Solving the Enrollment Compensation Problem (Part II) »

This multi-part Executive Briefing was prepared exclusively for senior decision-makers. The focus assumes progressive organizational experience leading to a senior position in a college or university setting.

Part I of this Executive Briefing assessed the current situation with respect to the compensation of enrollment representatives. Among other issues, Part I suggested that: (a) the moral high ground belongs to performance-based compensation, not to "equal" compensation for dissimilar results; (b) many complaints about the compensation practices of the for-profits arise from disgruntled ex-employees, concluding that few of us would find it accurate or fair to have our managerial practices defined by such individuals; (c) to be rational, we must examine the "compared to what" dimension of analysis where we find different but more consistent violations of good practice with respect to treatment of prospective students. The take-away for Part I is that compensation issues are neither black nor white and are more complex than the press they are receiving.

Part II continues with the briefing issues.

Issues (cont.)

• Some for-profits will argue that size is a part of their problem. The University of Phoenix has made this argument. When you have 5,000 enrollment representatives, operating under multiple physical environments, it is not reasonable (they have said) to "detect and correct" the occasional enrollment cowboy before he breaks the rules and does some damage. While true to an extent, this answer can be disingenuous when it is intended to obscure an intentional chasm between conception and execution, the former being embodied in formal documents, the latter being practiced through subtle and sometimes not-so-subtle managing and coaching to cross the line. From our very close vantage point (we shop the for-profits as well as leading independents), there are for-profits that seldom cross the line between good and bad sales practices. This is true even after adjusting for the size of the workforce and enrollment pipelines. One cause of these differences can be attributed to signals from the top. Beginning with the CEO, some for-profits do not want to enroll students who are unlikely to benefit. Other for-profits socialize the idea that all prospective students will benefit, whatever their ability or goals. At the management level, some enrollment leaders make it clear that unethical or illegal enrollment practices are unacceptable and will result in termination; other leaders convey the idea that one should do his best and deal with exceptions as they arise. Differences in clear cultural and behavioral signals result in different practices. Culture follows behavior and reward and ignores vacuous rhetoric. Written policy is always subordinate to cultural practice. Another difference is the nature and scope of training. Even signals from the top can be vitiated by a wink and nod from a manager. Training needs to be ongoing and transparent, not only to improve performance, but to ensure compliance with the ethical standards that are intuitively practiced by the best sales people.
• Regulators are not immune from causal responsibility in this problem; neither are they always as above board in their conduct as the law or good ethics would require of them. Wording this carefully for obvious reasons, and let's call it hypothetical, I am of the opinion that at least one large for-profit passed its regression analysis and policy review with respect to how it compensates enrollment representatives only to be told, in carefully couched words, there was too much public visibility of this issue for the regulators to go away empty-handed, even though they failed to prove wrongdoing by way of their own investigative methods and procedures. Perhaps in another world, someone would speak up to call this extortion.
• The regulators do not always behave as above. On another occasion, let's call this one hypothetical as well, a different large for-profit university (full disclosure: one for which our firm had designed the enrollment compensation system) was the subject of an inquiry initiated pursuant to allegations by a fired employee that the company was engaged in illegal enrollment compensation practices. In this case, after reviewing this university’s records, and with full and open cooperation by the university, the government was satisfied with what they saw (even pleased, some said) and issued a letter stating that they had no further interest in the question. Here is a case where the system worked as intended. I cannot help but feel that the underlying reason it worked was because the university was one of the for-profits that sees itself as an above-board company that values good enrollment practices.

Intentional Vagueness: The Real Problem

There are problems with the 2002 revisions to the Higher Education Act. Yet anyone who has a basic understanding of behavioral psychology and compensation theory will see that the problems the for-profits and a few independent colleges are having do not arise from the Reauthorization overall or even from the 12 "safe harbors" found in 34CFR668.14(b)(22)(ii) of the 2002 Act.

The problem with the 2002 revision centers on what we believe is an intentional vagueness in one of the safe harbor's requirements:

Compensation adjustments cannot be based solely on enrollment performance.

The intent here is that compensation should reflect an enrollment representative's performance on a broad base of measures including enrollment performance, product knowledge, organizational skills, and professional development.

As we have discussed elsewhere, compensating employees based on how well they do their job is a sound practice; not doing so is unethical, illogical, and unscientific. However . . .

compensating enrollment counselors solely for seats filled is equally unethical, illogical, and unscientific with respect to institutional-level financial and academic considerations.

In spite of what is generally agreed as the wisdom of doing so, the U.S. Department of Education has steadfastly refused to provide guidance that would permit reasonable people to create management metrics reflecting the intent of “not based solely.” To be cynical but accurate, the Department's silence has made a few DC law firms very wealthy. More than one insider has suggested that this was the underlying motive of someone senior in the Department. Most of us feel that the refusal to clarify is yet another instance, common inside the beltway, of controlling through vagueness.

Whatever the motivation for intentional vagueness, had the Department of Education said that no more than 75% (or 60% or 40%) of the variance in compensation can be based on enrollment performance, we would not be experiencing the problems we are seeing today.

A Simple Solution

Part III outlines a simple solution to the problems of compensating enrollment personnel in relation to federal regulations, ethics, and good practice.

Robert W. Tucker is President and CEO of InterEd, Inc.

He can be reached through this forum.

The expression of other views by leaders in higher education is welcomed.

Comments

[Duncan Samuel]

I agree that compensation adjustments cannot be based solely on enrollment performance. Even if there is a low enrollment turnout, the employee has worked for 8 hours a day and deserved to be compensated for that. What might be a good thing, is to give a fix rate for enrollment representatives and offer to give bonuses if the enrollment rate turns out great.

Duncan Samuel