An ethical approach to commissions-based recruitment

uwn ashwill west

Below is the unabridged version of an article with the above title that Eddie West and I wrote for University World News (UWN).  Follow this link to read that version.

Incentive-Based Compensation & International Student Recruitment: Is There a Better Way?  By Mark A. Ashwill & Eddie West

The agent issue in the US is reminiscent of those trick candles that delight children and some adults who are children at heart. You blow them out and they continue to ignite themselves – like magic! – using a fuse similar to those used in dynamite sticks.

Compared with their counterparts in Australia and the UK, US universities are relative latecomers to the wild and woolly world of commissions-based international student recruitment. In recent years steps have been undertaken to professionalize practice in the States and equip institutions with the tools they need to engage recruitment agents responsibly.

But while those efforts represent progress, they clearly haven’t assuaged everyone’s concerns about the well-being of students who are, or should be after all, front and center for those of us involved in educational advising and international student recruitment.

Last year, the Middle States Commission on Higher Education (MSCHE) rekindled the controversy surrounding the use of agents in a very public fashion. The regional accreditor released a draft policy that sought to stipulate that MSCHE-accredited institutions would be prohibited from paying incentive compensation for the recruitment of any student, domestic and international student alike. Following a period of public comment MSCHE agreed to conduct additional research, including a legal review of the draft policy, before taking further action.

As it turns out, MSCHE quietly decided to follow federal regulations that prohibit incentive compensation for the recruitment of domestic students but allow it when it comes to “foreign students residing in foreign countries who are not eligible” for Title IV student financial assistance; see 34 CFR §668.14 (b) (22) (i) (A).  In other words, the Commission backed down, deciding to hang its hat on the “foreign student carve-out”, or exception, to the incentive compensation rule, essentially caving in to the demands of commission-based international student recruitment supporters.

MSCHE’s decision to permit the institutions in its purview to continue using per-capita commissions for the recruitment of international students parallels the road chosen by the National Association for College Admission Counseling (NACAC) in 2013. After a period of extensive deliberation, the association concluded that “while NACAC should continue to be very cognizant of the potential effects of commissioned recruiting, it should also address the changing trends in international recruitment and lift the ban in favor of a best practice stance.”

The Fatal Flaw in Current Practice

The fatal flaw in commissioned recruitment is that most agents prioritize their partner schools’ interests over those of the students and parents they advise.  This means that most guide or, in many cases, drive students to their partner schools because of the gold (commission) at the end of the rainbow (enrollment process).  Moreover, most agents represent many partner schools, each of which can pay varied commission amounts. Remuneration can be as little as a few hundred dollars, or many thousands. And so the brute economic logic is that opportunistic commissions payouts vs. best fit often drive student advisement. (Many agents also “double dip,” piggybacking off of this approach by also charging a fee to parents.)

Bonus incentives are also common. A rhetorical question to consider: Agent A has a contract with University B that promises $1,000 per referral for the first 9 students thus enrolled in an academic year, but $1,500 per enrollment of student numbers 10 through 20. Will prospective student #10 receive the same integrity of advice as student #9?  The unfortunate answer is clear.

Indeed, instead of customers as queen or king whose goals are paramount, students and their parents, the key decision-makers, are treated as pawns in a mostly predetermined and opaque process over which they have little control and in which profit frequently trumps a commitment to serving their best interests.

This is a dilemma that advocates of agency-based recruitment have yet to resolve. The blithe assumption is that concerns about unethical business practices are being adequately addressed, despite widespread evidence to the contrary. In fact, some of the most vocal opponents of the Middle States’ draft policy were those who have a vested financial interest in this business practice, hardly a qualification for credibility.

In the spirit of “it takes two to tango,” it’s important to point out that there are educational institutions, albeit a small minority, that are not discerning about which education agents they work with as long as their agents produce.  For them it’s all about “showing them the students.”

Since such agents recruit students in a way that puts partner schools’ interests first, students are not always well-informed about the admitting institution and therefore not always pleased with what they discover once enrolled. This can result in lackluster student retention and negative word-of-mouth, which reflect poorly on both the school and the agent. Those institutional officials who choose to work with unethical education agents are hardly better than their partners in crime.

Need for a New Way

Those who have attempted to address the vexing problems associated with commissioned recruitment deserve credit for professionalizing practice, mitigating risk, and adding a dose of transparency to an activity so often shrouded in secrecy. But efforts thus far have simultaneously served to normalize commissioned recruitment and stifle further discussion, which raises the obvious question: Is that a good thing for students?  We don’t believe it is.

Capstone Vietnam, a full-service educational consulting company, implemented a unique approach that clearly recognizes students and parents as the primary clients in the educational advising process.  Advisers do not pressure students to attend partner schools simply because they pay a per head commission. Rather, they create a list of best fit schools based on student and parent interests, goals, preferences, and budget.  If a student ends up attending a commission-paying partner school, the advising fee is refunded to the parents. If s/he attends a non-partner institution, the company retains the advising fee.

While this approach makes sense from an ethical and financial perspective, are there other agency-based recruitment models that also do a good, and perhaps even better, job of ensuring that students and their families are well-served, by better aligning their interests with those of agents?

Imagine a scenario where, instead of an agency netting different commission payouts based on which school or program a student enrolls in – the prevailing, ethically fraught industry standard – the agency commits to earning a fixed, predetermined amount of money, regardless of which institution the student attends.

Let’s say for example that amount is $1,000 for assisting a student who wishes to attend a US community college. The agency explains to students, families and prospective partner colleges alike that $1,000 is their set fee for helping a student apply and enroll. The student will pay the agency a $1,000 advising fee if they end up attending a community college that isn’t one of the agency’s partners, as with the Capstone model.

On the other hand, if the student enrolls at one of the agency’s partner community colleges and that partner’s standard commission is $1,000, then the agency receives their $1,000 payment directly from the college. In this case, the family receives a refund of the fee they’ve already paid, also an example of the Capstone model.

Of course, this is an oversimplification. It’s the nature of international student recruitment for institutions and agencies alike to seek competitive advantage. Schools routinely pay more, or less, than $1,000 per student enrollment.  They and their agency partners require autonomy with respect to commissions decisions. With this model, they still have it.

Community colleges that wish to pay, say, $1,500 per enrollment can do so, but here’s the rub: the agency will retain their set $1,000 fee, and the excess $500 is given to the student. The same logic applies no matter the amount above $1,000.

Conversely, if the college pays less than $1,000, the student pays the difference. For example: the college pays $600 per enrollment, in which case the family pays $400 as a service fee. Think of this scenario as ethical double dipping.

This model eliminates the financial secrecy inherent in commissioned recruitment as it’s practiced today, because the agency’s earnings for helping a given student are transparent. It also eliminates the incentive for agents to steer students to poor fit environments on the basis of profitable hidden commission payments, the fundamental flaw with current practice.  The agency earns the same amount no matter where the student enrolls.

It also preserves an institution’s autonomy to incentivize outcomes to the extent they wish. Except, instead of the agent pocketing an entire commission payout, any additional financial benefit accrues directly to students. Think of this as akin to the widespread practice of tuition discounting, often packaged as merit scholarships.

We don’t presume this model is immune to criticism. As the saying goes, the devil is in the details. Established agencies may resist change to the status quo because the tradition of secret, variable commissions has proven so lucrative for them. Others will point out that it can take considerably more time to assist a student with a graduate school application than it does for short-term ESL study, for example, so charging a uniform fee across the board may not be practical.  

But such problems and the fees to be charged can be solved by experimentation in the marketplace. What agencies might sacrifice in this shift toward greater transparency may well be compensated with an increase in business. After all, it stands to reason that families will gravitate towards agencies committed to fair practice and who also help them obtain a tuition discount as a bonus.

Meanwhile, institutions that support this approach can recruit fairly, transparently, and without the burden of reputational taint that dogs traditional commissioned-based recruitment, of which the MSCHE news is only the latest – and surely not the last – reminder. The ideal end result is a triple win for students and parents, educational institutions, and education agents.

Mark A. Ashwill, Ph.D. is managing director of Capstone Vietnam, a full-service educational consulting company with offices in Hanoi and Ho Chi Minh City (HCMC) in Viet Nam. Capstone is the only company in Viet Nam, and possibly the world, that works exclusively with regionally accredited colleges and universities in the United States, and officially accredited institutions in other countries.  Its unique approach to educational advising treats students and parents as clients, not partner institutions. He blogs at An International Educator in Viet Nam.

Eddie West is Executive Director of International Programs at UC Berkeley Extension. Previously, he served as Director of International Initiatives at the National Association for College Admission Counseling (NACAC), and before that led internationalization activities for the Ohlone Community College District.

Shalom (שלום), MAA

 

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“We’ll Become Your Partner, If…

You Send Us a Student”

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I recently had a chat with a US higher education colleague about whether or not it would be advisable for his institution to require prospective education agents to send them at least one student before signing an agent agreement.  Think of it as a test that prospective agents need to pass in order to “make the cut.”  If you can deliver the goods, in this case, an enrolled international student, you  are welcome to join the esteemed ranks of our education agents.    

My response was that it’s better to find the right agents to work with than to have a quid pro quo means of encouraging “performance.”  Agents respond to market demand, to a great extent, in addition to other factors such as the amount of the per head commission and other incentives, mostly but not exclusively tangible.  Imposing any kind of requirement is likely to be a disincentive for most companies.  

It’s best to rely on other vetting criteria and then judge the agent based on performance.  Be selective, unlike many institutions that mistakenly believe more agents translates into more apps and admits,.  Finally, work with a select group of agents in a given country and cultivate quality relationships with those agents.  

Since partnerships are two-ways streets, it also depends on the education “product” that the agent is selling.  Many agents choose not to work with some educational institutions because they don’t see a market for them.  This could have to do with cost, location, a lack of scholarships, and other market-specific factors.  

recruit in vnSome companies like Capstone Vietnam, of which I’m managing director, will not work with institutions that insist on this kind of “audition.”  Capstone treats students and parents as clients not partner (or prospective partner) schools.  This means its advisers do not guide, or pressure, students to choose a Capstone partner.  It’s all about the fit.  

Peace, MAA

Working with Education Agents: A View from Vietnam

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Image courtesy of NAFSA

Below are a couple of excerpts from a blog post I wrote at the invitation of NAFSA’s International Enrollment Management (IEM) Knowledge Community.  

While there are some indications that growing numbers of students, who are better informed and more empowered than ever, are applying directly to foreign educational institutions – a trend that we should all encourage because it enables colleagues from admitting institutions to exercise more control over the application process – Vietnam, like most sending countries, is still very much an agent-driven market.

Given this reality and the fact that competition is fiercer than ever, colleagues need to develop a long-term and diversified strategy that includes a variety of non-commission-based recruitment tools and techniques, both digital and offline, in addition to developing a quality and ethical agent network.  Working with education agents should be just one of many tools in an institution’s recruitment toolbox. If it’s the only one, your recruitment efforts are doomed to fail in competitive markets.

Here’s a link to the original post, if would like to read it in its entirety on the NAFSA website.  

Peace, MAA

Q: How to Choose an Education Agent? A: Use Your Best Judgement

education-agents
Image courtesy of ETN Focus Workshops

And Don’t Forget the Tried-and-True Carrot & Stick Approach

Colleagues sometimes ask me to recommend education agents in Viet Nam. While I’d like to be able to help them in this regard, I can’t.  The simple reason is that this is such a problematic (read shady) and unregulated sector.  There is no one (or one company) that I can honestly vouch for.

If they ask me about a particular company, all that I can say it that I haven’t heard or read anything bad about that company, if that is indeed the case.  Some are well-established and have been around for a long time.  If I know that a specific company has been engaged in unethical or even illegal activity, I can share that information. (I rely on documented evidence not hearsay or gossip.)

My advice to colleagues is simple and straightforward.  Apply rigorous screening criteria and use your own best judgement, including intuition, a valuable yet underestimated quality.  Do prospective agents treat students and parents as clients and not their partner institutions, which pay them a per-head commission?  Do they counsel or script students when it comes to the visa interview preparation?  What do colleagues have to say about company A, B, or C?

Don’t rely on any external “stamps of approval,” which are limited in value for a host of reasons, including the (in)ability to monitor the activities of “certified” agents.  (Examples of naughty yet “certified” agents provide ample grist for another post or even a full-length article.  That’s an article waiting to be written by some enterprising investigative journalist.)

Here are some relevant articles and posts I’ve written: 

Walking the walk – Ethical agency-based recruitment (12.12.14)

Buyer beware – Advice for international students (15.7.16)

Take responsibility for ensuring ethical recruitment (30.9.16)

The Tip of the Iceberg? “China’s New Oriental accused of US application fraud”  (21.12.16)

Hold your education agents to your high standards, stay in frequent touch, and keep the lines of communication open.  Trust, if you have a reason to, but always verify.  Use the tried-and-true carrot and stick approach.  Business is based on trust, which is inextricably linked to integrity, relationship and performance.  If they don’t meet your high expectations, there are other fish in the sea.

Finally, don’t put too many of your international student recruitment eggs in the education agent basket, especially in competitive markets like Viet Nam.  You will also need to invest time and money in non-commission-based recruitment tools and techniques.

Peace, MAA

 

Direct Applications on the Rise

education-agentsWhile Viet Nam is still primarily an agent-driven market, growing numbers of students are beginning to bypass education agents and apply directly to educational institutions, especially for certain types of institutions and programs with simpler application procedures.  In some cases, more than 50% of all apps are directly from students.

The reasons for this recent trend are increased access to information, both on- and offline, more confidence, and greater sophistication.  Given the quality and ethical problems that plague many education agents, the more Vietnamese students (and international students, in general) who apply directly, the better.  

There are some students who don’t require the services of an education agent, thereby saving money and sparing both student and parent the potential aggravation of working with dodgy agents.  They include academically talented students who have done their homework, so to speak, and know which institutions they want on their short list, as well as those who know exactly which school they want to attend because of their participation in a fair, info session, or based on a recommendation from someone they trust, e.g., a parent, teacher, or friend. 

This is an encouraging win-win trend, in my opinion, that should be promoted.  It gives students and parents more control over the entire process, eliminates the need to work with an agent, many of whom do not have students’ (and parents’) best interests at heart, and saves admitting institutions the cost of a commission.  What’s not to like?     

Peace, MAA

How Many Students Will You Send Us?

globeI occasionally receive inquiries from colleagues asking me how many students will I refer to their institutions by a certain term, i.e., semester or quarter.  The assumption behind the question is that the company I work for, Capstone Vietnam, a full-service educational consulting company, follows the traditional agent model of student recruitment. 

In fact, we have our own unique model that views students and parents as clients not partner institutions that happen to pay a per head commission.  This means we don’t drive, or pressure, students to attend a partner school but rather look for “best fit” schools, regardless of their status.

If a student ends up attending a partner institution, we refund our fee to the parents because we receive a commission later.  If s/he enrolls in a non-partner school, we retain the fee because that’s how we get paid for the service.  It’s an ethical approach to educational advising that also makes financial sense. 

That’s part of the answer.

educated consumerAnother is that growing numbers of Vietnamese students are applying directly to certain types of educational institutions, thereby bypassing educational consulting companies.  This is a positive trend that I applaud.  (It includes students who attend Capstone events.)  More power to them, in my opinion.  It reminds me of a slogan from a now defunct US discount retail clothing store chain, SYMS, that was ingrained in my memory, thanks to persistent and pervasive marketing:  An Educated Consumer is our Best Customer

MAA

Of Dogs, Fleas, & the Occasionally Dirty Business of International Student Recruitment

A Deal with the Devil aka Partners in Unethical Behavior?

quote-he-that-lieth-down-with-dogs-shall-rise-up-with-fleas-benjamin-franklin-35-31-10Discussions about the use of commission-based recruitment and international student recruitment in general are often couched in black and white terms.  The former refers to the unethical business practices of many education agents whose overriding goal is money, and lots of it as quickly as possible, by hook or by crook.  The latter refers to institutional colleagues who are generally assumed to be above the fray and often the victims of unscrupulous and nefarious agents. 

It may not be “breaking news”,” but it’s certainly underreported news that quite a few education colleagues are not choosy about their partners as long as the student pipeline flows freely.  The end justifies the means, in other words.  In the spirit of “it takes two to tango,” they cross that tainted line as soon as they decide to work with a particular company,  in spite of having proof of wrongdoing on the part of said company. 

Since such agents recruit students in a way that puts partner schools’ interests first, students are not always well-informed about the admitting institution and therefore not always pleased with what they discover.  (This of course is one of the fundamental flaws of traditional commission-based recruitment.)

This can result in lackluster student retention and negative word-of-mouth advertising, which reflect poorly on both the school and the agent.  That’s the long-term view.  The short-term end result is that the institution gets its student(s) and the agent gets its commission(s). 

Aside from agents, there are other education companies for whom cheating is a way of doing business.  An example I’ve cited in the past is one foreign company that essentially bribed students to attend its fair by offering a cash payment to each attendee who brought a friend. That clearly crossed the line from incentive to bribe, wouldn’t you agree?

Those colleagues who choose to work with unethical education agents are co-conspirators, no better than their partners in crime, conjuring up the image evoked by this instructive and timeless quote from Benjamin Franklin:  He that lieth down with dogs, shall rise up with fleas.  Best to avoid the dogs and therefore the fleas.

MAA