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Workforce 2020 Report

Workforce 2020 Executive Report: EDMC

Danielle Ciccoli

Argosy University

Perspectives in Change Leadership

Professor Buividas

September 30th, 2013

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The organization chosen for this assignment was EDMC, which is the school

system that the author works for. EDMC stands for Education Management Corporation and is a

publicly traded company trading under EDMC in the NASDAQ. EDMC is, “among the largest

providers of private post-secondary education in North America, based on student enrollment

and revenue, with 110 locations in 32 U.S. States and Canada” (edmc.edu, 2013). EDMC has

over 24,000 employees with about 132,000 students as of October of 2012.

EDMC operates many different schools with diverse educational opportunities for

students. EDMC operates as The Art Institutes, Argosy University, Brown Mackie College, and

South University. Probably the most well-known, The Art Institutes, constitutes the majority of

student enrollment throughout the United States and offers many programs throughout the arts

including Graphic Design, Digital Photography, Studio Photography, Fashion and Retail

Management to just name a few. Argosy University, another one of EDMC’s school brands

offers programs in Education, Psychology, Criminal Justice, the Health Sciences, Liberal Arts

and Business Administration. Argosy University was originally founded as the Illinois Institute

of Professional Psychology back in 1976 with EDMC making an acquisition of the school and

rebranding as Argosy University in 2001. Brown Mackie College, the third biggest school in

EDMC’s system consists of career focused education in the health sciences such as Nursing,

HealthCare and Wellness, Early Childhood Education, Veterinary Technician, and Legal Studies.

Finally South University, EDMC’s online school, offers a more diverse grouping of educational

offerings including Psychology, Legal and Paralegal Studies, Healthcare, Business

Administration, and Nursing and medical classes.

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The organization, EDMC, motivates its employees by a number of benefits

including generous PTO, Generous Major Medical Benefits, 401K contributions, 100% Tuition

Vouchers, Accommodations for Work/School and Educational Opportunities as well as Health

and Welfare Programs designed to promote healthy living. According to the Careers section on

EDMC’s corporate website EDMC offers the following, “Medica, Prescription Drug, Dental,

Life Insurance, Disability Insurance, Flexible Spending Accounts, Employee Assistance

Program, Qualified Transportation Plan, Retirement Plan, Adoption Assistance, PTO, Family

Medical Leave and Tuition Assistance” (www.edmc.edu, 2012). EDMC also offers career

development and professional development opportunities to motivate its employees through

online courses that they can take part in. These benefits are motivational in themselves.

Employee surveys are often sent out to make sure employees are actively engaged in decision

making and their issues are addressed by management.

According to EDMC’s website, it has over 24,000 employees over all of its schools and

corporate headquarters. EDMC has 110 locations throughout the United States as well. Though,

back in June of this year, EDMC started cutting employees for budgetary reasons. According to

the Pittsburgh Post-Gazette (where EDMC is headquartered) EDMC was, “forced to cut less than

10% of its corporate services unit to reallocate resources” (Sabatini,, 2013).EDMC, as well as a

lot of other for profit mother ships have been in the same boat for the past few years causing a

swift change in the workforce dynamic. Less and less students are attending school, which is

causing schools like those operated by EDMC to make drastic cuts due to these drastic changes.

According to Steketee, though there are a lot of incentives for running a school in the for-profit

education sector, there are also many implications such as layoffs noted herein (Steketee, 2004).

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The sudden spike in student enrollments from 2000 to 2009 also played a critical role in the

sector and what EDMC is facing today. For example, Advocacy.collegeboard.com noted that,

“Between fall 2000 and fall 2009, full-time enrollment in degree-granting institutions in the for-

profit sector increased from 366,000 to 1.5 million. In just nine years, the sector went from

enrolling 4% of full-time students (and 3% of all students) to enrolling 11% of full-time students

(and 9% of all students). Among students in this sector, 61% are enrolled in institutions that offer

four-year degrees, 24% are in two-year institutions, and 15% attend less-than-two-year

institutions. Undergraduates account for 86% of the total. Among students in the for-profit

sector, 76% are enrolled full-time, compared to 62% of postsecondary students overall” (Baum

& Payea, 2011). The sudden spike noted in this time, resulted in massive hiring whereas now,

EDMC in its current state has been forced to cut back on spending in all areas, including

employees and human resources.

In order to address the workforce trends (layoffs due to low student enrollment) the

company, EDMC, can do a number of things to keep its employees and continue running

efficiently. According to JRDAdvisors, a company (like EDMC) can do the following: extend

unpaid vacation and leave to its employees, shut your business down for four days at the end of

the year, offer four day work weeks, cut employee salaries, freeze wages and offer other

incentives, reduce employee travel expenses, freeze hiring and many other options

(jrdadvisors.net, 2013).

In terms of industry trends, “Growth in the for-profit education sector has slowed, but is

expected to grow in revenue by 4.1 percent annually for the next five years, and continue to outpace not-

for-profit peers” (educationindustry.org). EDMC has seen an overall loss of student enrollments (in line

with the sector) but has shown promising trends. “The Pittsburgh-based, for-profit education

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company (Nasdaq: EDMC) held a conference call with analysts Thursday morning, a day after

reporting a net loss of $13.1 million, or 11 cents a share, in its first quarter ended Sept. 30. That

compared to profit of $26.9 million, or 24 cents a share, a year ago. The company was buffeted

by a decline in enrollment in its online and on-campus programs, which include The Art

Institutes, Argosy University and South University. But company executives said that things are

showing signs of improving” (Gough, 2012). In conclusion, the state of EDMC and other for-

profit educational institutions is in a bit of a decline with an unknown future. In order to

maximize efficiencies in the business, some of the pointers noted above need to be taken into

consideration as EDMC has no control over industry trends and student enrollments. It is a very

difficult and trying time for this organization.

EDMC is structured like a business, not a school complete with executive officers, a

board of trustees and is publicly traded under the NASDAQ ticker EDMC. Most schools are run

as a business, like EDMC which seek to, “provide educational opportunities for non-traditional

students utilizing year round schedules, self-paced courses, only offer degrees with high market

demand, and utilize strong customer service/recruiting/ student support practices” (Apollo

Group, 2009). Furthermore, “EDMC has proudly provided career-focused education for more

than 40 years. Our values system is founded in the belief that excellence in education is

measured by practical outcomes that enhance the lives of our students, enabling them to make

important contributions in their workplace and in their communities” (edmc.edu). In terms of

workforce diversity, EDMC strives to “embrace diversity as a critical step in ensuring employee,

student and graduate success” (www.edmc.edu). According to The Leadership Challenge,

“diversity enriches innovation and service” which are being provided to both employees and

students at EDMC schools (Kouzes, J., & Posner, 2007). EDMC is also an Equal Opportunity

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Employer and featured as a diversity employer. “EDMC is commited to promoting the value that

can be added to the range and diversity of the educational experience of our students by

developing and utilizing the various talents and energies of all our employees. We strive to create

an inclusive environment where all employees – regardless of race, gender, color, religion,

sexual orientation, age, national origin, disability, medical condition, marital status, veteran

status or on any other basis are protected by law…”(media.corporate-ir.net).

The general workforce trends in for-profit education are meager. There have been many

layoffs at EDMC and other for-profit schools in the past few years though, “a decade ago, there

was dramatic growth in for-profit higher education and the higher education community did not

know what to make of this new upstart” (Tierney, 2008). This same article talks about trends in

the for-profit education sector. Looking to 2020, we will see three trends emerge. One of these

trends being that we will be seeing schools and programs close all together. With lower and

lower student enrollments, EDMC faces tough times and has to decide which programs to offer

based on demand. Some schools and school systems like EDMC may close down all together.

Current market trends show increased demand in the IT fields which is what EDMC must focus

on in order to stay ahead of the game by 2020. Another trend that we will see by 2020 is the

changes in higher education.

We have gone from traditional classrooms to correspondence courses to online courses

and blended courses a like. We are also seeing an increase in classes meeting on such mediums

as WebX, where students are able to attend virtually. EDMC must stay competetive by

continuing to offer these competitive options, resulting in the constant need for program

evaluations. Finally, the next trend that we can see in and up to 2020 is the boutique feeling of

campuses (instead of the big appeal) which is appealing for EDMC because many of its

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campuses run on such a small number of students. :Massification does not suggest everything is

alike. American higher education has always been a diverse ecosystem, and as we transform

from one that is largely public to one that functions with a mixed market economy, there is every

reason to believe boutique for-profit companies will undergo a renaissance” (Tierney, 2008).

Furthermore, the 21st century saw a lot of technological innovations in the classroom and

pedigological implementations based on sound research. “In the first decade of the 21st century,

the nation, the states, and colleges and universities began to grapple with the challenges of

globalization, changing demography, the implications of the digital era, and of a less expansive

public sector. Although not a transformative period for higher education, the decade saw

significant innovations in teaching and learning, intense policy ferment, and debates over the

future of colleges and universities and their roles and responsibilities in American society”

(Trombley, 2012).

While the trends in leadership in education (both for-profit and others) play a seperate

role in how the school system as a whole is fairing, “little is looked into and most focus is placed

on student enrollments. Taking a closer look at leadership trends in this industry, we can see

quite a few things. High turnover is being seen in the for-profit educational field as well as

marked change. In order for EDMC and other for-profit and career oriented schools to stay ahead

(when thinking of leadership style) we need to take into consideration that, It is equally as

imperative for today's CTE [Career and Technical Education] leaders to stay abreast of current

and future trends in business and industry and to encourage technical educators to stay current in

their professional and trade areas as well as in pedagogy” (Viviano, 2012). “Leadership is

ultimately about creating a way for people to contribute something extraordinary happen” (Keith,

2012). If leaders in EDMC can make a commitment to enhancing career focused education, they

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will position themselves to prove viable in 2020. Todd Nelson, Chairman of the Board of

EDMC, is in a position to do this (before he steps down during elections coming up). The trends

I have seen coming from leadership have started to heavily focus on employee retention versus

layoffs which will only continue to help improve employee morale and leadership overall.

Employees do not perform when faced with such uncertainty so the programs that have been put

in place recently have helped our leadership team strive to improve education but also employee

retention rates.

Summary and Recommendations

Based on the above information and the current state of EDMC, I would recommend vast

changes across curriculum including the addition of ESL and IT programs across all schools as

well as the elimination for some underperforming programs. I would also authorize cuts in

healthcare and other areas of spending and centralizing processes in administration at the school

level to save on employee salaries and other overhead costs creating a more efficient process and

school.

Changes that are recommended based a macro environment coming to the year 2020

based on the above report include adding the addition of IT programs across the field of all

schools, and the addition of an ESL based program for international schools based on high

demand in the for-profit field. This is based on the 90/10 rule which stipulates that, “The 90/10

rule requires for-profit colleges to get no more than 90% of their revenues from Title IV federal

student aid. This discussion is technical and is unlikely to be of interest to consumers”

(finaid.org). Many schools are creating scholarships and utilizing other types of aid to fill these

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gaps but international students bring a different type of student because they do not qualify for

federal student aid and are often cash paying students.

The environmental concerns that EDMC face are based on a drastic decline in student

enrollments across the field of not just for-profit education but all educational institutions a like.

Because of this decline more and more students are able attend state schools once offering only

traditional programs and at a cheaper cost then for-profit educational giants like EDMC.

“Equitable” and “accessible” are among the terms most frequently used to describe American

higher education. The great expansion of American higher education that occurred in the two

decades following the end of World War II opened educational opportunities to many Americans

who previously would not have been able to attend college. This expansion of places in the

system was also accompanied by massive increases in financial aid, most notably the

introduction of need-based aid in many states, the major increases in federal aid that

accompanied the Higher Education Act” (Astin, 2011). Now EDMC and other schools like the

Apollo Group and CEC are fighting for students. I would strongly recommend at for-profit

educational schools like EDMC to take the IT sector and international student market into

consideration looking forward to 2020. EDMC and other for-profit schools cannot get away from

the ever whelming scrutiny by the federal and state governments and will continue to have these

same issues, same lawsuits until they are able to operate under the scope which they now serve.

In order to prepare for this shift in educational offerings based on market trends and

financial aid rules set forth by the Department of Education, EDMC needs to take a close look at

marketing in developing countries like India and also across Europe to expand the international

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student market which will alleviate the 90/10 problem it is currently facing and will continue to

face moving forward.

Finally, EDMC has positioned itself in a good state with many different offerings in

career focused programs. If it can complete the above recommendations, I believe EDMC will

continue to be successful and will work ahead, instead of backwards, making gains in stock price

and will eventually be able to start creating new programs and new schools based on these solid

models.

References

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Steketee, A. M. (2004). For-Profit Education Service Providers in Primary and Secondary Schooling: The Drive For and Consequences of Global Expansion. Indiana Journal Of Global Legal Studies, 11(2), 171-203.

Sabatini, P. (2013, June 29). Education management corp. announces cost cutting layoffs. Retrieved from http://www.post-gazette.com/stories/business/news/education-management-corp-announces-cost-cutting-layoffs-693569/

Edmc. (n.d.). Retrieved from www.edmc.edu

Baum, K. (2011). Trends in for-profit post-secondary education: Enrollment, prices, student aid and outcomes. Retrieved from http://advocacy.collegeboard.org/sites/default/files/11b_3376_Trends_Brief_4Pass_110414.pdf

Cut your costs without laying off employees. (2009). Retrieved from http://www.jrgadvisors.net/Module/Catalog/DocumentFileFile?id=33

Forcasts for growth in the education industry. (n.d.). Retrieved from http://www.educationindustry.org/industry-trends-data

Kouzes, J., & Posner, B. (2007). The Leadership Challenge. San Francisco: Jossey-Bass.

Gough, P. (2012). Edmc sees 'encouraging trends' in future. Retrieved from http://www.bizjournals.com/pittsburgh/news/2012/11/01/edmc-sees-encouraging-trends-in-future.html?page=all

For-profit institutions of higher education business model and cost savings. (2009). Retrieved from http://highered.colorado.gov/Publications/General/StrategicPlanning/Meetings/Resources/Sustain/Sustain_100608_For_Profit_Business_Model_Cost_Savings.pdf

Code of business ethics and conduct. (n.d.). Retrieved from http://media.corporate-ir.net/media_files/IROL/87/87813/COE1007.pdf

Tierney, W. (2008). Three future trends in for profit education. Retrieved from http://www.evolllution.com/opinions/future-trends-for-profit-higher-education/

Trombley, W. H., Sallo, T., & National Center for Public Policy and Higher, E. (2012). American Higher Education: Journalistic and Policy Perspectives from "National CrossTalk". National Center For Public Policy And Higher Education,

Viviano, T. (2012). What 21st Century Leadership in Career and Technical Education Should Look Like. Online Submission,

90/10 rule. (n.d.). Retrieved from http://www.finaid.org/loans/90-10-rule.phtml

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