Applying the Right Business Mentality to Education

Why is it that the business people who are increasingly influencing education policy do not follow the doctrines that have made them successful in their industry? Chief among them is how executives and managers allocate limited time and resources on the things that generate the biggest returns, not on the least profitable ones.

This metaphor is particularly relevant now, given the pervasive influence of business practices in schools. Powerful forces within this industry, whether they be individuals (e.g., Bill Gates and Michael Bloomberg) or private foundations (e.g. the Walton Family Foundation, the Eli & Edythe Broad Foundation, and of course the Bill and Melinda Gates Foundation) have shaped education reform in unprecedented and sometimes misguided ways. The relentless focus on teacher accountability is one such reform lifted straight out of the business world. In theory, it was a godsend concept whose time had come, given the bureaucratic failings of both the public school system and the teachers’ union over the past three decades.

So if teacher accountability is the reform du jour of business-minded politicians and reformers, one would think that teachers, more than any other possible factor, have the greatest influence on student outcome.

This is simply not true.

Most empirical studies consistently reveal that teacher quality, though the biggest in-school variable, accounts for no more than 20 percent of student outcomes (in some cases as low as 10 percent, according to education economist Eric Hanushek). In fact, non-school factors, such as the home environment and the family, along with culture and SES, play larger roles. Famed sociologist James Coleman confirmed the importance of a balanced perspective in one of the largest education study in the 20th century, the Equality of Educational Opportunity, which found that academic achievement was due more to the mixed factors of the school composition, student perception of his environment and future, verbal skills of the teacher, and particularly student background. These four major factors clearly included both in-school and non-school factors.

Simply put, children from birth to age 18 also spend less than 20 percent of their time in school. Based on calculating 7 hours per school day over 180 days per school year for 13 years (starting from age 5 to age 18 when most children start pre-K and graduate, respectively) the figure comes out even lower: 10 percent. With NAEP (considered the nation’s report card and the gold standard of assessments) scores showing little significant improvement compared with 2009 (particularly in reading), the decision to focus on teacher evaluations and performance pay over other non-school factors constitutes an inefficient use of capital at best, and gross mismanagement at worst.

Figuratively speaking, if student outcome is the deliverable, and the Department of Education the publicly traded company, then surely the board of directors, who represent the interests of the company’s shareholders, would hold upper management accountable. The parents, as both the board and the stakeholders, are already gaining political power to demand leadership changes in failing schools, particularly in California and Texas. Their accountability is just as crucial as those of teachers. The Educational Testing Service (ETS), in fact, called the family “America’s smallest school.”

Merely investing in teacher effectiveness to the exclusion of non-school factors is not a profitable executive decision, particularly if teachers account for a fraction of student performance. Part of the misallocated funds would be better spent on the front end recruiting top talent and comprehensively training and supporting teachers as the Finns have done with astonishing success — than counterproductively on the back end; only then will teachers be truly professionals, as I have argued previously.

Smart businesses invest first in research and development to create the best products. In education, parents are the R&D equivalent who nurture and develop habits of mind to create a school-ready child. Here is where investing in eradicating poverty and building community and family partnerships can have the most substantial, efficient, and long term impact. To maximize return, this is where business insight would best serve education.

One thought on “Applying the Right Business Mentality to Education

  1. Interesting comparison of making parents the Board of Dir and stockholders – they are the biggest stakeholders but haven’t been much a part of the reform solution. Interesting article.

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