Thursday, June 13, 2013

The Value Chain of Business English Training - Chapter One

There are several parallel conversations going on in Business English training at the moment.  The first is about money.  The second is about qualifications.  The third is materials.  There are certainly other issues, but I’ll limit it to these today.

The purpose of this article is to link these three threads and to give a few signposts out of the circular debate.  The link to all of these lies in business theory.  As Business English trainers, I hope this is familiar, but perhaps the application to our own field is new.

Porter’s Value Chain

Perhaps the most well-known name in business theory is Michael Porter.  In 1985, he presented the value chain, which explains the difference in price between the inputs and output of a business.  I think the clearest graphic of this process is from Wikipedia which shows a notional value chain for a manufacturer.

The business functions in blue are the primary functions of the business in transforming the raw materials into a product and selling that product to generate profits.  The functions labeled in brown support those primary activities and generally do not add value in themselves.  These are also typically the first business functions to be outsourced.  The difference between the cost of running these activities and the final price is the profit margin.  Each firm will have a different value chain, but all will resemble this model.

The Value Chain for Business English Training

Now, let’s take this model and apply it to Business English training.

The raw material of BE is the English language, which is a common good.  It belongs to no one and if you grew up in a native-speaking country you have it free-of-charge.  Indeed, there are enough resources and materials on the Internet that the language is available at no charge around the world.  Therefore, the main value of the trainer is to determine which parts of this massive body of knowledge are needed, organize that information, then transform it into a useful format for learning, mastery, and performance.

Overall, the first three activities are determining what to train, and the last two are how to train.  These primary activities include everything in training from using discourse analysis to determine key functions to elearning.  Additionally, materials development includes more than simply course books and handouts, but also the activities a trainer uses to instill knowledge, mastery, and performance. 

Note: It can be argued that marketing actually adds value but I doubt few trainers will be able to develop a brand with enough mass to considerably change what a client is willing to pay.  For simplicity I have left it as a supporting activity.

Why wages are so low...

Jenny has a CELTA and works at a private language school.  She is given Business English courses and travels to an accountancy for a 90 minute lesson every week.  The school and the client have decided to use a course book for the training.  Jenny supplements the material with some of her own activities and modifies some of the exercises in the book to better fit the needs of the group.  She conducted a short needs assessment at the beginning to find out which parts of the book are more important for the learners.  She is not that familiar with the company but she has read the company’s website and remembers some accounting from a university class she took several years ago.  She is very active reading blogs and articles to find creative lesson plans and activities to improve her teaching.

In the case above, Jenny is only one very small part of the value chain (marked in red).  The other primary activities were done by the course book writers/publisher (they were paid when the book was bought) and the brown support activities were done by the school.

Let's imagine the market price for this type of training is €60 per hour.  If Jenny gets a third of that, she is lucky.  Her limited needs assessment is added value and her addition of supplementary materials helps.  Most likely, she will receive a bit more than her peers at the school who do not do this.  But her professional development is limited to improving her training delivery.  This is admirable, but does nothing to increase her wages.  She is already receiving this portion of the value chain.

Susan has a CELTA and is a freelance trainer.  She started with general Business English courses but then started focusing on finance.  Every two weeks, she attends a local networking event for business leaders in the area.  At one event she meets a partner of one of the local accounting firms.  She talks about her business a little and how she has worked with other firms in the field and has seen good results.  She has developed a corpus of financial English and writes her own materials based on common functions and skills.  Prior to the training, she researches the firm and meets with a few of the partners to conduct a top-down needs assessment.  Then she conducts a bottom-up needs analysis with the participants.  She designs a course proposal and negotiates with the accountancy.  She then develops the materials and conducts the training.  Every month she invoices the firm and sends a progress report to the partners every quarter.

Again for simplicity, let’s assume that Susan is also subject to the same market rate for Business English training at €60 per hour.  But in this case, Susan collects every cent of the value chain.  Additionally, she is developing skills and tools which enhance her ability in other activities.  Over time, she becomes more proficient at billing, reporting, marketing and sales.  She checks on activities and methodology but is more interested in workplace discourse, specific needs in the field of finance, etc.  So, she does not ignore how she teaches, but spends an equal amount of time on what she teaches.

The end result is that Jenny spends three times the amount of time in the training room as Susan.  That does not mean Susan works less, but she is doing different things.  Additionally, Susan is developing skills which will help her earn even more money in the future, whereas Jenny is continually improving an activity she has already tapped (training delivery).

In the next chapter we will discuss the relationship between qualifications and the value chain to see how hitting the books will help increase wages.

1 comment:

  1. Some criticisms:

    1) This model works (or worked, back in 1985) in an environment where there were regular budgets for BE training, and where customers want (relatively) standardised products. But in a volatile marketplace, where, for example, budgets are transferred from HR to Procurement (often with no continuity of staff, or budget, from year to year), and with customers demanding a wider variety of training, this model may no longer apply.

    2) You're also, for terms of simplification, making two ideal cases--which might not exist in the real world. In fact, Susan, in some instance, might be working for both a language academy and with higher-paying clients. You're also removing important variables: country, rural/ city, etc.

    3) In your model, the customer is also peripheral--your value chain is company or firm-centric. What about what the customer considers as value? A thought-experiment: if the school is creating more of the value--then why do so many customers ask the teacher to 'go private'?

    4) Porter's model is only a model, or theory of how value is created--it's not a social fact, there are other theories of how value is created. Marx would say that it's only labour power that creates value, labour power sold by workers to capitalists--therefore all the people in your value chain selling their labour power: the coursebook writers, the teachers, the cleaners, the secretaries are selling their labour power so that the business owner can make a profit (the surplus value). And the value produced by these people far surpasses that of the boss. This is self-evident in the fact that it's hard to believe that a person can work 400 times harder than another person--but they can be paid 400 times more!

    5) The idea that the English language is a 'common good', available to everyone, is idealistic and does not take into account all-too-real issues of power, economics and social relations in the world. You're presuming equal access to knowledge, which doesn't yet exist.

    Paul Walsh