"In this world nothing can be said to be certain, except death and taxes," said Benjamin Franklin.

Sadly he missed one other certainty: Ofsted.

Ofsted. A word that seems to strike fear in the heart of the most astute and able FE staff and is perhaps feared more than death and taxes. Ofsted inspections seem inevitable but there is a way to ensure you don't get more attention from Ofsted than you might.

How? Simple. Read and act upon the letter the FE Commissioner circulated in March. In it he identifies 20 pointers to a provider that is heading for trouble. None of them should surprise you and in essence they are similar to the list one might produce for a business studies text book on how to prevent company failure.

Indeed so obvious are they that I've mentioned several of them in my previous post on this website.

However, obvious though they are the items listed have been derived, by Dr Collins, from his observations of inadequate providers and those that have received a Financial Notice of Concern. So they aren't exactly rare.

Financial signs

Any business that produces financial forecasts and then experiences a significantly different outturn clearly has problems. The reasons can be many. Poor recruitment is just one; others include poor planning processes and, one I've seen several times myself, where the marketing plan doesn't match the business plan. On several occasions when I've examined this situation the marketing department have never seen the business plan or, if they did, the business plan wasn't SMART. I've frequently seen business plans that say something like "we will expand care/construction/IT apprenticeships". No figures or measures are given so I have to ask how the marketing department can actually satisfy such a vague directive. If they can't then financial planning and recruitment reality are going to be worlds apart.

Other financial measures include the percentage of budget spent on staffing and the level of borrowings. This isn't rocket science but does present a problem to far too many providers. Staffing costs can be reduced by ensuring each class is full and that courses where demand is low are axed or merged. Low numbers are always the result of poor marketing; often it is that curriculum planning is poor or even absent. Too frequently courses are run simply because an area says there is a demand for it (but too often in my experience no evidence is produced). Often what they really mean is that they want to teach this subject so please find us some students!

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Organisational signs of failure

Dr Collins identifies something I wrote about in this column quite recently. It is about meetings. The measure he identifies is where board papers are late or tabled. If a provider regularly fails to organise meetings properly what faith should be placed in their ability to deliver education and training? Of course circumstances dictate that some papers will have to be tabled ... but the problem is where this is the norm.

Linked to the inability to provide papers is the lack of KPIs and MIS info the board require if they are to be effective. These measures should be gathered routinely so providing them to the board should not be arduous.

Dr Collins also identifies the issue of empty classrooms and class sizes below 15. The latter is part of the problem identified in the finance section above. As for empty classrooms I often wonder why providers own so many classrooms. If they were rented then capital expenditure and hence borrowings could be reduced and, where classes to fill them don't exist, they can be released back to the owner.

Quite a few of my private provider clients rent rooms as the norm, so never experience the empty classroom problem for long. Their costs also tend to be much lower as they have no capital cost impacting their overheads.

As a businessman I also recognise another item identified in Dr Collins' letter. That of employer engagement. Far too many identify employer engagement with sales rather than satisfying customer need. Look at their websites and they provide a list of courses they offer and talk of bespoke provision; but too often they fail to ask the right questions when phoned with an enquiry. A recent call I made to a provider asking if they could offer me training on a specialist topic was greeted with the comment that they didn't do it as there was no call for it. Wrong, I was requesting it. Sadly they failed to ask me the right questions and failed to discover that I was phoning on behalf of a client that wanted to get 36 people trained. Another provider was more astute and now has a contract worth £16k with the option of more training to follow.

General issues that lead to Notice of Financial Concern

A key item here is that some providers generally discourage formal meetings between board members and students or staff. One has to question how board members can undertake their responsibilities if they cannot meet with students and staff. As a Non Exec for a national charity I have been encouraged to meet with staff and users and, if I hadn't been encouraged from day one I would have insisted on it anyway.
This issue is not a surprise to me.

Having asked staff if they know who on the board have responsibility for, or expertise in their area, too frequently I get puzzled looks. Clearly they have never spoken to board members. Of course members have a non-exec role, but if they rely on the SLT and reports for their knowledge they are abdicating responsibility for the provider and I don't think they should not be on the board.

Conclusions

As Dr Collins says in his letter, his list is not exhaustive and likewise my comments above are not the whole story. However, they are indicative of areas of concern that every provider should be aware of.

Providers are businesses like any other and they need to adhere to basic business principles. Not having data or meeting KPIs and tabling meeting papers are indicative of problems as are the other issues I've addressed above.

My advice to providers is to formally and objectively go through the items listed in Dr Collins' letter. It is of course difficult to be totally objective in some cases as there is often a temptation to find excuses or ignore the obvious. In which case I suggest you bring in consultants who will provide an objective overview and will make recommendations that will ensure that Ofsted isn't to be feared as much as taxes and death.

Marketing consultant Stefan Drew was previously director of marketing at two FHE colleges and now works with providers throughout the UK, Europe and the US - visit: http://www.providermastermind.com

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