Menu Close

Turnaround of the Vet Sector: where are you at?

Disclaimer: If you are not aware of what the 3 segments of the VET sector are, and think it is just RTOs, please read this blog or you might get a bit lost working out where in the turnaround strategy you are.

This turnaround process (above) has been around since the last century. IKR! How long ago was that!!! Published in an article in the Harvard Business Review in their “crisis management” section (or tag as the cool kids would say today).

History: Turnaround never repeats?!?

While COVID-19 created a crisis for many businesses, it certainly was not unprecedented. This article written largely about the business created in the “greed is good” era (of the 80’s), gave large companies that survived the 1997 stock market (mini) crash a way to thrive until the tech bubble burst a couple of years later (in 2000). However, by then businesses learn to adapt. The ones that didn’t fell victim to natural selection and were either eaten or died a slow and painful death.

Then we had the CFG 10 years before COVID-19, caused (generally) by reputable financial institutions bundling up poor quality products that would actually cost money (known as sub-prime loans) with a facade of high-quality products. It was not illegal, AKA compliant, and people didn’t know what to look for. After all, it was a safe as houses, that didn’t exist, more so customers that didn’t exist when the housed needed to be sold. And the government would not let them fail… until they did.

Back to the future, after COVID-19, add in the term “Sub-prime learning”, then see if you can pick where the formal, non-formal, and informal learning segments of the VET sector are in this process?

No alt text provided for this image

Your turnaround: Who wants a hint?

Again, we go back further down the page in this blog to the diffusion of innovation. As I explain in that blog (passive-aggressive enough for you?), even though the formal VET sector is the smallest of the three segments, it provides training (or training like products) for 50% of the general population.

The formal segment is also the most protected, but the VET quality framework is intended to create consistency, and ensuring consistency basically puts a parking brake on high performance.

But this 50% of the population is split up further into public and private RTOs. TAFE and Job seekers agencies would look after laggards (16%), the late majority (34%) is looked after by private RTOs.

Add in the term Sub-prime learning, common in RTOs who generally focus on full qualifications rather than the skills sets people need to do a job right now, and there is a $100 billion bubble ready to burst. If it hasn’t already happened.

The pin primed to burst that bubble seems to be the new release of the business services training package (BSB7.0) last October. While the training package developers went out and asked businesses what they wanted to be added into the qualifications, as in step 4 in the 5-step process, it took 4 years to do that.

Whereas informal learning providers do that every 6 to 9 months. So in the time it took the formal system to update their products, informal learning providers would have done this 8 times. Just to give you an idea of how quickly they can adapt to survive.

So what are you saying?

It seems RTOs on the #TAEtanic are still stuck on the 2nd step, not even following the plan set in step 1. Which was the release of TAE40116. Now all the life rafts are gone, it’s freezing water any way you look at it.

Why would RTOs need to buy in training and assessment resources for BSB7.0 when it was mandated 2 years ago that it was a trainer and assessor’s job to Design and develop assessment tools? The answer to that if you can’t work it out is from this blog.

So many RTOs (but not all) are still trying to get through step 2. They are in the life rafts, but the ship (ASQA) that came to save them is tooting its own horn and building up steam to sail away, going by their webinar series topics…

Where is ASQA at in all this Turnaround talk?

Right in the middle of it. Well, for one of the 3 VET segments anyway. They have nothing to do with 2 of them as it is Fair Work and the ACCC that regulates the other 2.

If ASQA thought RTOs had trainers and assessors with the industry currency to deliver the new BSB7.0 units, why would they release this now: Spotlight On trainers and assessors: Working under supervision.

How would ASQA know this? A regulatory focus area for ASQA the last 2 years was trainer competency (Assessor was not the word used). So their focus has moved on from cleaning its house (the Formal VET segment)

Then there’s the RTOs that applied to get the BSB7.0 non-equivalent qualification on scope that sent a big red flag to ASQA’s risk management department if you paid for consultant’s resources. Why is that?… Have you not heard of turn-it-in? If they have an issue with one, they know who else to chase.

If you believe the consultants who make their living out of “saving” RTOs from deregistration at AAT, ASQA is stuck on step 2. When you look at the language in the slides attached from ASQA’s Deputy CEO Christina Bolger, outlining ASQA’s regulatory reform, it seems ASQA has already moved to step 3. Without many RTOs. Now looking at ways to improve performance as “compliance” is money out and doesn’t get money coming into the industry (that pays ASQA to regulate them).

Just like any good franchisor does. So instead of AusPost, could AusLearn be the next biggest franchise in Australia?

No alt text provided for this image

No alt text provided for this image

What about L&D?

Performance assessment, self-assurance, starting to sound more like L&D, which basically operates on step 4, and how you get corporate clients. But the right question is not “what would people pay for”, the question is “what would people pay extra for?”.

  1. Money going out is your costs.
  2. What you charge is your price.
  3. How much people can use your product is the value to the customer. And
  4. money coming in is a consequence of providing value.

This is how L&D operates, and what they charge for their training depends on the question “how does it add value to our organisation”, AKA, how much money can we make from doing this? And for every $10,000 you save a company, that is $100,000 fewer sales the company needs to do to make the same $ profit in the bank.

I call this the Airline affordability model because of this process. People generally pay 3 times more for something if they believe it is only twice as good. but that’s another whole blog to explain why TAE40116 price is set at 25% of its value, and you can get ten times the price for an L&D equivalent.

While L&D looks a doubling $50 (strengths), Training looks at doubling $10 (overcoming weaknesses). Which do you think business prefers these days?

Why do you think Airlines let business class on first and then make you walk past them sipping a drink before you squeeze into your economy class middle seat? This is why RTOs can’t compete with L&D. They are not even in the same airport.

If you want to know what a business class RTO class looks like… click here… This is a series of webinars I did with my marketing students to teach them how to set up, moderate and simulcast webinars across social media.

No alt text provided for this image

Aren’t we missing someone?

No, if you are thinking of the informal learning providers that you see all over the internet? ASQA talks about them in their “Spotlight On trainers and assessors: Working under supervision”

When recruiting trainers and assessors, sometimes RTOs find potential staff who are industry-experienced subject matter experts, but lack the required training and assessment credentials. You may still be able to employ these people to participate in delivery through a supervision process.

Under the diffusion of innovation, the informal learning market is the largest segment of the VET market. It involves mostly online course providers, that usually have premium coaching and mentoring programs run by authorities in their industry. So it is like the inmates run the asylum (Step 5).

It is a lucrative market that gets most of its business from referrals, but as it generally involves using the latest technology. Early adopters and inventors only make up 16% of the population. They will pay a premium to get in on the ground level investing in new untested technology. But this is a high risk, and burnout is common.

Informal learning providers pull students from outside of the market. They get interest from the early and late majority as they have a lot of convenient options and low-cost trials. But where they make their money from. The early adopters with an esteem sensitivity are not users of the product can be high maintenance.

Disruptive in group training, and looking for validation of their “specialness”, Early adopters see affiliate marking opportunities with the informal learning providers to create extra streams of income. they give loads of referrals, but not do this in only a “spare-time hustle” for them.

The inmates get “money in”, but at what cost?

Informal learning providers may replace the people lost in the “clean house” step as an obvious choice. However getting them to train what you want them to do maybe a costly exercise, as they don’t think RTOs are willing to pay them what they are worth. Particularly if you tell them they need to get their full Cert IV TAE, and they already have their own content.

Even low-quality trainers on the informal market could get $500 for a 1/2 day workshop. but it’s not regular work. Still, RTOs expect them to do a full day’s work, with double the students, and the going day rate for a casual trainer is around $315. That’s not enough money coming in to keep the informal trainer’s interested for long.

Informal learning providers tend to do their own thing, usually whatever they love doing, but few make good money out of it. With high industry currency, they are perfectly happy to do training for RTO. However, as they don’t like following rules, they still need to be supervised by an assessor

The downside for RTOs is narcissistic personalities are accepted in the informal learning sector. It’s only a problem for you if you ask them to do other training outside their expertise. They will always say yes, and try to prove how they can “pivot” as that is what they love doing. Fake it till you make it is OK to them, but it comes with disclaimers. Like “I’m not an expert, but…” and there go 2 hours of your life, you may never get back.

RTOs will find very quickly that the reason why you are supposed to get your Cert IV TAE is so you can understand what is required by the training package. Informal Vet sector trainers working under supervision might say “but you don’t do that in business”, meaning “I don’t know how to do that”, and without industry currency, the assessor usually believes them as they are the “expert”.

Need help?

There is a massive amount of help available, and I work with people at the highest level in all 3 segments of the VET sector.

Let me know what you need help with here. This could be career advice, professional development, even help with how you can get what you paid for. I have made many friends I the industry, and happy to connect you with them, but can only help a few people as this is not a paid service for me.

If you want to work with me, as long as it is working toward improving the quality of training in Australia, I’m in.

Just keep in mind that I’m not a consultant, I’m just a trainer, that’s why I do what I do. I’m one of the inmates running the asylum, basically to show what others can do if they want to.

I don’t want to be the best, nor claim to be. I just do what I love, and get frustrated when people say “but you can’t…” when I already do. I’m not anything special, so if I can do it, why can’t you?