Wal-Mart recently announced that it would be offering many of its employees an opportunity to work on a college degree through an agreement with American Public Education, Inc (APE). APE offers online degree programs through the two components of its American Public University System (APUS), American Military University (AMU) and American Public University (APU). APUS is accredited by the Higher Learning Commission of the North Central Association. AMU focuses on providing education for active military personnel; APU focuses on the non-military working adult. Eligible Wal-Mart employees will get a 15% discount on tuition at American Public University, and Wal-Mart is setting up a $50M tuition aid fund as well. According to a June 3 article in the New York Times (NYT1), Wal-Mart executives said that the “point of the program was to help employees get more education and to build a better work force.”
Wal-Mart is known as provides an enormous range of competitive quality “everyday” products at very low prices. The business model that enables it to sell its merchandise at such low prices is both much admired and much maligned, and need not be discussed in detail here. However, one component of that model is to drive very hard bargains with its suppliers, requiring both low prices and appropriate, competitive quality. Thus one would not imagine that Wal-Mart would pick an educational provider without due diligence and an understanding of what it wanted to buy. Indeed, according to a June 9 article in the New York Times (NYT2), before picking APU:
Wal-Mart surveyed 81 institutions, including for-profits, nonprofits, online universities, brick-and-mortar colleges, and “even some of the open-source, open-platform online offerings that are out there,” said Alicia Ledlie Brew, senior director of Wal-Mart’s lifelong learning program.
The criteria Wal-Mart used in making its decision paralleled those used in its usual relationships with suppliers, according to NYT2:
It had several criteria: a program with clear, low pricing (American Public charges $250 a credit hour, a price that has not changed in 10 years, Mr. Boston (President and CEO of APE) told the UBS audience); one that was accredited; a college that offered a variety of degrees and course subjects; and one that was used to dealing with adult students.
Because Wal-Mart is so large (1.4M employees in the US), and because it has transformed retailing in the US and many other parts of the world, it is important to consider about some of the implications of this arrangement.
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Wal-Mart executives said it decided to work with an online university instead of a brick-and-mortar school after surveying more than 32,000 of its employees and learning that most of them wanted the scheduling flexibility afforded by online classes. (NYT1)
This result, of course, is not very surprising. Indeed, flexible scheduling is one of the main requirements most working adults have when they consider returning to higher education. It is also not surprising that Wal-Mart decided to go with a for-profit university since few non-profit universities both have extensive on-line degree programs comparable to those found in the for-profit sector, and are flexible in their dealings with large potential client corporations.
In pitching their programs to Wal-Mart, APE’s President and CEO Dr Wallace Boston and his team:
stressed the organization’s history of offering classes to the nation’s more than one million military personnel. These students are often older than conventional undergraduates, hold jobs and work shifts at various times of day in different time zones. (NYT2)
One must assume, therefore, that the normally demanding executives of Wal-Mart looked at the programs and outcomes of AMU and found them to be of a standard they found appropriate. In the process, they must have considered Daniel Golden’s article For-profit Colleges Target the Military with its many mentions of AMU, as well as the many negative articles that followed as Golden and others pummeled the for-profit world for what they viewed as its excesses and shortcomings. The resulting contract seems to indicate that Wal-Mart must have concluded that Golden and his followers had not made their case, at least as it applied to AMU.
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The partnership with American Public University, a for-profit school with about 70,000 online students, will allow some Wal-Mart and Sam’s Club employees to earn credits in areas like retail management and logistics for performing their regular jobs…. For instance, a department-level manager, who receives training from Wal-Mart in areas like pricing, inventory management and ethics, would be eligible for 24 on-the-job credits, at no charge, toward a 61-credit associates’ degree. A cashier would be eligible for six credits toward a 61-credit associate’s degree or a 120-credit bachelor’s degree. (NYT1)
All studies of the adult education world clearly demonstrate the importance to prospective students of gaining a credential (degree), as opposed to simply taking a set of courses, no matter how pertinent they may be. This agreement enables employees at Wal-Mart to get credit towards a degree for the training they already are receiving from their employer, thus facilitating their quest for the desired credential. It might well increase the value of their Wal-Mart training in their minds at the same time. Thus this component of the arrangement was probably quite central for both Wal-Mart and its employees.
More than half of all higher education institutions give some kind of credit for learning outside the classroom, so this arrangement is not unusual per se. In addition, such credit for prior learning has recently been shown in a study funded by the Lumina foundation to correlate strongly with success in persistence to the degree: students receiving such credit had graduation rates more than 2 times higher than those of students who had not received such credit, and the difference held regardless of institutional size, level (2 or 4 year), and institutional control (for-profit, non-profit public or private).
A key to the ultimate (rather than short term) success of this program is whether the prior credit given is based on a rigorous, credible process. Many Wal-Mart employees will eventually seek to transfer some of the academic credit awarded by APU to other institutions, and if it is not accepted, the negative impact on employee moral could be significant.
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Wal-Mart clearly recognizes that size alone makes this a very visible corporate educational program, one which may ultimately be as influential in the adult education field as Wal-Mart itself has been in the retail field. In a letter to Secretary of Education Arne Duncan, Wal-Mart showed that it has ambitions of playing a leadership role in pushing the adult education field to levels of increased effectiveness:
“While there is broad agreement about the need for more Americans to attain college degrees, we recognize that there is a healthy discussion under way about the best way to get there,” wrote Leslie Dach, Wal-Mart’s executive vice president for corporate affairs and government relations. “One of our aims with this program is to try some innovative approaches that seem promising, grounded in what is already known in the field.”
He added: “We hope in this way to expand the education and employer communities’ knowledge of what works most effectively, so that policy makers, other companies and other stakeholders can continuously improve such offerings.”(NYT1)
Dach also said in his letter that Wal-Mart “will work with third party experts to evaluate the impact and effectiveness of this program.” One imagines that APU will welcome these evaluations, and use them to modify and improve their own approach as time goes on. At present, APU is a relatively small player in the field of for-profit higher education. However, if it effectively and rapidly transforms the results of these evaluations into improved educational approaches, the visibility this program could move it into a leadership role in adult education.
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Some commentators have decried the fact the Wal-Mart chose to go with a for-profit university rather than a non-profit college or university. They charge that the degrees obtained will have little or no validity in the rest of the world, and that the employees will, in effect, be cheated. I think that charge deserves some additional consideration.
First, as I have pointed out in earlier posts, we actually have no data to demonstrate that the education that for-profits provide is less effective than that at non-profits. For simplicity, I am willing to stipulate that the education provided at the top 200 of the approximately 4000 accredited non-profit colleges is superior to that provided at any of the non-profits, although there is no data to support that stipulation. However, I believe that a large fraction of the for-profits provide an education that is equal or superior to that provided by a similarly large fraction of the remaining 3800 accredited non-profit colleges. Many of the for-profits simply spend more developing courses, bringing in advanced pedagogy, and evaluating student outcomes than do most of the non-profits. So, there is no a priori reason to believe that the Wal-Mart students will be cheated in the quality of their instruction.
Secondly, while there is no doubt that at this time degrees from most for-profit institutions generally are viewed less favorably than degrees from most non-profit institutions, there are reasons to believe that view may be changing. In reality, many corporations are working with major for-profit higher education providers to offer advanced opportunities to their employees, including degree programs. For example, both Kaplan University and the University of Phoenix have programs focusing on this market. This has numerous consequences. Perhaps most importantly, the sheer number of students in this group assures that graduates of for-profit universities increasingly will be moving into responsible managerial positions in corporations all across America. As more of these graduates move into positions of responsibility, they will increase the respectability and brand value of the degrees. As some of the successful graduates move to other companies, they will take a respect for the brand with them to the new company. Equally significant, in companies that have such education programs, HR offices clearly will treat candidates with degrees from for-profit universities more positively.
The Wal-Mart program, because of its potentially very large number of students and the visibility of the employer, looks suspiciously like a significant step forward in the evolution of for-profit higher education as a disruptive innovation ( as described by Christensen.)