A dynamic which incentivises agents to attempt to service dozens or hundreds of partners, including direct competitor institutions, cannot be fit for today’s hyper-competitive recruiting environment. It’s a relic of a different time.
Sure, the market is volatile – so all the more reason not to persist with a high-cost, high-risk, passive recruitment model that couldn’t help 50+ UK providers and more elsewhere hit their critical load targets. Expecting different results whilst working to the same 90s-era contracts as everyone else is madness.
If universities are to be run as modern businesses they must procure like modern businesses, and that means being more ruthless than hopeful.
How many more institutions have to miss intake targets before providers act?
There’s effectively no agent market today. Each of a provider’s 100+ agents are contracted on a siloed, inflexible contract for one to three years (up to 10 years in the case of one NZ University), giving them the right to submit applications to any program or course.
It’s hard to imagine a less healthy contracting arrangement than one in which a business voluntarily prevents competition among its many suppliers and which limits the ability to flex to changing (prospect) supply and (provider) demand levels.
And since any agent can submit applications to almost any course or program, there’s essentially no pipeline control — no tap to open or close at course level. Hence famine and feast conditions and often poor conversion rates. The game’s being played on hard mode. Why?
Whilst agents bear some risk, e.g. visa declines, it’s providers alone that carry the very material risks of zero tuition fee being earned for a 4 year undergraduate degree place, and of zero income on an empty accommodation bed.
And whereas agents have many partners and so many opportunities to place students and earn commissions, for providers no such each-way betting is possible; a prospect enrols or they don’t.
So institutions supplicate to the world’s largest and costliest agents in the hope they get what they need to hit targets. Unthinkable a decade ago, one Russell Group Vice-Chancellor recently shook hands in an agent office overseas.
Providers’ urgent aim should be to shorten the odds of a prospect enrolling without the need for bigger agent bonuses, costly fam trips, and retreats in Bali. The most cost-effective place to start is as early as possible in the buying process: contracts.
An open secret
More existing agents are rebranding as aggregators or bolting one on (“an innovative B2B EdTech solution leveraging AI to bring…”). Whilst this is great for the small number of bad actors who launder their weaker applications by submitting these via aggregators, avoiding the negative provenance, it’s not good for the majority of established agents who deal in a quality applicant experience.
And it’s very bad for providers.
On a zoom call in 2023 I was left waiting by an agency peak body head whilst they finished a conversation with a destination country’s senior trade diplomat. They maybe believed their mic was muted. Perhaps they didn’t care. Their statement that “all agents are aggregators now” was endorsed by the diplomat and was a neat representation of something few discuss openly.
Yet who can blame agents for innovating within a system that rewards supply chain obscurity? At least one UK university is reportedly happy to pay an aggregator 30% commission. It would be crazy, if true.
It would also be lazy, since any single provider’s failure to innovate away from the passive agent supply model is a choice they alone make. And, as long as they persist with a passive contracting approach, they should expect margin erosion and continued lack of pipeline control and visibility.
With so much focus on student numbers and reactive, high-profile tactical efforts, very few universities’ executive teams are interrogating the suitability of that which underpins all of this.
Hope is not a strategy
Some international recruitment practitioners are convinced it’s their careful management of agent ties that gets results. Yet it’s specifically because of the way these contracts are structured today that forces universities to take a costly kid-glove approach to agent relationship management and sees Vice-Chancellors shuffled into agent offices for photo ops. Good results occur despite these agreements.
In 2024 providers and agents should be digitally agreeing market-rate commission terms in real-time for guaranteed student load. This means a university saying “we need 25 MSc Mechanical Engineers for Jan 2025 entry” and willing agents contractually agreeing to source these at commission rates that are based on the scale of the specific challenge.
This is not difficult to do and happens in every other B2B relationship in any other sector.
Agree commission digitally and competitively, and suddenly the provider has greater control of pipeline. Leverage even. Some agents won’t work this way? Okay, there are 32,000 more agents that might. Again, more ruthless than hopeful.
Almost every university’s 2030 Strategy speaks to digitisation and financial sustainability. So perhaps, given challenges and opportunities faced today, agent contracting is being reviewed in earnest.
Where a few years ago it could be termed commercially naive to run inflexible offline agreements, colleagues being made redundant due to missed targets might now view it as irresponsible.
