Examination of Witnesses (Questions 60-79)
BRITISH COUNCIL
& FOREIGN & COMMONWEALTH
OFFICE
23 JUNE 2008
Q60 Mr Burstow: Why is it now that
it is two years' behind schedule, I believe, to get the system
up and running just for the people potential?
Mr Davidson: The reason is one
of the sheer complexity and scale on which we are operating and
a great deal of scepticism, certainly on my part, in going for
a technical solution to a problem which has not been adequately
defined. I have been emphasising with my colleagues the definition
of the problem—the definition of what we are actually seeking
to achieve; and that is why we have spent something like £300,000
in trying to achieve that; rather than going in for what would
have been something like a £6 million IT solution, which
industry standards suggest something like 60% of them fail. My
concern was that we did not go for a quick IT win to a problem
which we had not adequately defined. We are going through pilot
programmes at the moment in China and also in Europe to look at
how we can deliver a system.
Q61 Mr Burstow: How are you guarding
against the situation where people on the ground, waiting for
a system to come, are busy working out and inventing their own,
and therefore you have a proliferation of systems that eventually
have to be integrated into some overall system so you could answer
my question about the numbers of contacts that you miss and get
year?
Mr Davidson: Obviously, first
of all, our IT systems do control the creation of new database
systems, or new systems on our unified IT system. It is ultimately
the responsibility of our regional directors to understand and
engage with the corporate programmes, not to go ahead and create
their own. There is a frustration in the organisation, I have
to accept, that we are not moving as quickly as some colleagues
would want; but I reiterate I think the dangers of moving quickly
and getting it wrong are very considerable.
Q62 Mr Burstow: Let us move on to
my final area which is the issue of teaching, which you have been
answering some questions on already. How did the Australian company
IDP manage to creep up on you in India and take such a large share
of your business over about six years? Did you not see it coming?
Mr Davidson: The IELTS programme,
which is specifically referred to here, is a joint agreement between
ourselves, the University of Cambridge and IDP, so it is a shared
examination. The examination has grown incredibly quickly globally.
Q63 Mr Burstow: In India you lost
two-thirds of your market share during this period, between 2002
and 2007?
Mr Davidson: While we did lose
market share, that is absolutely correct, the total number of
exams we were offering did grow. There was an explosion of demand
in India. IDP were working with local Indian partners and they
were quicker than we were to take advantage of that market. In
other markets we were faster on our feet. Indeed, of the global
market for IELTs we deliver two-thirds and IDP deliver one-third.
India, no, we were not as quick as IDP were in developing the
programme.
Q64 Mr Burstow: I understand five
out of the 50 centres around the world generate the bulk of the
surplus, which is about £10 million every year. What are
you doing to make sure that those high performers are not ambushed
in the same way as it appears took place in India, and ensuring
that other centres become better performers in the future?
Mr Davidson: I think that particular
statistic refers principally to the teaching rather than examinations.
The examinations, as far as I am aware, are profitable in the
vast majority of our centres. Of course, we have marketing managers
and we have regular development programmes for the examinations.
Examinations are a highly volatile market and we will be continuing
to looking very closely indeed with our partners, both Cambridge
and IDP, to continue to develop it. I have to say, I am delighted
that over the last two the IELTS examination has overtaken the
American competitor as the world's largest examination of its
kind.
Q65 Geraldine Smith: It is a good
report and my initial feeling about the British Council is a good
one, so your marketing must be good, there must be something.
Certainly when I have visited any of your offices abroad, I have
got a good impression. I understand you are moving away from Europe
and into the Islamic world more, the Indian subcontinent and the
Far East and it makes a lot of sense to do it, but how easy is
that practically to achieve? What does it involve? Does it involve
closing offices and relocating staff? How do you do it?
Mr Davidson: It is a two-headed
problem, one is taking the resource out of Europe and that does
involve us closing offices, closing public presence and, indeed,
laying off staff and there has been a significant reduction in
staff in Europe. The second side of the problem is rapidly growing
the new programmes in the Middle East, in areas of North Africa
and Central and South Asia in a way which is really effective.
Perhaps Mr Lynes could say a word or two about how he has done
that in the Middle East.
Mr Lynes: It is easier to grow
than to close. Our budget for the Middle East has grown from £3.1
million in 2000-2001 to a budget of £10 million this year
where we have had to employ new staff and develop new programmes.
In 2004 we set about designing six large-scale projects in the
areas of education, English, the arts and science, building on
the work we have been doing for many, many years in the region,
to be able to scale up, work with new partners and develop our
work that way. The demand for our work is very, very strong, particularly
in the areas of English and education.
Q66 Geraldine Smith: Can I turn now
to measuring the impact of your activities. Again, that cannot
be easy when you operate in so many different countries and it
must vary considerably between country to country. It seems odd
that your staff seem to have a lot of discretion over which events
they invite audience feedback for. Human nature being what it
is, if something is going well you are going to ask people what
they think and if it is not, you are not going to bother.
Mr Davidson: I accept there is
obviously a danger of that, though I think in almost all cases
we decide before the events take place whether or not they are
going to be measured, so I do not think any of my colleagues wait
and see whether it has gone well before they ask the question.
We have made considerable efforts to develop new ways of measuring.
It is a very complex and difficult area to measure because you
are dealing with human beings' reactions and personal feelings
rather than a clearly quantifiable set. It has been looked at
quite extensively both by organisations in this country but also
by our counterparts elsewhere. Our approach is generally seen
as one which is in advance of what most of our analogue organisations
from other countries are involved in. We do spend a great deal
of time talking with other people asking the question how can
we improve that. You will have seen from the report that a study
was undertaken, jointly funded by ourselves and the FCO, to look
at what we do in our area of work and what the FCO does in public
diplomacy. It can also be measured against a common set of criteria.
A considerable amount of effort goes into constantly trying to
improve our measurement systems.
Q67 Geraldine Smith: You have collected
and evaluated over 200,000 customer feedback forms, is it worthwhile
doing that? You have pointed out it is very difficult to measure.
Mr Davidson: I think the customer
evaluation feedback form is only one of the measures through which
we attempt to evaluate our work. We also ask questions about customer
satisfaction, for example through our teaching, our examinations.
We also have a programme called the Evaluation of Long-Term
Outcomes which is run for us by a survey organisation so we
do not get directly involved in it ourselves to ask the question,
"What is the broader impact?" It is one part of the
balance scorecard, which has a whole range of different components.
I think it is important but it is not sufficient in itself.
Q68 Geraldine Smith: Can you give
me an example, perhaps, of how the performance information, the
feedback you have received, has made you change the way you do
something?
Mr Davidson: I will ask Mr Lynes
for his personal experience in a moment, if I may. One of the
things we are doing from this year is getting that feedback data
back into headquarters on a quarterly basis rather than at the
end of the year, so that we identify whether or not our customer
satisfaction has improved or is reaching the targets we are looking
for so that we adjust what we are doing in year. The same is true
of other satisfaction rates but, Mr Lynes, have you got an example
from your region?
Mr Lynes: Mr Davidson mentioned
the Evaluation of Long-Term Outcomes which is carried out
by an external organisation and those are in-depth interviews
with some of our key partners. Because the feedback we get is
quite substantial, what we have found out through that is they
have helped influence our future programmes. For example, in the
Middle East they may say, "We'd like you to do more work
in a particular area" for example teaching development, and
that helps inform our programmes and how we develop them in terms
of our large-scale projects. You do not get immediate feedback
from the customer questionnaires that you may get after an event.
It may tell you how you organise the event or initial reaction
to it, but it is through the evaluation of the long-term outcomes,
those in-depth interviews that we get better feedback so we can
adjust our programmes.
Q69 Geraldine Smith: What about having
a database to track customers? Do you pick up on all your customers
or is that something you fail to do?
Mr Lynes: We do. As has been highlighted,
we do not have a global CRM module, however in the Middle East
we use Microsoft Outlook to capture all our contacts. All our
managers are trained in that, they record in a systematic way
and review it on a regular basis. We are able to track our partners,
our contacts quite sufficiently, both at a country level and a
regional level.
Q70 Geraldine Smith: I was going
to ask you about your customer care, your standards of answering
the phone and email, but when you said seven days for email, it
does not sound too bad! What can you do to improve that?
Mr Davidson: If we were able to
hit that, I would be broadly satisfied. The great problem with
customer service standards is you can spend a very, very large
sum of money to make only a moderate improvement on them. For
me, at this stage what I am looking for is consistency across
the organisation and then raising the overall standards. While
our targets are, as I said, seven days for email, two minutes
for telephone calls, we clearly are not hitting those targets
at the moment, we are only achieving something like 74%-75% of
that and we recognise we have got to improve. What is a problem
also is that only 10 out of our 12 regions have improved over
the last year. Again, what we are looking for is getting that
consistent improvement across the whole organisation.
Q71 Geraldine Smith: Could that not
be linked to resources though? You would think with basic things
like answering the phone and answering emails you might just need
a few more staff on those because they are very important tasks
for an organisation like the British Council. If you fail there,
you are failing at the very basic level.
Mr Davidson: I think that is absolutely
right, but it is up to the regional directors to ensure they are
meeting the targets we set. That is the reason why we are moving
from an annual mystery shopping survey to a quarterly mystery
shopping survey so that we get much better data in year so we
can apply appropriate pressure to those regions that are not hitting
the targets.
Q72 Geraldine Smith: You think by
having regional managers you will have much more control and be
able to do that?
Mr Lynes: Certainly, how we have
tackled this in the Middle East is we have put in customer service
managers into each of our offices to address this problem. We
have a Customer Service Excellence Project which is part of a
broader project because we are recruiting a full-time customer
service manager for the region. You are right, we do need to put
in extra resource where they are needed.
Q73 Mr Mitchell: I cannot understand
why you do not go for broke on language classes. Here is one thing
the world needs, the English language, which is a great marketing
opportunity and yet you are putting yourself at the pricey end
of the market and cutting down the numbers. Most of your profit
comes from five centres, we see on 2.25, three of which I have
been in, they were packed and marvellous. Why do you not do that
everywhere?
Mr Davidson: I am slightly nervous
about coming up with top of the head numbers, but our plans are
to very substantially increase our teaching centres globally.
We will not do it on the basis of the model we have at the moment,
we will only do it on the basis of rethinking quite fundamentally
the way in which we teach English.
Q74 Mr Mitchell: Why do you not go
for the mass market?
Mr Davidson: I think the two pilots
we have got, China and India, clearly will be asking that question,
how can we access the mass market, but I do not think the really
mass market can be delivered through purely a face to face operation
dependent upon teachers from the UK. I do not think there are
enough teachers in the UK in total to be able to deliver what
India and China are looking for, so we are going to have to find
different ways of doing that business.
Q75 Mr Mitchell: You could dilute
the teaching course by having people phone, a second language,
and you talked about doing that, you have recruited some. That
would enable you to employ more teachers and probably reduce the
price of the courses.
Mr Davidson: That is correct and,
indeed, that is part of our plan. Also, this year in China we
are experimenting with providing tuition over mobile phones so
that people are able to phone up and get tuition. We are looking
at a range of different ways of doing this. In China, the costs
of delivering a premises-based teaching operation of any scale
whatsoever would be astronomical, bearing in mind we are unable
to borrow in order to be able to expand. We have to do that from
within the resources we create within the organisation and, again,
that is a constraint on us.
Q76 Mr Mitchell: It is a snowballing
process, it raises more money and therefore you can spend more
money and develop more centres. Is it a fact that you are scared
of competitors complaining?
Mr Davidson: We are very conscious
of competition, yes.
Q77 Mr Mitchell: Why?
Mr Davidson: Because we need to
make sure we compete in a fair way.
Q78 Mr Mitchell: Why? The Government
wants the public sector to be more entrepreneurial and competitive
and here you are tying your hands, going for the pricey end of
the market in expensive premises where the fees are going to be
high. Why not go for the mass market?
Mr Davidson: I think we are looking
at developing those mass market programmes. We will be looking
at programmes like franchising, which is completely new for us.
Q79 Mr Mitchell: You do that in Brazil,
do you not?
Mr Davidson: What we do in Brazil
is not really franchising. We have a partnership with the culturas
but they are independent organisations and now completely independent
from the British Council. We will be looking at programmes like
franchising, branch operations and partnership operations. We
will also be looking at delivering teaching through non-traditional
methods, particularly virtual methods.
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