The first hagwon (a Korean for-profit, after-school academy – think "night school for elementary kids") that I worked for was called Tomorrow School. I was under the impression that it was pretty successful, but it was a small, single-location, "mom and pop" business. The owners, Danny and Diana, showed either a lot of market savvy or else had a lot of luck in selling it when they did – basically, they jumped out at the top of the market, as far as I can tell. So, after my first four months, Tomorrow School was purchased by a rapidly growing chain of hagwon being built by LinguaForum corporation.
LinguaForum was not, originally, a hagwon business but rather a significant publishing house of language-teaching materials. I had the somewhat vague impression that they were building the chain of hagwon mostly to function as a sort of "lab school" environment in which to develop, test and promote their textbooks and teaching materials. In that respect, I liked them, because they showed a great deal of methodological sophistication in terms of their higher-level curriculum design and intentions. But they were new to the hagwon business, and their on-the-ground execution was pretty weak. I don't think they had a clue how to actually manage, capitalize, and compete in Korea's private after-school-academy market.
So, after taking on too much debt by growing too fast (mostly through acquisitions of mom and pop single-location hagwon like Tomorrow School), LinguaForum decided to abandon the field. They tried to arrange some kind of complex cross-investing relationship with LBridge company, which was a successful and growing but well-established local player in the Ilsan area hagwon market. I'm under the impression that more than one of the terms of the deal fell through, and neither LBridge nor LinguaForum were happy with the outcome.
Nevertheless, the consequence was that last July, LBridge acquired my contract from LinguaForum. Unfortunately, management flat-footedness (in the form of no small amount of arrogance, among other things) meant that although the LinguaForum hagwon chain ceased to exist (the parent publishing house remains), only about half the teachers and barely 10% of the student body tranferred over. I have the unconfirmed suspicion that the failed deal was bad, financially, for LBridge.
All of that, combined with the slumping economy (although, as I've mentioned before, South Korea, relative to other OECD countries, is doing quite well) and an intensely competitive hagwon business environment with lots of consolidation, cutthroat student poaching, etc., means that LBridge now finds itself it somewhat dire straits. Yesterday, it was announced to staff that there will be layoffs, campus closings, and shrinking teaching "teams" in the coming Summer term. I don't think I'm directly affected… my current understanding is that they're going to let my contract run out as written to the end of August. But end-of-contract "bonuses" are imperiled, apparently, and Korean staff (i.e. those who are working here as Korean citizens rather than under work visas, regardless of native language) are deeply and justifiably concerned about job security.
Enrollments have definitely been shrinking. There have been lots of complaints about the difficulty of the curriculum – yet, last fall, there were complaints about the lightness of it. To keep changing the curriculum in response to the tides of parental sentiment is a little bit of an unwinnable battle. You've got to adopt a curriculum and methodology, and stick with it. LBridge definitely has proven poor at this.
Mostly, however, it seems to me that success in the hagwon biz is about building and managing relationships with kids and, of course, parents. And my gut feeling is that LBridge is TERRIBLE at this. Unlike Tomorrow School or LinguaForum, LBridge leaves the major portion of the parent-relationship-management problem to the front-line teachers. While philosophically this may be a good idea, the fact that the management provides precisely zero training or support to the teachers who they throw into this role means that LBridge sets itself up for failure. The fact is that they basically treat their staff like wage-slaves rather than professionals (i.e. things like a lack of respect, a distrust of teachers' abilities to manage their own time, etc.), yet they think they're being clever by having their front-line people be the ones in charge of interacting with parents. You can see the mistake, here, I think. The parents, after all, are the paying customers. You don't want disgruntled and untrained staff being the ones who manage your customer relationships.
To connect this crisis to a business I know fairly well, it is like those tech companies that rely on their technical people to manage customer relationships. This, as we all know, rarely works. You need customer-relationship-management specialists – commonly known as salespeople. That's how for-profit business works. Far be it from me to parrot the likes of the Harvard Business Review, but it seems to me self-evident that in successful companies, intelligent and hard-working salespeople and marketers drive quality and innovation, and then the technical people make it happen behind the scenes, where they can murmur and grumble to their hearts' content. In the hagwon biz, that means having dedicated "parent-relationship-management" specialists, I think.
Danny, the owner of the Tomorrow School, understood this intuitively: he did almost nothing but focus on interacting with the parents, as far as I could tell, leaving the day-to-day management of his business to his wife Diana, and the classroom execution was left to the teachers from whom he expected a great deal of self-reliance and innovation (which is to say that, despite my complaints at the time – see my blog from a year and a half ago – he actually treated his workers more professionally than I've seen at LBridge… we always see things more clearly in retrospect, right?).