I met a lady whom I’ll call “Ms. T”, who owned an English School for young children in an affluent section of Taipei. Upon meeting, she wanted me to dress up like Santa Claus, and help her attract customers. But after we got to know each other a little better, she forgot about Christmas and lamented her deeper woes to me. Ms. T talked about how much trouble it was to run her school, and how she wasn’t much of a businessman, so the topic turned to me helping her manage the school. I told her that I was not much of a businessman either, but that two heads are always better than one when making tough decisions. I appreciated the fact that she trusted me enough to discuss these things.
About a month later, Ms. T asked me to attend a training meeting to be a manager at her school. But when I met her at the school for the training, she had completely forgotten about our appointment. Instead, she was very busy and in a very bad mood. I tried to get a chance to sit her down and talk to her, but she was too agitated to listen to me. The environment at the school was extremely disorganized and confused, and after I monitored the situation, I saw that the school’s atmosphere was a reflection of Ms. T’s own poor leadership style. Then suddenly, she announced she had some personal errands that needed urgent attention, and she asked me to come along to help her. I was very suspicious at first, but I decided I would take my chances and go along with her.
While we were out, I learned that Ms. T was divorced and was at odds with various people in her life, including close family members. From the way she talked, it sounded like she was struggling to support herself, although from observation, she seemed to enjoy a rather affluent lifestyle. She also had a cute daughter named “B”, who was about three years old. That girl was so excited to see me, and I wondered if she had any male/father-figure in her life. While Ms. T was busy, little B and I shared a drink and I talked to her for a while.
Ms. T’s personal errands consumed most of the day, and after a while, I saw that I would not have any opportunity to talk with Ms. T about the school business, or my training, unless I stayed very late at her apartment. I didn’t want to do that, and I didn’t want to interrupt her personal business, so I just gathered myself together and made for the door. When Ms. T saw me getting ready to leave, she changed her priorities and asked me to go out to dinner with her and B. So we went to a hotpot restaurant, and over dinner, I talked to her for two and a half hours about her school, and how she could run her business better. Finally, the restaurant was closing, so we had to leave around midnight. B had fallen asleep in the adjacent booth, but Ms. T had written about ten pages of notes covering things she needed to do with the school. After this, she said I was a genius, and she said she was so confident about my management ability, that she wanted to make me the executive manager. But when I asked her about an offer, she refused to get specific, so I recognized her flattering statement as (1) a discreet appreciation, and (2) a cover of the fact that she hated the responsibilities of running this school.
A genius?!?!?!? In my opinion, I only told her some common sense – a few logistical requirements for her school to go smoothly. The major points of our discussion are described briefly as follows:
Reasons she gave for not registering her business (English school) with the government:1. She claimed that the owner/executive manager and the investors are able to make more money from the business if the business affairs are kept confidential.
2. Labor expenses are greatly reduced because employees can be hired for less than the minimum wages specified by law.
3. Avoid all responsibilities for employees (e.g. health insurance, workers compensation coverage, other contractual obligations)
4. Avoid paying taxes.
5. Avoid the publicity of financial records (the owner is not subject to burdensome audits).
6. Avoid legal responsibilities in the event of a disaster.
7. Avoid the trouble and expenses related to the changes required to obtain registration (building codes, fire and safety regulations, legally adherent contracts for employees, obtaining licenses and permits)
Reasons she gave for not being physically present at the school during hours of operation:1. Everytime she goes to the school, she spends all her time answering the phone, responding to e-mails, greeting customers, and covering gaps in the workers responsibility, which she says wastes her time and accomplishes nothing.
2. Whenever she arrives at school, the employees barrage her with all kinds of problems, which she cannot solve.
3. She doesn’t want to face the complaints of parents and customers.
4. She has “many other things” to do with her time.
Other problems that she mentioned:1. Domestic employees were irresponsible, especially, they fail to show up for work on time.
2. Foreign English teachers were neither willing to work full time, nor stay with her school for more than one year.
3. All employees have frequently quit after a short employment in order to travel, to visit family, to attend school, or to accept positions at competing schools.
4. Investors keep demanding financial reports and fiscal returns, but there are no profits, nor reports thereof, to disperse among them.
Other problems that I noticed:1. She gave herself a hefty salary of NT65,000/month, while workers quit on account of being underpaid, and the business was losing money overall.
2. After examining her books, I found that she was stalling investors while receiving a disproportionately greater amount of the earnings, frequently labeled as “salary” and “bonus”.
3. Her primary investor was her brother, who did not expect to be repaid ad hoc.
I indicated the following problems as being caused by her unregistered status:1. Time and money is wasted in hiring and training low-quality, short-term employees (who neither have a vested interest in developing a career at her company, nor are seeking to build a resume).
2. Unable to sponsor work permits and visas for foreign workers (English teachers)
3. Unable to attract and hire quality, long-term employees, (because of inability to sponsor work permits and visas, uncompetitive contracts/agreements, unreliability of work, and unsafe working conditions)
4. Unable to attract enough student enrollment to produce a profit (caused by an insecure environment, a poor corporate image and low-quality, short-term employees)
5. Unable to establish a respectable and trusted corporate image
6. Unable to advertise without drawing unwanted attention (from government agencies and better business bureaus)
7. Authorities keep coming to check the status of the business (adding to the trouble and stress of the owner, investors and employees)
8. Possible liability of tax evasion (NT$150,000 fine)
9. Possible liability of illegal worker status (NT$150,000 fine)
10. Unable to obtain quality business insurance (therefore, a possible risk of lawsuits from customers in the event of a disaster)
My Advice and Suggestions to her:1. Attract investors by being more transparent and paying them a certain percentage of the profits. Include a disclaimer in the agreement covering the event of a business loss. (Further credibility might be obtained by detailing the business plans here described.)
2. Invest in the changes required to obtain registration (building codes, fire and safety regulations, obtaining licenses and permits)
3. Formally register the business with the government.
4. Sponsor work permits and visas for foreign workers (English teachers).
5. Offer legally adherent and competitive contracts to encourage employee and customer loyalty.
6. The owner/executive manager should be physically present at the school for at least six hours every day the school is open. This will enhance employee efficiency, and increase customer security, satisfaction and loyalty.
7. The owner/executive manager should not have exclusive responsibility. Instead, daily duties should be executed by appropriate employees who are arranged in a hierarchy, and each assigned a delegation of responsibilities.
Results of Case Study:One year after I had helped Ms. T with her business, I got a call from her. She had finally got a license and registration for her school, and now she wanted to hire me to work for her part time. I thanked her but rejected the offer, because by that time, I had found a much better position. We had a long chat, and I found her business is doing much better than before, due to the advice I gave her. She now has three full-time foreign English teachers, who are very happy to work for her and have no intention of leaving. She had a flood of new enrollment after advertising, and there are more new students coming every semester. The overall quality of her employees is much higher, as is the general morale of the school. Ms. T said, "I'm much more happy with my job, and everyone else is happier too!" She also noticed that the more time she spent at the school, the less problems and complaints she received from employees and customers alike. But she still spent less than six hours a day at the school. For the first time since she started the school three years ago, her business was financially solvent, and she expected significant profits from now on. She also said she has since become interested in the Jews, because of their “business saavy”. (Funny, because I’m not Jewish.)
She said she wanted to see me on a regular basis again, because she realized that the advice I gave her a year ago was dead accurate. She was amazed that I could find the problems in her business right away, while it’s taken her the past entire year, just to see the problems that I saw immediately.
I’ve lived in Taiwan long enough to know that Ms. T’s former attitude about her business is a very common one among English school owners/executives. But from my perspective, Ms. T’s school is living proof to the people of Taiwan that an English school, or any kind of business, with a law-abiding, customer-oriented, western-style of management, can really work and compete here in Taiwan.