COO Daryl Dixon notes, "There are kids who literally grow up in our system." Nobel's schools are open 12 hours a day and nearly 12 months a year, running summer schools and camps in addition to the regular academic program. That not only adds to the top line but raises the profile of a Nobel school all the more as a fixture in the local community.
And that ties back in to the company's goal of keeping corporate overhead low. By attracting students at an early age, Nobel can theoretically keep them as "customers" for more years. That reduces the cost of the average "sale." In other words, low student turnover means the company can spend less on marketing to replace the students it does lose.
Jack Clegg's third key number is school personnel costs as a percentage of tuition. Clegg considers any school where that figure is below 50% to be well run. Nobel's number is currently around 45%. That signals that teacher turnover, a chronic headache in education, is at acceptable levels, which leads to lower corporate expenses -- G&A -- related to recruiting.
According to Nobel, the total cost for its nonteaching support staff is only 20% of tuition, or roughly 40% of the comparable public-school figure. By clustering its schools, Nobel is able to deploy one maintenance worker to cover four schools. That varies from the public-school model, in which maintenance workers might be assigned to one school, waiting for emergencies.
Nobel keeps personnel costs in line in another way. It offers its teachers longevity-based incentive programs, including multiyear contracts, broad-based career paths, and tuition subsidies for teachers' children the longer the teachers have been with Nobel. Those programs help keep turnover and recruiting costs down.
Dixon says smaller classes give teachers at Nobel the flexibility to innovate in the classroom. "We hire extremely experienced public-school teachers," he says. They typically take a 10% to 15% pay cut and accept a leaner benefits package in return for relative autonomy. "There's a high degree of frustration over what they can and cannot do in the [public-school] classroom," says Dixon.
Clegg says that none of that would be possible without the adaptation of strict business controls. "We are really planners," he says. "We put a lot of time and effort into true strategic planning." Every year, Nobel managers go on a four-day retreat and return with a very detailed plan for the coming year. "That's my road map," says Clegg. "I have to know where I'm going."
As a result, the company is always able to measure performance on a school-by-school basis, comparing it against the plan or against the prior year's numbers. "My philosophy is that you work within the month and not try to justify things after the month is over," says Clegg.
He gives his managers no more than three or four goals to hit for a given year. If they have too much to worry about, nothing will get done well, and the company won't be able to manage its growth.
Clegg couples his sense of how the business is doing at any moment with an eye for future opportunities. For him, the litmus test is how easily a concept can be replicated. "For something to really work, we always need to be able to roll it out," he says. Currently, Nobel is testing the waters with charter schools, an arena it has just entered with the school in Philadelphia and two in Phoenix. Clegg wants to ensure that he understands how charter schools -- which are public -- operate before he jumps into the segment with both feet.
Asked how he can juggle so many initiatives, Clegg readily replies: "Our business is not that complex. It's all about cost control." Spoken like a man who once manufactured trash compactors. But then again, maybe there is more to Jack Clegg, hard-nosed entrepreneur, than meets the eye. He has given presentations to World Bank officials and visiting dignitaries from China on how the Nobel model works. He has traveled as far afield as Africa to explain his philosophy at the invitation of curious educators. And he has even walked right into the lions' dens, speaking at such education establishments as Columbia Teachers' College.
For Jack Clegg, the bottom line is, well, the bottom line -- and so far it appears to be healthy.
Edward O. Welles is a senior feature writer at Inc.
The Company
Nobel Learning Communities Inc., based in Media, Pa.
Business: Operates 162 schools in 15 states. The company has recently entered the specialty-high-school and charter-school markets
Financial summary: For fiscal year 2000, sales were $127 million; net earnings were $2.5 million, up 56%
