Kevin Modany brought ITT Educational Services through a crisis without abandoning his mission


Kevin Modany has a mission at ITT Educational Services Inc. His job is to increase access to high-quality, post-secondary education so that more people across the United States can learn a job skill or trade and become a more valuable member of society.
It’s a noble duty, but it’s only one part of his job. Because ITT is a publicly traded company, Modany also has a fiduciary responsibility to make sure shareholders see a return on their investment.
As the economy began to tank in late 2008, Modany found these two priorities to be in direct conflict with each other at the 9,800-employee educational institute.
“The credit markets basically froze up,” says Modany, the chairman, president and CEO at ITT. “As a result, our students’ access to private financing was virtually eliminated. So that created a real challenge for our organization. It’s not immediately clear what you do to address that situation when there isn’t financing available for your students.”
Modany had two choices, each of which carried its own set of problems.
“One of the alternatives was, ‘OK, if you can’t get financing, you can’t come to school,’” Modany says. “That’s not consistent with our mission. Another alternative was to use our own balance sheet to provide financing for our students.”
This second choice would allow more students to continue receiving an education. But it also had the potential to irritate some investors who had invested their hard-earned money in the $1.32 billion company and were counting on a good financial return.
“That’s not the most optimal solution if you’re purely looking at it from a financial perspective,” Modany says. “We’re not in the business of providing financing. But our mission is to increase access. So we were left with the choices of either abandoning the mission and having a more favorable financial result on the balance sheet or sticking with the mission and maybe the balance sheet is hampered somewhat.”
Modany was confident that his organization was strong enough to find a solution that would make both students and shareholders happy.
“There should be alignment of the mission and that ultimate goal,” Modany says. “Sometimes you have to sacrifice optimal results, but it shouldn’t put you in a position where you have to sacrifice survivability.”