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11:05am EDT December 17, 2003
The adult education business is booming, says ITT Educational Services Inc. Chairman and CEO Rene Champagne.

"We posted a very aggressive enrollment increase of 21 percent in the third quarter," he says.

Champagne attributes ITT's success to its size, depth of programs and customer service.

"We have 76 colleges in 29 states," he says. "That means we are reaching a significant percentage of the American population."

ITT Technical Institutes offers technology-related degrees but has broadened its scope to include an online MBA program. ITT has also added degree programs in design and drafting, and electronics.

Champagne says his biggest operational challenge is staffing, a major reason ITT isn't expanding at a faster rate. He says there are numerous markets that are right for new schools, but hiring and training staff significantly slows the process.

"Each candidate talks with multiple people, and no one person makes the hiring decision," Champagne says.

The process is slow, but it ensures a quality staff, he says.

ITT plans to add three to four campuses a year, primarily in high population centers. Champagne talked with Smart Business about the company's business model and its plans for growth.


What do you feel makes the company successful and gives it a competitive edge?


Several things. We have a large number of colleges. ... Our array of programs and depth of courses offered are attractive to potential students. And we deliver education in a convenient and flexible manner.

Our typical student is a working adult between 20 and 35 years old, maintaining a full-time job. We require students to attend just three days a week, four hours each day. We also offer small class sizes and a student-teacher ratio of about 25:1, so our students get more personal attention.

We also offer other services that assist the student. If the student needs help to find employment, we have career services that helps. Our graduate work placement rates are attractive. In 2002 ,73 percent of graduates were placed in technology-oriented jobs.

The slower economy has had an effect on that number. In 2000, we were as high as 90 percent, but we feel 73 percent is still very good.


What policies or initiatives have contributed the most to your growth?


We have three areas that contribute to our growth: quality, compliance and customer satisfaction. We try to bring quality into everything we do, from the furniture in the buildings to class presentations.

If we see a problem, it is quickly corrected. Education is not inexpensive, and we feel this is one way students can see their investments or justify the tuition.

And that carries into the people we hire. We hire well-qualified and trained people. We devote a lot of time and attention to recruiting and training people.

Quality is reflected in the content and method of delivery. The equipment used in the classroom is reflective of what is used in the employment market, so they are very well versed in it before becoming employed.

Post secondary education is very regulated by state accrediting commissions and congressional laws. We are governed by the Department of Education, and as a public company, we also follow the New York Stock Exchange and Securities and Exchange Commission rules and regulations. So compliance becomes of the utmost importance.

We have many groups that we consider our customers. Our primary customer is the student. The second customer group is the employer hiring our graduates. We have strong working relationships with employers, and we want to keep them happy.

Those are the areas that we work at on a daily basis. Every existing and new employee knows this philosophy. We survey our students every quarter and survey employers of graduates. We generally receive high marks.

If a survey turns up negative comments, we feel it is good to know and correct it before it blows up.


How do you choose campus locations?


We choose locations in metropolitan, high population centers. Generally, we choose cities with a population of 1 million or more.

We look at the demographics to see if our target market, the 20- to 35-year-olds, is growing or shrinking. We also look at the state and local regulations. It's important that we can accommodate them before putting up a new school.

We also look at what the employment environment is for potential graduates. We encourage students to relocate, but 75 percent prefer to stay local, so there do need to be career opportunities there. We do look at the competition, but there are few schools that offer the kind or quality of curriculum that we do, so if all the other factors are positive, competition would not cause us to avoid that location.


Are there plans to add new campuses in the next five years?


We intend to grow at the rate of three or four new campuses a year. Our ultimate objective is to increase from 76 locations to 200 or more. We know the locations we wish to be in; it just takes time to develop the staff for each location.

This year we opened a school in Dayton, and we're opening another in Minneapolis. In 2004, we're opening a location in Baltimore. Then we're looking at Kansas City, Mo., a second location in Atlanta, a location in Long Island, N.Y., and Landover, Md.


Do you plan to offer degrees in other academic areas?


As of September this year, we introduced a fully online master of business administration program, which has been very successful. Business is one arena for expansion for us.

We also started a school of electronics and design and drafting. But we'll never become a school that offers hundreds of degrees. We are seeking a much narrower market. We want to be a leader in the content we choose to offer. Health care and life sciences are growing career opportunities that we might turn our attention to as well.


A work force shortage is predicted by the end of this decade. How does ITT plan to help fill this gap?


We believe there will be a shortage, and it will be quite severe. This was caused due to the birth rate, which slowed remarkably following baby boomers. There was almost zero population growth in the 10 to 15 years following baby boomers.

When they retire, it will create dramatic shortages. We feel our degree programs will help train people to fill that gap.


What are your biggest operational challenges and how do you meet them?


Our single biggest challenge is in the form of a human resources need -- finding the right people to train. We look for people that are passionate about helping other people. Not everyone is cut out for the job. Finding the right people to staff our locations restricts how fast we can grow.

We have the money to enter new markets; we just don't have a bench of people ready to start work. We go through a rigorous screening process. Multiple people are required to interview and evaluate the individual. No one person makes the hiring decision.

It takes a lot of time and effort, but it produces the best result.

How to reach: ITT Educational Services Inc, www.ittesi.com