Educational Testing Services, the longtime administrator of the SAT, offered voluntary buyouts to every U.S. employee with more than two years of service on Tuesday morning. It’s the second major round of job cuts within the past year at the standardized testing pioneer, which has struggled to maintain its foothold in the shrinking assessment space.

In a video sent to employees and obtained by Inside Higher Ed, CEO Amit Sevak said that while the organization is “cash flow positive for the first time in five years,” a number of revenue challenges have put it under financial strain.

“ETS is at an inflection point, one that requires critical decisions to ensure our sustainability,” he said.

That inflection point comes after the organization inked a new contract with the College Board this month, under which ETS will no longer administer the SAT, a College Board spokesperson confirmed. A fiscal year 2023 audit of ETS showed that 30 percent of the organization’s revenue, or about $300 million, came from its College Board contract alone.

The move also follows years of steep test-taker declines for its marquee product, the Graduate Record Examination (GRE).

The news comes less than a year after ETS laid off 6 percent of its global workforce—about 150 people—in September, the second such downsizing in Sevak’s two-year tenure. The company also downsized in 2021; in fact, this is ETS’s fifth round of job cuts in five years.

Sevak said that by offering voluntary severance agreements, ETS was “putting this decision in [employees’] hands.” He encouraged anyone “on the fence” about staying at ETS to take the buyout, adding that the package is “above market practice” and that officials “do not plan to offer something similar again.” He also said that the pace of change at the organization would be “intense,” and that those who stay would be expected to give “110 percent.”

“The purpose is to reduce our staff in the most gracious way we can,” Sevak said. “This is an opportunity.”

A longtime ETS employee who received the buyout offer told Inside Higher Ed that judging from messages sent by colleagues following the announcement, that’s not how staff see it.

“This is affecting people who raised their families alongside their work at ETS, people who have spent lifetimes working on a single product,” said the employee, who requested anonymity to avoid backlash from the company. “It’s been an hour since the news broke and folks are earnestly sharing self-harm and suicide-prevention hotlines.”

An ETS spokesperson confirmed the news in an email to Inside Higher Ed, saying the buyouts would allow officials to “make necessary changes to our organization.”

“Today’s announcement is one of the many ways ETS will continue to adapt and build momentum so that we can best serve the learners and customers that rely on our solutions well into the future,” the spokesperson wrote.

The anonymous ETS employee said that morale has been low across the company for a long time, an observation confirmed by internal employee satisfaction survey responses obtained by Inside Higher Ed in September. But the source said it’s gotten worse since the fall layoffs, and employees have been expecting more bad news for months.

“There are so many people who just want to do their jobs, for their work to improve, and that hasn’t happened,” the employee said. “We’ve all been kind of waiting for the bullet to hit the bone.”

Employees who received the offer have until July 11 to accept, and ETS will decide whether to approve those by July 25. The ETS spokesperson said there are over 2,000 U.S. employees but declined to answer questions from Inside Higher Ed about the number who received buyout offers or the company’s total expected layoffs.

“When this process of voluntary separation is over,” Sevak cautioned in the video, “it is likely that we may need to proceed with an involuntary layoff.”

‘A Perfect Storm’

ETS—the “largest private educational assessment organization in the world,” according to its website—owns and administers two of the largest exams in the U.S.: the Test of English as a Foreign Language (TOEFL), commonly taken by international students looking to study in the U.S., and the Graduate Record Examination (GRE), the standard post-baccalaureate exam.

But the organization has faced mounting market challenges for years, especially since the onset of the COVID-19 pandemic.

Those include the declining popularity of the GRE, whose customer base had nosedived due to the normalization of test-optional policies for grad programs. The GRE suffered a dramatic drop in test-takers after the pandemic, falling from 541,750 in 2017 to 341,574 in 2021; last May, ETS cut the time it took to complete the test in half in an effort to attract more customers.

Sevak also cited a “significant reduction in work from the College Board,” with whom ETS has had a decades-long partnership in administering the popular standardized exam. ETS’s previous contract with the College Board ends this month, a College Board spokesperson told Inside Higher Ed in September, and Sevak said that though they signed a new agreement, it is less lucrative than the previous one.

“While the new contract maintains a relationship, it is a significant reduction in scope,” he said.

A College Board spokesperson told Inside Higher Ed that although ETS is no longer the SAT administrator—a role it held for nearly two decades—their relationship will continue.

“We plan to continue working together to administer our AP and CLEP [College Level Examination] programs,” the spokesperson wrote in an email Tuesday afternoon. “With the SAT Suite’s full transition to digital on College Board’s Bluebook testing platform, we now develop and administer the SAT and PSAT-related assessments directly.”

In March, the College Board launched its new, digital-only SAT, a massive pivot for what remains the most popular standardized test in the country.

The testing industry is going through a period of turmoil and change. The ACT, the organization that runs its namesake test, was purchased by venture capital firm Nexus Capital Management in April. ACT, which struggled during the pandemic, laid off over 100 employees ahead of the acquisition.

Sevak said that as the assessment landscape continues to change, “inefficiencies” in ETS’s structure and business model have prevented them from adapting.

“If we do nothing, we will be left behind. In fact, we’ve been looking at backsliding into tens of millions of dollars in loss by 2025,” he continued. “It’s a perfect storm.”

A Skills-Based Pivot?

In April, ETS’s research institute released a report titled “Charting the Future of Assessment,” which concludes that opportunities for testing in traditional college admissions are limited and hamstrung by mounting challenges such as data security and the evolution of artificial intelligence.

The new frontier, the report declares, is skills assessment, certifications and credentials—and the biggest untapped consumer pool for assessment companies are adults interested in lifelong learning and continuous career development.

“Skills are the future currency,” the report says. Assessment companies, it goes on to assert, can be trusted just as much as an accredited university or employer to identify those skills and convert them into hard cash on the job market.

“A variety of certification sources, which will include universities, but also corporate training and testing organizations, will be approximately equally valued in producing certifications and credentials,” the report says.

In the video announcing employee buyouts, Sevak stressed the need for ETS to be nimble and to adapt to rapidly changing market demands for educational assessments.

“We see our competitors operating with a much lower and more flexible cost base, and with highly automated models,” he said. “The way we’re structured is inhibiting us from swiftly pivoting to mitigate external threats such as AI, geopolitics, future customer needs, and the disruptive, competitive context [of testing].”

A number of recent acquisitions point to ETS’s venture into the skills-assessment space. In September, the company acquired Wheebox, an “assessment platform and proctoring solutions company,” to the tune of $12.2 million, according to the audit. Wheebox’s LinkedIn describes it as a “global work skill assessment firm. And in January, ETS acquired PSI, a “global leader in workforce certification and licensure” which administers, among other professional tests, the Federal Aviation Administration exams.



Source link

By admin

Malcare WordPress Security