You may have seen a recent blog by our friend and colleague Nick, from Finnemore Consulting, entitled ‘What’s next for school support teams?’
It outlines a number of great ideas to ensure that support teams can evolve their businesses to become truly agnostic and independent partners to their schools. You can read the blog here.
The article made us think about the ethics of referral payments within this context.
Referral payments are nothing new in our industry, but when it comes to something as important as the school’s MIS, we wonder if they are actually ethical?
The question schools should ask is, does your MIS support centre receive a fee or payment of any kind for recommending you switch to an alternative system?
If they do, how confident are you that their advice is unbiased and that their recommendation of an MIS is the best system for the school rather than the one that pays them the most?
Schools are changing their management information systems more than any time in the past, and whilst we’re not suggesting anything untoward is going on, perhaps it’s a question worth asking your MIS support provider if they are recommending you change?
The principle of companies paying their partners a referral fee to persuade schools to switch suppliers is a grey area. On the one hand, it can be seen as a way to reward partners for their efforts in bringing in new business. It can also be seen as a way to give schools more options and to encourage competition among suppliers.
On the other hand, some people would argue that paying referral fees can be unethical. They suggest that it can create a conflict of interest for partners, who may be more likely to recommend a supplier that pays them a referral fee rather than one that does not, even if it is not the best option for the school. Additionally, they argue that it could drive up the cost of goods and services for schools, as suppliers may pass on the cost of the referral fees to their customers.
Ultimately, whether or not the principle of paying referral fees is right or wrong is a matter of opinion. There are valid arguments to be made on both sides of the issue.
Here are some additional things to consider:
- The size of the referral fee. A small referral fee is less likely to be seen as a conflict of interest than a large one.
- The transparency of the referral fee arrangement. Schools should be made aware of the fact that their partners may receive a referral fee if they switch suppliers.
- The quality of the goods or services offered by the supplier. Even if a supplier pays a referral fee, schools should still make sure that they are getting the best possible deal.
If you are considering switching suppliers, it is important to ask about, and to weigh the pros and cons of, the referral fee arrangement. You should also talk to other schools that have switched suppliers to get their feedback on the process and recommendations.
2 responses to “School support teams and referral fees: Ethical or not?”
Regarding referral or kickback fees, it’s important to understand who and what they are for, in this case, Management Information System (MIS) solutions in a Local Authority’s school setting. A referral fee generally rewards an individual or organisation for introducing a product or service. I believe the party receiving this fee should not be involved in the product’s delivery or ongoing support.
For Local Authority Traded Services that offer and support only one specific product, referral fees are generally not applicable. Any monetary incentives in such cases are likely to be based on volume licensing and specified within the commercial agreements between the service provider and the supplier.
However, when a Traded Service offers a range of MIS solutions, potential conflicts of interest may arise among competing suppliers seeking to gain or maintain market share within the Local Authority’s education estate. Traded Services must maintain an impartial and professionally ethical stance to mitigate concerns about unfair procurement practices.
If a Traded Service introduces a new supplier into its network, the incentives for making such a switch must be transparent. Importantly, these incentives should not include a referral fee or kickback for the educational institution or the service provider. Decisions to change suppliers should be solely based on the merit of the new solution and its suitability for the schools’ needs, ensuring a fair competitive landscape.
In my experience working with Traded Services, I have not noticed any form of Kickbacks or referrals, they operate to the high professional standards expected of them as a Public Sector organisation!!
Certainly gets you thinking. How ethical is it to pay any kind of referral fee to Local Authority teams? I’m not sure on this one…