A very dear friend recently lost his job at Universal Technical Institute (UTI). My friend worked hard for years for UTI, often giving up family time to help UTI. He has 3 kids. He loved UTI, or at least the UTI that could be. He definitely did not love the UTI that was. I want to share the outrageous things I have discovered while trying to help a friend understand why they were fired. After discovering the things I discovered I want to ask the Board of Directors what they intend to do to reverse the downward spiral the company is in that caused my friend and hundreds others to lose their job. I doubt I would be invited to a board meeting so my best hope is that with your help they will somehow see this and perhaps jobs can be saved. What motivated me as a stay at home mom is that I listened for months as he would say the company is totally mismanaged. I decided to look for myself and see if I could view the problem from an objective place. I have watched in sadness as many of his coworkers have lost their jobs over the past 4 years. The company says it is not their fault. If you listen to Kim McWaters on the quarterly calls she repeatedly says the problems are caused by external headwinds and government regulation. She repeated this excuse for 12 quarterly reports in a row. That’s 3 straight years of blaming something else for your failures. Sounds like my kids. External headwinds and government regulation is partially true, but not entirely true. My research shows many schools have gotten smaller in the last 4 years. But more than a few are starting to grow again. This made me wonder if the problems are more than just external headwinds. Based on what I discovered I now have serious doubts. In my research I began to notice many schools showing signs of recovering while UTI continued to decline. I have come to the conclusion that UTI is horrifically and flat-out mind bogglingly mismanaged. My friend has been saying for over a year now that he would be let go soon. Not because he wasn’t doing his job but because the leaders at UTI are ineffective. I started asking questions several months ago in the hopes I could better understand why my friend would get fired and the executives at UTI would get pay raises and promotions. Google and chat boards and disillusioned employees are wonderful things if you want to get to the heart of a problem. UTI’s main competitors, Wyotech and Lincoln Tech are shuttering schools because they too have been mismanaged and perhaps even engaged in criminal activity. Since UTI is the leader in automotive training these closings should result in a boost in students and therefore profit. UTI got neither more students nor profits from fewer competitors. If Burger King and Wendy’s were closing locations one could expect McDonalds to benefit from that right? Shockingly UTI student population is around 2004-2005 levels. The company has, astoundingly, gone backwards 10 years in the time span of 4. I want you to conduct your own research. Do not take my word for it. The leading for-profit schools in Nursing, Cosmetology, Massage, Welding, Aircraft Mechanics, IT, and many other niche trades are all showing growth. Grand Canyon University, a for-profit school less than 20 miles from UTI, is experiencing double digit student growth. Spending time on Google will show you hundreds of for-profit schools that have increasing enrollments. As you read this you might be compelled to suggest that UTI cannot be compared to these other schools. If you feel that way you would be wrong. These schools have all faced the same economic headwinds and regulatory challenges that have been mentioned as the main driver for UTI’s failure for the past 14 quarters. These schools also offer unique niche type higher educational programs. So why or how did these schools achieve population growth when UTI went backwards to 2004 levels? The other schools are growing because they have the right leaders. UTI is contracting because they have the wrong leaders.If you follow Warren Buffet you understand one of his strategies when he buys companies is that he buys the Management Team.I decided to do some research on UTI’s leadership team. The bottom line is the leadership of UTI has failed to lead. I will share the words of many UTI employees. These summaries are not my words; they came directly from Google, chat rooms, and conversations with current or former employees. SALES-Kenneth Cranston The leader of the Sales division has never worked in a college admissions division. He is rumored to have gotten the position because he was recommended by Roger Penske. His sales staff claims he is never at work. He allegedly works from 10 am to 3 pm Monday through Thursday. His favorite topics are that he loves the job because he gets to frequently leave early to watch his sons play baseball. He routinely discusses how he cannot be fired because he has a contract. He is last to arrive and first to leave every day. I could not find a single published positive comment about his leadership, strategies, or commitment to improving company outcomes. Incredibly, under his leadership, he has single handedly reduced the student population by over 30%. This reflects a decline of hundreds of millions of dollars in revenue. It says something about his character that he has not resigned after shockingly poor performance. It says even more that McWaters or the board hasn’t fired him. Why is that? His leadership style is described as disconnected, uninspiring, and technically incompetent. His personality style is described as lifeless, boring, and dull. Coworkers say he lacks energy, passion, enthusiasm, and innovation. How can the leader of sales lack passion and energy? This defies logic. His very personality makes him unqualified for the position. Does McWaters or the board recognize that UTI performed unbelievably better with Cranston’s predecessor? Does the board need any more information to recognize that it is time for a change? The questions that repeatedly came up from nearly everyone I talked to were: Why is a person with zero college admissions experience in charge of the sales division? Why is he still employed with a 100% 4-year track record of failure in every sales KPI the school has? He has singlehandedly caused the termination of hundreds of employees, and tanked shareholder investments. Any other company would have fired him after 6 months on the job when he failed to produce a single actionable strategy. Operations-Sherrell Smith This is a baffling choice to lead Operations. Researching 10 years of data does not show any periods of positive measurable outcomes, ironically, except for when Smith wasn’t with UTI. During the period without Smith, UTI had record-setting operational performance. Tom Riggs was in charge then. Isn’t it time to bring him back? Current employees shared disturbing comments. Again, these are comments made by others and I do not know if they are true. But, true or not, if this is the perception of the senior operational leader then the board should immediately investigate. According to a current UTI employee, Mr. Smith’s departure in 2009 was the result of allegedly physically threatening another UTI employee. If that is true in any circumstance he should have never been allowed to return. If true,shame on the entire board of Directors and on Ms McWaters for rehiring him. In another incident shared by a current employee, Mr. Smith’s wife, a VP at UTI allegedly had a romantic affair with someone at UTI and Smith supposedly discovered the affair. Mrs. Smith showed to work soon after the alleged discovery with black eyes and busted lips. I found this incredulous and tried to see if police reports were filed to see if the alleged events were connected. I did not find any, which may mean the rumors are false. I did find, however, a restraining order filed against a person named Sherrell Smith during divorce proceedings. Certainly the board will want to investigate these rumors before someone else does and a scandal further impacts more jobs and the stock price. Given the current climate on domestic and workplace violence, there should be zero tolerance on any hints of violence whatsoever. Beyond the rumors, there are some things to factually consider. UTI has had at least one round of staff layoffs every year that Smith was in charge of Operations. When asked to name any accomplishments of Smith’s not a single person could name even one. Under Smith’s leadership, UTI has not improved. It has continued to perform poorly. Does the board recognize that the company performed better with Smith’s predecessor? The questions that repeatedly came up from nearly everyone I talked to were: Why is he running operations? Why was he brought back? How did the board allow him to return? Has he produced a single actionable strategy and if so what is it? Marketing There is no polite way to say this. This division is a disaster. While advertising costs h
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Isn't the board of directors required to look into these issues? Don't they need to be responsible to stock holders. Isn't this why they receive obscene amounts of money?
Maybe it is time the teachers become a union to help us with bad management. I hate unions but maybe it is what we need to back us up.
I don't understand. Less than a year ago Kim came to our campus and said that UTI has no debt, 100 million in the bank and was looking good. Did she lie to us then, is she lying now or did this current management team drive us into this this situation in such a short amount of time. How can they take away the last match on the 401K and Kim still pull 2.5 million out of the company last year? If the company is failing shouldn't the ones who put us in this situation suffer first? All I have done last year is work my butt off to educate our students and I received an 11 cent an hour raise. KIM TOOK HOME 2.5 MILLION DOLLARS!!!!! What is she going to say to St. Peter at the end of her life????
We are constantly told that if we can not contact a graduate or they will not respond back that we are to assume that 9 out of 10 of them found jobs in the automotive industry. This is why Ranchs numbers are so high.
UTI's CEO is a University of Phoenix grad.
I am from Corinthian colleges and yes there was illegal activity and corruption. Be warned that this scam the for profits have been running is over. If you find a job take it. It will only get worse.
Wow, that's a big and long post. Heavy stuff. Not trying to put you down but this is crazy.
The pattern here is obvious, greed and arrogance. This is common in big business and easily spotted by the workers. Greed is simply asking for increases every year, year after year,regardless of the environment. If profit can be maintained by letting a 'few' people go then so be it. We all saw this happen when many organisations were giving raises and bonuses to executives and workers were let go.
The arrogance is when you think you are number one and no one will up-set that. So just sit back and rake in the cash!
There is a lot of profit in for profit education. You can use it to build your own castle or you can use it to help the organisation grow and better help "change lives". UTI is building castles.