School support teams and referral fees: Ethical or not?

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.