Pearson

Pearson is the world’s biggest educational company and a strong advocate of market-driven education reform.

It is also the world's leading book publisher.

Headquartered in London, it has 40,000 employees in 80 countries, although Pearson generates approximately 60% of its sales in North America. In 2014, it had revenues of $8.2 billion.

Research by ActionAid on company use of tax havens has shown that Pearson’s group structure includes 90 subsidiaries in recognised tax havens.

Pearson education business

Pearson provides a range of education products and services to institutions - schools, colleges and universities – and direct to individual learners, the 'retail' side of the business. It also has a 'wholesale' business selling education products and services to government, such as testing services and examinations, and the management of education data.

It is organised into three main business groupings: Pearson School, Pearson Higher Education and Pearson Professional.

Pearson's reach in schools

Pearson's publishes textbooks and digital technologies for teachers and students across school ages. Its brands include: Heinemann, Longman, BBC Active and Bug Club.

It also provides a huge percentage of the world's exams and tests, as well as practice assessments and online tutoring services aligned to tests. For example, Pearson owns Edexcel, which is the UK's largest and only for-profit awarding body. In the US, it produces standardised tests aligned with common core academic standards, and with the purchase of National Computer Systems in 2000, became the leading provider of test-scoring services with control of an estimated 60% of the North American testing market.

It also provides assessments for teacher certification and teacher training around the world, as well as whole 'school Improvement services'.

...too far?

Pearson's enormous reach in the schools market, particularly in the US, and the potential for conflicts of interests, have led to criticism.

As one US observer put it: 'Pearson has it all -- and all of it has a price. For statewide testing in Texas alone, the company holds a five-year contract worth nearly $500 million to create and administer exams. If students should fail those tests, Pearson offers a series of remedial-learning products to help them pass. Meanwhile, kids are likely to use textbooks from Pearson-owned publishing houses. Students who want to take virtual classes may well find themselves in a course subcontracted to Pearson. And if the student drops out, Pearson partners with the American Council on Education to offer the GED exam [high school equivalency credential] for a profit.'

Prominent education historian, Diane Ravitch has accused Pearson of 'acting as a quasi-government agency'. 'But it is not a quasi-government agency,' she said. 'It is a business that sells products and services.'

'What part of the field of education does Pearson not manage? At what point do conflicts of interest arise? Is it acting in the best interests of students, of the nation, or of its own business? These are questions that must be raised and answered,' said Ravitch.

Pushing data-driven, digital learning

Pearson is a vocal lobbyist and large investor in technology in education. It believes:

'The future of learning is digital, personal and driven by data – and that it’s pretty much here already. We believe learning happens anywhere and everywhere, so we can’t focus all our efforts on the classroom. We believe literacy today is as much about code as it is learning to read and write.'

Pearson claims to have invested over $9bn in the digitisation and what it calls ‘creative destruction’ of education. 'By this I mean we’re intentionally tearing down an outdated, industrial model of learning and replacing it with more personalized and connected experiences for each student,' said Pearson Education's North American chief, Will Ethridge.

The company earns its revenue from the sale of digital content and online learning tools; student and teacher testing programs and services; data management systems, virtual schools and more.

It has achieved this digital shift by buying up education technology businesses and through partnerships with leading edtech firms. For example, it provides 'adaptive learning technology in partnership with Knewton - adaptive learning is where data and analytics are used to 'personalise' content, so that pupils can learn at their own pace. Another partnership it has entered into is with Apple, which sells iPads to schools preloaded with Pearson content (see controversy below).

Pearson digital education products and services include:

• Power School (www.powerschool.com): web-based student information system. It allows teachers to track pupils progress, as well as things like attendance and standards, and parents and students to monitor how well they are doing.
• Schoolnet (www.schoolnet.com): allows teachers to build and administer tests and collect data on student progress
• AIMSweb: helps teachers spot students needing additional help
• Fronter: a 'learning platform' designed to allow pupils to to learn 'whenever and wherever they choose'. Through it, pupils can: submit work, communicate with their teachers, and review personal study plans.
• TutorVista: provides online tutoring, homework help, test prep.

• Connections Education (www.connectionseducation.com): In 2011 Pearson bought Connections Education, a virtual public schooling provider. The deal made Pearson the second-largest operator of virtual schools in the US. As Tom Vander Ark commented, it signalled 'a more rapid move into school management than was anticipated' from Pearson. 'Historically, the line between supporting and operating schools has been one they did not want to cross given the special venom for private enterprise when it takes outcome responsibility,' he noted. In other words, Pearson knows the reputational risk from for-profit companies being fully responsible for pupils' education - when it merely supplies the materials and tests, the school can be blamed for poor standards.

Pearson also supports the development of edtech businesses through:

• Learn Capital: Pearson is the biggest partner in this US education venture capital firm that invests in education technology startups.
• 'Pearson Catalyst for Education' (catalyst.pearson.com) is an accelerator programme run by Pearson that matches edtech startups with Pearson brands to deliver pilot programs.

Selling private schooling to the poor

Over the past five years Pearson has grown its education in business emerging, fast growing economies. It has achieved this by buying companies in the space, such as the Chinese English language test preparation provider Global Education and Technology Group (acquired 2011), and Grupo Multi, Brazil’s largest network of adult English language schools (acquired 2013).

Its most significant investments, however, are in what have been dubbed low-cost, or low-fee private school chains.

Bridge International Academies

Bridge International Academies (BIA; www.bridgeinternationalacademies.com) claims to be the world’s largest chain of primary and pre-primary schools delivering low-cost private schooling across Kenya and Uganda.

The key to BIA’s rapid growth is the standardisation of its operating model; the company has developed an 'academy-in-a-box' model, which is reliant on the use of technology in both the running of the school and teaching: a single manager runs the school with all back office processes automated via a smartphone application; teaching is delivered via a scripted curriculum with everything from the delivery of lessons, to testing and pupil attendance tracked by headquarters via the use of teacher tablets.Teachers (all high school graduates) are provided with five weeks training before entering classrooms.

BIA was founded in 2009 with a $1.8 million investment from the Omidyar Network (founded by eBay founder Pierre Omidyar). It receives further funding and support from: the UK's Department for International Development (DFID); International Finance Corporation of the World Bank; Overseas Private Investment Corporation (OPIC; US government investment); Bill Gates; Mark Zuckerberg; Novastar Ventures; Khosla ventures; and Pearson, which invested in Bridge via the Learn Capital fund (see above).

President of the World Bank, Jim Yong Kim, praised Bridge in a recent speech for using new technology to help transform educational outcomes: 'Bridge International Academies uses software and tablets in schools that teach over 100,000 students in Kenya and Uganda. After about two years, students’ average scores for reading and math have risen high above their public school peers. The cost per student at Bridge Academies is just $6 dollars a month.' However, as a group of 100 civil society organisations pointed out in protest: Bridge provides technology only for teachers (as a way of reducing the need for qualified teachers and costs); the test scores cited were from a study financed by the company itself; and finally fees vary by grade, and the $6 mentioned in the speech is the lowest fee charged (Bridge also charges for exams, uniforms, and other expenses). In reality, costs per child range from $9 to $13 a month (plus an additional $7 per month per child for food).

Private schools damage the public good

Many in education and international development have criticised the model of low-cost private schooling, or the type offered by Bridge. They argue that while it is understandable that parents want to send their children to private schools, often for lack of alternatives, it is poor public policy to promote them. Education privatisation increases inequality, provides no learning gains, and de-professionalises teachers. As Kishore Singh, the UN special rapporteur on the right to education writes:

'The cost of privatising education lies not just with school fees but also with the damage done to the public good. Fees, however small, hit the poorest and most vulnerable hardest. Sometimes, this means the oldest son receives an education while daughters stay at home. Inequalities in society grow when the poorest are excluded... The international development agenda must aim to eliminate private schools, not champion them.'

Pearson, however, sees low-fee private schools as a solution to an unmet need, and, more significantly, an opportunity to profit.

Pearson Affordable Learning Fund

Pearson launched the 'Pearson Affordable Learning Fund' (PALF; www.affordable-learning.com) in 2012 as a for-profit venture fund to invest in low-cost private schooling in emerging economies. The fund makes investments in for-profit companies 'to meet the demand for affordable education across the developing world,' it states. With an initial investment from Pearson of $15m, it is chaired by Pearson's Michael Barber and managed by Katelyn Donnelly.

PALF is part of Pearson’s business strategy of looking for and venturing into new markets and uncovering new market opportunities, which in the case of PALF, is the need and ambition of the poor in developing countries to give their children a good education. Pearson argues that access to education and student achievement represent a major challenge for education systems in developing countries, and that the public sector alone is not sufficient to tackle the problem. It will require a joint effort from both governments and the private sector, it says. Yet, as academic Stephen Ball notes, as well as having a social aim, the creation of PALF is a 'very decisive business commitment to education for the poor as a profit opportunity... and healthy returns on the fund’s investments are anticipated.'

To date, PALF's investments include:

• Omega Schools, a chain of Low Fee Private Schools operating in Ghana co-founded in 2009 by James Tooley. It operates on a ‘school-in-a-box’ model, allowing it to replicate more widely. The model involves the basic construction of a 12-classroom building, along with the initial materials and resources needed to run the private 'storefront' school. Beyond the start-up costs, the schools are financed on a the daily-fee – or ‘pay-as-you- learn’ – payment system.
• Affordable Private Education Centres, a chain of low-cost secondary schools in the Philippines.
• eAdvance, a company that manages the first South African blended learning low fee school chain called Spark schools.

It has also invested in broader, non-teacher based, commercial education ‘solutions’, including education technology business, such as:

• Zaya Learning Labs, a provider of blended (online) learning experiences to government and low-fee private schools in India.
• Avanti Learning Centres, a provider in India of college entrance exam preparation for students of low-income families based on peer-to-peer learning and self-study,

Due to limited investment opportunities in emerging markets, Pearson is also creating and developing strong 'enterprise ecosystems' in countries, and supporting earlier stage edu-businesses.

• Edupreneurs is a Pearson incubator business programme run in partnership with Village Capital operating in India and across Africa.

Lobbying for education reform

Pearson's shift from being mainly a publishing and media company to a global edu-business, has been accompanied by an increase in lobbying and its involvement in policy debates.

As Alice Hunt, director of communications for Pearson's non-US operations explained in 2012:

'That [shift] created in us an awareness of education debates around the world and the need to contribute to them. We see our contribution to these debates as a really important part of the overall discussion, which embraces governments, other policymakers, civil society groups and so on.'

Stephen Ball, professor of the sociology of education at London University's Institute of Education and an expert on education business, notes:

'I think it's related to an overall strategy: they want to offer products and services in all areas of school practice: assessment, pedagogy, curriculum and management, and they want to create the possibility for that through policy work. They want to have indirect influence in policy to create opportunities for business expansion. It's a very well thought-out business strategy. I think we should be thinking about it, because a lot of it is going unnoticed.'

Pearson has implemented a sophisticated, global lobbying operation. It encompasses a number of different strategies, including:

• Building relationships with policy-makers at all levels.
• Lobbying through third parties, such as think tanks and pupils
• Producing research to develop a supportive evidence-base
• Sponsorship of education policy debates

Close relations with UK government

In the UK, Pearson has close ties to a number of government departments, developed through informal lobbying, which is helped by the movement of people between Pearson and government (the so-called revolving door); and through more transparent, official relationships.

What is obvious, is that the UK government and Pearson have a number of mutual interests and, more broadly, in growing the market for educational products and services around the world.

Mutual interest in market reform of education in developing countries

• Since 2011, Pearson's Michael Barber has been the UK Department for International Development's (DFID) 'special representative in Pakistan. Barber has been drafted in (unpaid) to work on the reform of Pakistan's education sector with ex-McKinsey & Company colleague Katelyn Donnelly. Donnelly has acted as an adviser to the Punjab Education Reform Roadmap, launched in 2011, which is DFID’s flagship education project in Pakistan. Barber works with the Chief Minister of Punjab to provide strategic advice and political momentum to the Roadmap. One of the aims of the reforms is to expand low cost private schooling in the country. Pearson stated, however, that it has an explicit agreement with DFID to ensure that his role does not advantage Pearson, and that Pearson’s Affordable Learning Fund has no current investment in Pakistan and has made a point of not investing, to avoid a conflict of interest.

• DFID and Pearson have a shared interest in Bridge International Academies (see above). DFID’s Impact Fund – a 13 year project worth £75 million managed by CDC, DFID’s ‘principal mechanism for leveraging private sector investment’ in developing countries - invested in the venture fund, Novastar which has recently invested in Bridge International Academies. Pearson invested in Bridge via the Learn Capital fund (see above).

• DFID’s flagship education project, on which it is spending a massive £355 million during 2011-17, is the 'Girl’s Education Challenge', which is being managed by PwC on the department's behalf. Under the Girls Education Challenge, DFID is funding a project in Tanzania and Zimbabwe involving a partnership between Pearson and Camfed, an NGO which provides funds for children to attend school. Pearson will train and certify 'Learner Guides', young women who have graduated from secondary school with Camfed’s support.

• Pearson is also a member of the Funders Platform of the US based Centre for Education Innovations, a body set up and funded by DFID. This Funders Platform ‘allows donors, foundations, companies and investors to share information on their non-state education policies and programmes in developing countries’.

• Pearson is leading a team charged with delivering DFID's 'Global Learning Programme', which is a project to teach international development and global issues in schools.

Mutual interest in selling the ‘Education UK’ brand abroad

The UK government's 'International Education Strategy' was launched from Pearson's London office in July 2013. The Strategy, jointly owned by the Department for Business, Innovation and Skills and the Department for Education, outlines the government's plans for capitalising on the export opportunities from international education.

Universities and Skills minister, David Willetts writes in the foreword:

'Quite rightly our education system is envied on many levels, stretching beyond our academic excellence. Other countries are attracted to the expertise that UK institutions and organisations can offer on governance models, on professional development and curricular design, on construction, on the international reputation of our qualifications and on management and finance. The attraction also extends to the innovative equipment and technology solutions that our educational suppliers are constantly developing.'

Welcoming the initiative, Pearson’s CEO John Fallon said that over the next twenty years, education will come to be seen as a one of the new global growth industries.

Pearson president Rod Bristow is also a member of the government's International Education Council, established at the same time with the remit to 'act as a champion and advocate for the ‘Education UK’ brand'; 'provide pragmatic leadership, co-ordination and strategic direction' to the government; and 'ensure effective communication and engagement with all parts of the sector, industry and government'

Lobbying local decision-makers in the US

The New York Times reported in 2011 that the Pearson Foundation, the (now defunct) nonprofit arm of Pearson, was paying to send school officials to international conferences where Pearson products were promoted and they met with Pearson executives.

Michael Winerip of the Times reports:

'In recent years, the Pearson Foundation has paid to send state education commissioners to meet with their international counterparts in London, Helsinki, Singapore and Rio de Janeiro. The commissioners stay in expensive hotels, like the Mandarin Oriental in Singapore. They spend several days meeting with educators in these places. They also meet with top executives from the commercial side of Pearson... Pearson would not say which state commissioners have gone on the trips, but of the 10 whom I was able to identify, at least seven oversee state education departments that have substantial contracts with Pearson.'

Pearson 'categorically refuted' any suggestion or implication that the arrangement was designed to enable Pearson to win contracts, and said that the trips are 'in pursuit of educational excellence'. Experts in tax law, quoted in a subsequent article, said that Pearson appears to be using its foundation to push its business interests. Another commentator compared the practice to pharmaceutical companies that run junkets for doctors or lobbyists who fly members of Congress to holiday getaways.

Criticism and protest

US

Pearson's level of involvement in state education in the US, particularly through testing, has become high-profile in recent weeks. Last month, hundreds of parents reportedly protested outside the firm's New York offices, unhappy at the company's $35m (£22m) contract to provide controversial high-stakes tests for the city's schools. A statement from the group ParentVoicesNY said the protest was about "the excessive power and influence the billion-dollar, for-profit company, Pearson, has over [New York City's] education department".

In an article on Pearson in the New York Times columnist Gail Collins described testing as a "huge corporate profit-centre", and seemed to call for a "pushback against education privatisation".

UK

AGM

Book publishing

It is the largest book publisher in the UK, India, Australia and New Zealand, and the second largest in the US and Canada. In 2003 it had sales of £4,048m ($7,246m) and operating profits of £490m ($877m). Marjorie Scardino has been CEO since 1997. Its headquarters today are at 80 Strand, the former Shell Mex House.

In January 2007 it was widely reported that plans are afoot for Pearson to be taken over by Kohlberg Kravis Roberts, which drove the shares to new 5-year highs.

Pearson has branched out into related services: testing and learning software for students of all ages; data for financial institutions; public information systems for government departments. The Financial Times is a subsidiary of Pearson PLC.

They also own the following publishing houses: Penguin, Dorling Kindersley, Scott Foresman, Prentice Hall, Addison Wesley and Longman. Pearson is listed on the London and New York stock exchanges (UK: PSON; NYSE: PSO) and in 2007 had sales of £4,218m ($8,394m) and an operating profit of £634m ($1,262m).

People

• Dennis Stevenson

Board of Directors

Glen Moreno, Chairman | Robin Freestone, Chief Financial Officer | David Bell, Director for People and Chairman of Pearson Inc | Will Ethridge, Chief Executive, North American Education | Rona Fairhead Chief Executive, Financial Times Group | John Makinson, Chairman and Chief Executive, Penguin

Former employees

• Marjorie Scardino, ex-Chief Executive

Affiliations

• Media Standards Trust
• Chime Communications Plc
• Brunswick Group
• Community Action Network
  • Lord Gibson, chairman of Pearson Longman, which owns the FT
• Centre for European Reform
• ERA
• Digital Learning Alliance
• Media CSR Forum
• PubAffairs Public Affairs Manager for Edexcel, part of Pearson plc. Before joining Edexcel she was the Corpora...
• Porter Novelli, client 2004
• Don Cruickshank Information and Entertainment division of Pearson plc (which included the Financial Times)
• Ditchley Foundation
  • Dr Glen R Moreno Chairman, Pearson plc.
• Unilever
  • John Makinson, Group Finance Director of Pearson plc
• Lord Cowdray of Pearson printing and banking company. Lazards was owned by the Pearson family, headed by Lord Cowdray.
• Greg Dyke former Chairman and Chief Executive at Pearson Television
• Open Europe
  • Lord Blakenham former Chairman, Pearson Plc

Lobbying firms

• Blue Rubicon

Former lobbying firms

• Weber Shandwick, until May 2014

Resources

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