GMAT Tutor

Question

Has anyone done an atypical arrangement with a tutor? i.e. not on a per hour basis, but more on a performance basis?

The genesis of my question comes from the fact that I spent way too much money on a mediocre tutor that was very inefficient with our time (not that it's his fault), but I just want us both to have the same goal. Would be really curious if anyone has set up anything like this? Or if anyone is willing to set it up etc.?

AtlanticGMAT · Answer

Hi,

I think that your idea is interesting but  you are asking the tutor to take a risk on the student while the student takes no risk  (yes, there is the risk of not getting a good score). I think that you have to consider that a lot of score improvement comes from the student and not the tutor.  The tutor is a guide, an organizer, and a motivator.   At the end of the day the student has to put in a lot of work and analysis outside of sessions in order to improve. That said, it is  the responsibility of the tutor to manage time in sessions and to use that time efficiently to get as much learning across as possible.

You have to ask yourself a few questions:

1. Should a terrible/lazy/incompetent tutor be paid well just because the student is amazing and has a huge improvement?

2. Should an expert/contentious/hard working tutor be paid less because a student does not do the work necessary to improve?

3. How do you assess if a student is doing the work necessary?

At the end of the day some these factors are very hard to judge which is why tutors get paid for the hours that they put in and not for the score results. That said, a company that I work for does provide  bonuses for certain levels of improvements  but they are nothing that is making or breaking the bank. I would think that  in the long run that a tutor who does not foster good results is not going to be successful  in this field but there will always be plenty of people doing this for the short term who may or may not be up to the task.

A general suggestion: if you are not feeling a lot of value from your tutor talk to him/her about it. Maybe they don't understand exactly what you want out of the sessions. If that doesn't work then go ahead and try someone else. I know it is a tough marketplace to understand and it is hard to know who to choose and what criteria to use to choose them. It is also hard to judge your progress in the short-term. That said, I would try to  find someone who is not only an expert but really understands you and what your needs are.

Happy Studies,

HG.

PS: Another system I was thinking about was offering tutoring for no up front cost but for a percent of future earnings. Then, if you are a great tutor and helping people achieve you will share in their success and your goals are somewhat aligned. This could work because although you are taking a risk there is a possibility of a big upside for the tutor. So in the aggregate, even though will have plenty of non-pay offs, you should do well.

EMess51 · Answer

Thank you for the reply, it was very thoughtful. I know a pure performance based approach isn't in the tutor's best interest, however, having that be a large percent of their pay ensures that their goals are aligned. For example, I was thinking like $50/hour and $500 for (previously got 650) 30points improvement and maybe like $1000 for 50 points up and then like $200 for every 10 pts over 700. Again, don't quote me on any of this, I am just throwing out ideas that seem to be logical to me. If the tutor thinks that the student is incapable of achieving his desired score, then instead of wasting the students time this would force them to be more selective in who they tutor but more importantly honest. Tutors tend to just pat you on the back over and over again, which adds nothing to your score, which is all you really care about.

What do you think about the proposed structure??? All comments appreciated.

PS: As for the future earnings power portion of your reply...Anyone who had a decent job or any chance would never sign-up for an royalty on their own future earnings (or at least not anyone with successful careers pre-mba).

What do you think about the proposed structure??? All comments appreciated.

PS: As for the future earnings power portion of your reply...Anyone who had a decent job or any chance would never sign-up for an royalty on their own future earnings (or at least not anyone with successful careers pre-mba).

VeritasPrepRon · Answer

Hi EMess51, this is an interesting topic because I personally love hearing about how students I teach/tutor improve their scores. It's much more rewarding for a tutor to see their student go up by 50 or 100 or 200 points instead of stagnating at the same level. The problem with performance pay is that students are incentivized to not perform well. The per hour basis makes it so that students try and maximize their return in as little time as possible, which is good for both parties. The performance payscale encourages students to spend a lot of time with tutors and very little time on their own.

In my experience, I've often asked my students to memorize the multiplication table (huge time saver on the quant section) or know all the fractions up until 1/10, but the next session they cannot answer 7x8 or 9x12 in less than 10 seconds. If a financial advisor tells you to save 100$ per week and you don't do it, can you really penalize them because you didn't have 5,000$ at the end of the year? The students I tutor who do well are the ones who study on their own. As HerrGrau eloquently put "the tutor is a guide, an organizer, and a motivator". If you do a tutoring session on the 1st of the month and don't do any studying or tutoring for the next 3 weeks, the chances of you getting a good score aren't particularly high, but that isn't the responsibility of the tutor.

I personally agree that tutors should be incentivized by the performance of their pupil, but it's very hard to make that incentive significant without severaly penalizing the tutor. The way the market works, good tutors pick up more students and probably charge more money, whereas substandard tutors don't have (m)any students and charge less. HG's response above was completely on point: Students should try to find someone who's both an expert and in tune with their needs. Couldn't have put it any better myself.

Thanks!
-Ron

EMess51 · Answer

Ron I totally get where you both are coming from, which is why I mentioned a structure that is not 100% performance based, but rather probably closer to 50/50 perf vs hourly. I think if I could interview a room full of tutors all at the same time, then I could make a pretty good guess as to who would work well with me, however, since you meet them one at a time and they all get 750's+ and have had success with others the decision is a total stab in the dark. Obviously I know to look for big signs of them acting lazy, being tardy, etc. However, beyond that there is very little one can ascertain from the tutor, in terms of "how much do I think he can help me." All the tutors are probably smart, have had some experience, etc.

I agree that no tutor would sign up for a 100% performance based, however, why would a tutor not want to have a risk vs. reward pay structure if he/she is confident in their abilities. However, I understand that most of the responsiblity lies on the pupil (me). The problem lies with my last experience being super unorganized and extremely inefficient (i.e. I paid for way more hours of tutoring than I got in value). I would love it if someone shared in my success and I want them to get rewarded above and beyond the per hour level. I would hope to create a structure that a good tutor would make 25%+ more money on this structure, an average tutor would make the same and a poor tutor make 25% less than the normal per hour tutor. The specifics are less important and the money is less important to me than making sure they are incentivized to be EFFICIENT! Right now the incentive lies in the "I'll give you a little taste now, but save the best till next time" approach, which is the same as a psychologist. In my opinion I think it should be structured more like a mechanic (i.e. if they can get a 12 hour job done in 8 hours...they still get paid for 12, but if it takes 18 hours they still get paid for 12). What do you think? Anyone willing to set-up something more performance based or know anyone??

VeritasPrepRon · Answer

I understand where you're coming from as well and it's the same with anything in life: You can get great service from anyone (mechanic, handyman, GMAT tutor), so the best thing is to go by word of mouth whenever possible. I think the difference here is that you're not paying a mechanic to fix your car, you're paying a mechanic to teach you how to fix your car. If you give most tutors the GMAT and 4 hours, they'll get you back a 700-800 score. If you leave most tutors with you and 4 hours, can they teach you to get 700-800? Unlikely. The onus really is on the student because they're the ones writing the exam. If you want me to change your timing belt, I can get that done. If you want me to teach you how to change a timing belt, you'd better get a wrench

As for the performance-based tutoring, I'd love to give it a shot as an experiment if nothing else, but I am contractually obligated to decline. I'm sure someone would be interested, though!

EMess51 · Answer

Ron,

I understand and was using my metaphors to make my point simplistic. Maybe I should have use attorney vs mechanic so it doesn't get dumbed down too much. If I get in an accident and he doesn't win my case, then I pay him nothing! If he wins then he gets 25-33%. Touche with the wrench comment; however, the point remains that there is 0 incentive, besides obvious referral rewards from good word of mouth. On that same note, maybe a GMAT tutor is just really good at marketing and has a high functioning SEO (Search Engine Optimization) website, which I am sure is the case for several of the first links when someone types into Google "GMAT tutor."

If someone thinks that improving a 650 to 700 (50 points) will require 10 hours of tutor time at say $150/hr then why would they not want $75/hour and another $1000 if they get the desired score. One nets them $250 more. I don't really care about the money as much as I do the incentive structure. Incentive structure largely determines our actions. However, I understand that every 1 hour of tutor time may come with 10x more personal hours of studying...I just can't stomach having another inefficient tutor (I would rather pay more for my structure and be confident in what I am getting). Anyone intersted in some sort of arrangement? I know it is a stretch, but I am open to suggestions.

AtlanticGMAT · Answer

Great discussion going on over here. Just a quick reply between sessions here.

1. The difference between the lawyer and the tutor is that in the personal injury case (I'm assuming that this is the type of case that we are talking about) the client doesn't need to do anything. The case is almost completely in the hands of the lawyer. In the tutor/student scenario the tutor can do a great job but the student could have some test anxiety which hurts the score. The tutor shouldn't be punished for that.

2. Also, in the lawyer/client scenario the lawyer has the potential to get a large portion of the expected value of the proposition. If you were offering a portion of the expected value that you will get from an amazing GMAT score (some percentage of 7 figures) then you might find a lot of tutors interested in taking up the case:)

I still think that this discussion is worthwhile. And there is a lot to think about here. I'll try to check in later or tomorrow to address more of what has been said and maybe to add more thoughts.

HG.

EMess51 · Answer

I am lost now! This doesn't seem to address anything. I am not opposed to a different alternative from the one I suggested, however, I don't understand the "tutor shouldn't be punished" type of comments. These make NO sense. The tutor is not punished for ANYTHING ever; here in lies the problem. I mean, I get it, this is all coming from tutors, which I makes sense. I wouldn't expect someone to accept what a non-tutor says and just adopt it, but lets examine "incentive structure." People will always do what they are incentivized to do. Tutors pay structure (aka incentive) is set up to milk the clock...I know...I know. I understand that not every tutor is just milking the minutes and trying to stick it to the tutor, however, I also know that they are "running their business/doing their job." I know these are generalizations, which makes it a slippery slope and I mean no disrespect, but never in any scenario do I want the tutor to make any less than he normally would (except in the case of him not doing his job well). There should be some sort of bell curve here where the top tutors make 25% more than the middle-of-the-road tutors and the bottom make 25% less. Right now it makes NO SENSE to me to not reward performance at all. I know these tutors aren't bad people, but also recognize they aren't helping us (the pupils) out of the goodness of their hearts.

Why does it not make sense for the tutor to begin with a budget of what he thinks is necessary to get you to your desired score? Lets say the tutor thinks it will take 15 hours of tutoring and the pupil doing his homework/job to fill-in the gaps that the tutor tells him to in the in-between sessions time. Now the tutor should have the ability to be candid and let the pupil know if he is falling behind (here is the real value). Now if the pupil doesn't do whats expected, then the tutor should have outs to not get screwed out of anything. However, if the pupil does EVERYTHING that he is told and more, and it takes say 300 hours of tutoring (at say $150/hr or $45,000) then I think we can all agree the pupil go screwed. I know that isn't realistic as no one would pay that much (or I hope not), but it is simply to make the point that there should be a threshold at which the tutor becomes ACCOUNTABLE (the theme of my whole arguement). Is there no way to set-up any structure to make them accountable or have some level of responsiblity, which as you can all see THE DO NOT WANT??? Please provide some opinions or thoughts and spare me the "why is it fair for the tutor to get screwed" comments, which just show me you don't have a clue what I am talking about.

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