The Pros and Cons of Performance-Based Compensation

Pros and Cons of merit pay for teachers

While controversy continues to swirl around it, merit pay for teachers is once again on the table as a strategy to improve the educational system. One working model for merit pay or performance-based compensation for teachers is the Teacher Advancement Program (TAP) launched by the Milken Family Foundation in 1999. One of the trademarks of TAP is that it ties educators' salaries and bonuses to instructional performance and growth in student achievement. Other features of the model that aims to develop high-quality teachers include ongoing professional development as part of the school day, multiple career paths and accountability based on clearly defined, research-based standards. To address the controversy around merit pay for teachers, the Milken Family Foundation produced an opinion paper on the pros and cons of performance-based compensation. The authors, Lewis Solmon and Michael Podgursky, developed a list of 15 common arguments against merit pay or performance-based compensation for educators. They then asked 50 educators to comment on those statements. Finally, the authors developed a response to each of the arguments against merit pay.

Objections to merit pay

Creates competition 1. Merit pay creates competition and is at odds with the collegial character of effective schools.

Responses to objections
Merit-pay models can be designed to encourage collaboration. Collaboration may be one aspect of performance that gets rewarded. Differentiated pay can be awarded to groups of teachers as well as to individuals. Many professional athletes receive pay incentives as members of a team (playing in the Superbowl) and also as individual players. Merit pay is commonplace in higher education where a mix of across-the-board and individual merit pay increases is used. If this idea is taken to its logical conclusion, then teachers could be hired randomly. If we have no idea who is a good teacher, how to we know applicant A is better than applicant B? Merit pay is common in other industries (e.g. in medicine) in which it is difficult to measure individual performance. Although the meaning of high performance is often complex, workers in those fields accept being judged as a necessity. A focus on gains rather than levels of achievement would address this concern. If student achievement is measured in a value-added sense, teachers may prefer to work where scores are initially lower because there is a lot more room for progress.

Unions don't like it 2. Merit pay is a tough sell to unions because it is inequitable by definition.

What is a good teacher? 3. Measuring a teacher's value to the educational process is nearly impossible. There is no clear definition of what constitutes a "good teacher." Teacher not the only influence 4. A teacher is not the only influence on student achievement. Other factors such as family background, prior teachers and student mobility have major influences on how much a student learns. No one will want to teach challenging kids 5. When you reward teachers for student achievement, nobody will want to teach kids who live in challenging communities and have a hard time succeeding.

Bias and favoritism 6. Bias and favoritism enter into any merit pay system. Most principals don't spend enough time in

A master teacher and principal should both be involved in the evaluation. Other measures such as

teachers' classrooms to know who is doing a good job. score gains, student attendance and parent surveys Merit pay often has more to do with getting along with should be used in teacher evaluations. the principal than anything else. Everyone will teach same way 7. Teachers will just jump through the required hoops and will be less able to teach the way they think is best. Merit pay will make everyone teach and behave in the same way.

Very few professionals can work "as they wish." All face constraints and professional norms. Current salary schedules that reward education credentials also make teachers jump through hoops. The point is to select hoops that are closely tied to student achievement gains. Merit pay need not be limited to a fixed percentage of the workforce. All teachers can be evaluated for merit pay. In tiered systems, all teachers can move from one level to the next.

Only top performers count 8. Performance-based compensation programs reward the top 15-20% of performers without making any effort to improve all teachers. Many programs place arbitrary limits on how many teachers receive merit pay (e.g. 10%, or one in each department, etc.) We can't afford it 9. It's expensive to implement a performance-based compensation system. In some districts, there is not enough money in the budget to buy paper. How can you justify paying teachers performance-based compensation when there is not even enough money to buy paper? Teachers don't teach for money 10. Teachers should not want to teach for money, but because they love teaching and want to serve kids. The rewards of teaching are often non-monetary such as knowing your work makes a difference for a child. Teachers already work hard enough 11. Performance-based compensation forces teachers to work harder for more pay but the extra pay is often not sufficient for the extra work required. Professionalization (raising salaries and creating expanded roles for teachers) adds to an already demanding schedule. Public relations nightmare 12. If the names of teachers who receive performance-based compensation are posted, parents might be upset if they disagree with the choices or if their kids get teachers who did not receive merit pay. This list can also cause hard feelings and embarrassment among staff and possible legal action by parents who want their children to have access to the best teachers. Teaching is not a business 13. Merit pay systems will open the door to comparisons between education and business. Teaching is not a business, but a service profession. It is not only difficult, but inappropriate to compare education to business.

School districts currently incur major costs from one year to the next simply because teachers have one more year of experience. A large share of payroll is used just to reward seniority or the accumulation of course credits which may have no relationship to performance.

Loving one's work and making money are not mutually exclusive. Lawyers, doctors and pilots enjoy their work but still make large salaries. Teachers feel they deserve higher status and, like it or not, in our society, there is a correlation between earnings and status. The current system of earning credits does not reward the gifted teacher who does not need to earn credits to be an exceptional performer. Other occupations reward such individuals without requiring additional investments of their time. True performance-based compensation simply rewards superior teachers for doing a good job. Administrators would be inconvenienced if the information is public, but it would put pressure on schools to hire and retain the best teachers. Are we better off if information about superior doctors, dentists and lawyers is suppressed even though not everyone has access to them?

The private, for-profit sector of education is growing rapidly, calling into question assertions that business practices are incompatible with providing education services.

Hard to impose 14. Performance-based compensation cannot be imposed from the outside and the rank-and-file will never impose it on itself. It's not so bad 15. People are too critical of education. In fact, the system works pretty well. Over the last 100 years, there have been more than 300 American Nobel prize winners out of a total of 789 prizes. Our economy and spirit of entrepreneurship has for been the envy of the world.

Administrators must have the authority to implement pay schemes which they see as representing the best interests of taxpayers, whether or not such schemes are popular with current teachers. American children do not score well on international math tests compared to children in other industrial nations. Urban black and Hispanic students also score low compared to other socioeconomic groups and dropout rates are much higher. Students who drop out of school or graduate with weak academic skills face a low and declining standard of living.

"Performance-based compensation will stimulate a market for superior teachers," write the authors. "Under the current system of seniority and credential-based pay, teachers who have accumulated seniority tend to be locked into districts. If pay is determined by performance-based promotions and annual evaluations, there will develop a lateral market for mentor, master and novice teachers. When teachers are able to document a track record of raising student achievement, their services will be valued in the market." "The Pros and Cons of Performance-Based Compensation," by Lewis Solmon and Michael Podgursky, Milken Family Foundation, 2000.