Merit pay systems and organizational performance

Merit Pay

Pay for performance is not a new idea.

Organizations all over the world use this type of system when offering bonuses based on predetermined results or commission. Pay for performance, or merit pay, though is a fairly revolutionary idea for the teaching profession of today. In a profession where pay is traditionally based on tenure and not actual results, the idea that teachers should be paid based on how their students perform is quite revolutionary.

This paper explores the concept of merit pay for individual teachers, in the form of bonuses or permanent salary increases and their effectiveness in improving student performance and improving teacher attrition rates.

Merit Pay for Teachers

Introduction:

Pay for performance is not a new idea.

Organizations all over the world use this type of system when offering bonuses based on predetermined results or commission. Pay for performance, or merit pay, though is a fairly revolutionary idea for the teaching profession of today. In a profession where pay is traditionally based on tenure and education as opposed actual performance results, the idea that teachers should be paid based on how their students perform is quite revolutionary.

This paper explores the concept of merit pay for individual teachers, in the form of bonuses or permanent salary increases and their effectiveness in improving student performance and improving teacher attrition rates.

Merit Pay for Teachers Concept:

The public education system, as it currently exists, was developed in the middle of the 19th century.

Following the industrial model of this era, teachers were seen as assembly-line workers. They added value to their product (their student) and then passed it along to the next worker on the line. With this concept, all workers must be interchangeable, and each must work independently. This isolation and egalitarianism combine powerfully to perpetuate a culture that is resistant to reform initiatives, according to Boles and Troen (2007).

Education has been a growing concern in American politics, for decades. Providing the best educational opportunities for America's children, so that they're able to compete in an increasingly globalized and competitive world has become evermore important. Part of this challenge comes in the form of poorly compensated teachers whose traditional starting salary is quite low - a national average of $30,000 per year (Philips & Tyre, 2007). To this end, a variety of educational reforms have been introduced over the years, both locally and nationally, in hopes of improving effectiveness. One of the most recent facets of educational reform is the introduction of the merit pay for teachers concept.

Simply put, merit pay rewards talented teacher and encourages them to stay in the profession, while also encouraging ineffective teachers to improve their teaching abilities (Olson, 2007b). In 2005, Massachusetts Governor Mitt Romney introduced a revolutionary plan for school reform, in his state. The center point for this plan involved paying teachers for their performance.

This plan was based on an emerging movement being seen around the country to move away from the traditional salary structure for teachers, that was based solely on tenure and the number of academic degrees held by a teacher.

Romney's plan meant that by improving classroom performance, teachers could add $5,000 or more to their annual salary (Janofsky, 2005).

And, Massachusetts was not alone. Many other states and cities have begun to utilize merit pay systems as a means of improving the educational experience for children and addressing the high turnover rates in the profession. "There's a clear line between low test scores and high teacher turnover" (Philips & Tyre, 2007).

Although it may seem that merit pay for teachers is an idea that has been long since overdue, there has been much opposition to its implementation.

Teachers' unions see the merit pay program as unfair and divisive, Janofsky (2005) notes. It has been seen as exclusionary, and there have been worries voiced that such a plan would pit teachers against one another.

In addition, the system is criticized for being too subjective. This subjectivity was seen in the merit pay programs introduced in the 1980s where teachers were paid more for taking on extra roles and responsibilities. These limited incentives often encouraged unhealthy competition between teaching colleagues (Olson, 2007b). Personal like or dislike of a teacher could also be used by administrators to reward or punish a teacher. For these reasons, union support has been scarce.

Despite this resistance, merit pay in any other industry is commonplace and in most instances is the best business decision.

Employees are not just paid dependent on how long they've been with an organization, but also how they perform at their job.

A low performing employee wouldn't be paid more just because they'd been with the company a long time and had obtained a graduate degree. Perform well, and come review time that employee will be rewarded to a greater degree than the employee who doesn't.

This pay for performance type system does occur in many private and parochial schools, as well as some of the higher education public facilities, but is not common in the public system of compulsory education in grades K-12. In this segment of the academia world, teachers are paid based on years of tenure and their own personal educational achievements. Yet, these measurements don't fairly compensate teachers who work hard and do not encourage teachers to go above and beyond.

Ineffective teachers have an employment contract for life.

In addition, the challenge of merit pay being too subjectively biased has been overcome with the development of value-added assessment (VAA). Utilizing VAA teachers and administrators can objectively determine how effective teachers really are in assisting their students with their educational improvement. From this objective assessment, merit pay rewards can be fairly determined.

Union Resistance Supporting Mediocrity:

Sadly, as mentioned, there has been strong opposition to the merit pay plan for teachers, and much of this opposition has come from teachers' unions. Even erasing the subjective fear of merit pay, and replacing it with measurable, objective assessments, union opposition comes also because they fear that this type of system will weaken their collective bargaining power and doubt money can provide motivation needed (Viadero, 2007).

Hruz (2000) describes why teachers' unions have expressed such strong opposition to merit pay.

The threat that teachers' unions see from a performance-based pay system is clear: it would make them less relevant. The importance of teachers' unions is reliant upon their superior ability to get gor teachers better working conditions and compensation. If individual teachers, or groups of teachers within schools, are able to garner control over the effectuation of their own compensation levels, then the unions are faced with the potential of these teachers saying that the unions' services are no longer needed, at least when it comes to bargaining for salaries.

American Federation of Teachers President, Edward McElroy notes that his union feels that compensation is an important matter of collective bargaining (cited in Olson, 2007b). This strong desire for self-preservation has resulted in an acceptance and a support of mediocrity in the teaching profession.

Although the concept of merit pay may be revolutionary for the current teaching profession, it is not a new idea. The concept was first introduced in England, in 1710 (Wilms & Chapleau, 1999). For centuries, educational institutions have tried to implement pay for performance type systems, but one of the failings has been the failure by educators, in general, to embrace the spirit of this type of system. Instead of trying to effectively educate their students, many instances of 'teaching to the test' occur, combine this with an increased incidence of cheating (Bobby Ann Starnes (2007), chair of the Education Studies Department at Berea College in Berea, Kentucky, admits that if her salary were tied to test scores that she's pretty sure she would cheat) and teachers' unions working behind the scenes prompting failure, and this has often been the failing point of previously implemented merit pay systems. However, with current strong bipartisan support, merit pay system is proving its worth, despite union detractors.

Merit Pay Stories of Success:

At least half a dozen states have statewide or pilot programs that have implemented merit pay programs that are tied to educational achievement growth at the classroom or school level. In addition, hundreds of districts are experimenting with this type of pay for performance system.

The U.S. Department of Education has promoted this system, in high-need districts, through their $100 million federal Teacher Incentive Fund (Olson, 2007b).

Denver, Colorado:

Denver, Colorado has seen some of the success merit pay can bring.

Their ProComp Plan began small in 1999, with a pilot merit pay program launched by the mayor, the superintendent, and the union, in 15 schools ("A good mark," 2007). For seven years they adjusted the pay formula, and finally, in 2006, they rolled out the program citywide, to 73,400 students (Olson, 2007b). Teachers who agreed to work in struggling schools were paid more, as were those who taught hard-to-staff subjects, like math in middle schools, in the form of yearly bonuses. Bonuses could also be earned by taking advanced courses in improving classroom techniques and by improving the scores their students achieved on state tests.

These salary additions can add up to as much as $9,800 per year. In addition, teachers' pay can be docked if state testing demonstrates that their students have fallen too far below expectations (Philips & Tyre, 2007). The system has been so successful, that Denver has completely eliminated their pay scale based solely on years of experience and academic degrees (Olson, 2007b).

Denver's program collaborated with the Denver Classroom Teachers Association, an NEA affiliate, to develop their plan. In addition, they've permitted teaching veterans to opt into the program, rather than force them to participate. This has helped with the acceptance of the program as teachers have not felt pressured into joining the ProComp Plan.

To help facilitate this decision, Denver's ProComp Plan has its own Internet website with a salary calculator, so teachers can determine their payout, if they achieve various accomplishments. and, Olson (2007b) concludes, as of Fall 2007, nearly half of the veteran teachers are taking part in the program.

Alaska:

Alaska has also recently instituted a merit pay system that rewards teachers, in addition to administrators and even non-instructional personnel for improved student test scores. Several elementary school employees received bonuses through the Alaska School Performance Program, in their inaugural round. $1.8 million was paid out to 773 educational staff members across the state. Most of the employees who received these bonuses were 'certified' employees, such as teachers and principals, according to Cavanagh (2007). These employees received bonuses that ranged from $2,500 to $5,500. In addition, 303 'non-certified' school employees, including employees such as teachers' aides, food-service workers, and custodians, collected awards from $1,000 to $2,500 each.

Understanding that all employees contribute to a sound academic environment, the Alaska School Performance Program seeks to reward all school employees when students improve test scores or maintain high marks on state exams in reading, writing and mathematics.

Even though the program may be adjusted as the years go on, to ensure fairness in both urban and rural areas, recipients and their administrators are proud of their recognition for the hard work that they've put in (Cavanagh, 2007).

New York City, New York:

New York City has recently announced their plan to give bonuses to teachers at some of the city's highest need schools, pending state legislature approval, if they are able to raise their students' test scores. Honawar (2007a) reports that this largest school district in the country, with 1.1 million students, implements their merit pay system with the blessings of their local teachers' union, a ground-breaking development.

Part of this easy acceptance of the plan is in its design. Instead of giving bonuses to individual teachers, bonuses go to the entire school who raise student test scores. The United Federation of Teachers believes that this will foster teamwork and collaboration.

It is also a voluntary plan, requiring at least 55% of the teachers to vote to opt-in to the program. It is hoped that this plan will help attract some of the city's best teachers to some of the lower performing schools in the district.

The New York merit pay program is based almost solely on raising student test scores. Approximately 200 of the district's more than 1,400 school would be eligible for an award, if they demonstrate gains in student achievement. Awards of roughly $3,000 per the number of teachers would be given to each successful school. This award amount would then be divided up by a committee made up of the school's principal, another administrator and two teachers.

Houston, Texas:

In September 2007, the Houston school board approved an overhaul of America's largest performance for pay system for teachers, following a study at Vanderbilt (Honawar, 2007b). The reworked program will continue to reward the 200,000 student Houston school district's schools and teachers that succeed in raising student test scores. The newly named ASPIRE Award program, an acronym for Accelerating Student Progress Increasing Results & Expectations, hopes to address some of the troublesome areas of the program's first year. Some of the areas improved upon are improved communication with teachers, better data analysis used for determining awards, and an increase in the number of educators that are potentially eligible for the bonuses (Olson, 2007a).

Despite the positive changes, the Houston Federation of Teachers still opposes the plan. Gayle Fallon, the president, states that the union would oppose, "any plan that is just based on how well a kid bubbles in a standardized test" (Olson, 2007a). However, it is predicted that most teachers will still decide to opt-in to the program, given the expected payout of up to $22.5 million in bonuses come January 2008, with as much as $7,300 going to individual teachers.

The program is still set to pay the most money to teachers of core academic subjects, such as English and mathematics. However, instead of internally analyzing data, the district has hired William L. Sanders, a national expert on 'value added' educational measurement, to externally analyze the data from multiple years of both state and national testing, according to Olson (2007a).

This will provide a more statistically robust and fairer system than the previous year, that awarded more than $15 million in staff bonuses.

ASPIRE will allow the district to calculate value-added results for a more diverse group of teachers this year. These will include departmentalized elementary and middle school teachers who teach language arts, science and social studies, as well as teachers who teach preschool through grade 2, and high school teachers.

In addition, every teacher and staff member will receive an award if their school's average academic improvement of students is in the top half of all schools in the district. Yet, as last year, smaller awards will be given to all instructional staff at schools that perform well under the Texas accountability system (Olson, 2007a).

Research Demonstrating the Potential of Merit Pay:

In addition to individual reports of local successes, recent studies have found a generally positive relationship between merit pay and increased financial incentives for teachers and improvements in student achievement. Pay for performance programs encourage teachers to look at their own practices and how these impact student growth.

Michael Podgursky, a professor of economics at the University of Missouri-Columbia, commented following his study with Matthew Springer, the director of the National Center on Performance Incentives at Vanderbilt University, that the research evidence to date was strong enough to encourage districts and states to experiment with merit pay innovations (cited in Olson, 2007b).

However, research also has shown that financial incentives alone may not be enough to improve student learning and dramatically change the teacher-talent pool, according to Olson (2007b).

There are other issues that also need to be addressed to improve educational effectiveness in American classrooms and the associated attrition in the teaching profession. School principal leadership, opportunities for advancement for teachers, increased availability of materials and resources, improvement of student behavior and discipline, and an opportunity for teachers to influence decisions within their working environment are all needed to improve teacher satisfaction and turnover and positively affect student educational growth, in addition to providing financial incentives through pay for performance systems.

Milken Family Foundation's Teacher Advancement Program:

Combining a universal desire for the best possible education for America's children and research that demonstrates the single most important school-related factor for student success is having talented teachers on staff, the Milken Family Foundation developed the Teacher Advancement Program (TAP), in 1999.

The program is "a bold new strategy to attract, retain, develop and motivate talented people to the teaching profession. (...) TAP's goal is to draw more talented people to the teaching profession - and keep them there - by making it more attractive and rewarding to be a teacher" ("What is the Teacher Advancement Program," 2007).

This innovative program was developed to provide bonuses to teachers who increase their students' academic progress and demonstrate their teaching skills through classroom evaluations that are conducted by TAP trained and certified evaluators, four to six times per year.

The TAP program has been evaluated by the National Institute for Excellence in Teaching, the agency that operates the program, and has found it to be a success. Olson (2007b) states that teachers in schools that are participating in TAP "are more likely to significantly raise student achievement than similar teachers in other public schools."

However, TAP is a comprehensive program that goes beyond simply merit pay for teachers. Teachers who were qualified were also rewarded for taking on more responsibilities. In addition, teachers have the ability to take advantage of school-based professional development, during the day, to develop their knowledge and skills, through TAP (Olson, 2007b).

It is this combination of pay for performance and opportunities to improve their skills that many believe is TAP's secret to success.

There are four components to TAP: multiple career paths, ongoing, applied professional growth, instructionally focused accountability, and performance-based compensation. Traditionally, the most common way for a teacher to increase their salary is to become an administrator. However, this means that good teachers are taking out of the classroom, where they are needed most.

TAP offers alternatives to this, by providing other career paths including: career, mentor, and master teacher. Advancing increases qualifications, roles and responsibilities, and increases their compensation. This multiple career path option allows good teachers to stay in the classroom while also advancing their career ("What is the Teacher Advanced Program," 2007).

Understanding that teachers have little time to learn new techniques and strategies that would improve their classroom performance, TAP also involves an Ongoing Applied Professional Growth component. This facet also gives teachers a chance to collaborate with one another and learn from their colleagues' experiences. The school schedule is restructured to provide time during the school day for teachers to meet, learn, mentor, plan, and share with each other.

In this way, teachers are constantly improving the quality of their instruction and increasing the associated academic performance of their students ("What is the Teacher Advanced Program," 2007).

Instructionally Focused Accountability is a comprehensive system for evaluating teachers.

It rewards teachers for how effective they are in advancing their students' education. In addition to academic growth, teachers in the program are held accountable for meeting the TAP Teaching Skills, Knowledge, and Responsibility Standards ("What is the Teacher Advanced Program," 2007). With this accountability comes the Performance-Based Compensation.

Teaching has too often been the exception to the common rule that employees are rewarded and promoted for how well their jobs are performed. TAP adjusts teaching compensation to reflect the individual teachers roles and responsibilities, their performance in the classroom, and the performance of their students, while encouraging hard-to-staff schools to offer competitive salaries. In these ways, "TAP is working to turn teaching from a revolving-door profession int a highly rewarding career choice" ("What is the Teacher Advanced Program," 2007). Offering higher salaries, professional advancement, and career training allows teachers to become the best they can be through TAP.