Pay for Performance, or Alternately

Pay for performance, or alternately referred to as 'merit pay' is a system in which financial incentive is used to elicit certain levels of performance.

This system of pay has been used in the educational system for nearly 300 years, and saw a strong revival in the 1980s (Gratz, 2005). The definition of pay for performance changes with the definer and their needs.

This paper overviews pay for performance systems. It discusses the advantages and disadvantages of such a system. The effectiveness of pay for performance in the Denver pilot program is overviewed. The relevant considerations for implementing the system is detailed, as well as a brief overview of employee communications. and, in the end, the anticipated impact of the pay for performance impact on the district is discussed.

Pay for Performance in Public Schools

Overview of Pay for Performance:

Pay for performance, or alternately referred to as 'merit pay' is a system in which financial incentive is used to elicit certain levels of performance.

This system of pay has been used in the educational system for nearly 300 years, and saw a strong revival in the 1980s (Gratz, 2005). The definition of pay for performance changes with the definer and their needs.

No uniform definition of pay for performance exists, even within the confines of the educational arena. Despite this fluid nature of the definition of pay for performance, the general meaning is a system where merit is determined by a supervisor, of a worker, and performance is arranged to be a more objective measurement. In many pay for performance systems, in the educational system, both merit and performance are determined by the administration of a test.

These tests can be either a testing of the teacher being evaluated, to demonstrate their personal skill and knowledge, or it can be a testing of the student, to mark their achievement (Gratz, 2005). Recently, the testing of the students to determine the effectiveness of their teachers has become the most predominant method of performance assessment. The No Child Left Behind Act has supported this.

In the early 1700s, teachers' salaries, in certain areas in England, were linked directly with their students' scores on examinations in reading, writing and arithmetic. By the mid-19th century, this practice of linking teachers' salaries with student performance had been incorporated into the English education system as part of the Revised Education Code, enacted in 1862 (Gratz, 2005). From this, the pay for performance system would see its first, of several, surges in popularity.

During the next three decades, the pay for performance system grew more and more complex. "Merit grants" were issued for greater efficiency and expansion of the subjects that were being taught and tested. Bureaucracy grew significantly, thanks to the implementation of this system. Inspectors became a part of the educational system, and examiners, who reviewed the inspection reports, also added another layer to the educational bureaucracy. Because of the increasing bureaucracy, teachers came under intense pressure, as journals from this time in history indicate. This pressure led to the over pressuring of students to ensure that they would meet or surpass the standards needed for the teachers to receive a favorable assessment (Gratz, 2005).

During this era, upper-class politicians favored this system of compensation. They saw it as a method for restricting the learning of the common class. Robert Lowe, Education Minister, and a supporter of the pay for performance system, noted that it would at the very least reduce costs. He stated, "If it is not cheap, it shall be efficient; if it is not efficient, it will be cheap" (as cited in Gratz, 2005). However, Lowe's opinion would not be the mainstream opinion, only a few short years later.

By 1904, the Board of Education changed their pay policy for teachers. They indicated that teachers were charged with assisting children to learn. They also encouraged each teacher to use their best methods of teaching, unique to the needs and conditions of their students. The Board felt that teachers should definitely continue to test their students, but that that it was unreasonable to assume that a child would be able to keep at the call of his memory (Gratz, 2005). As such the single salary system came into favor, and would be as such for many more decades.

Nation at Risk, put forth in the mid-1980s, opened up the United States, once again to their struggling school systems. It recommended that teachers' compensation be switched to a performance-based system, with backing on President Reagan. This new system rewarded teachers' dependant on supervisor reviews (Gratz, 2005).

This system had the right idea, of the effectiveness and efficiency that can be had with pay for performance, however it made the system too subjective to ensure fairness. Today, pay for performance has been revitalized to almost a human resources mantra. It is now most commonly found as a system of extra compensation for achieving certain pre-determined criteria. In education, this is currently most often seen as being in conjunction with higher student test scores, much like the system from the 18th and 19th century.

Potential Advantages to Pay for Performance:

One of the most significant pay for performance advantages is that those teachers who truly excel at their profession can be awarded as such. Merit pay systems allows for monetary awards to be given to individual teachers, those who deserve it. Of course, in some instances, an entire school has to obtain a specified goal before an award is given, and then the school disburses the money as they see fit, but for the purposes of this paper, this plan discusses individual pay for performance systems.

Pay for performance allows for a specified, quantifiable level of accountability. Measurable goals that are put into place, holds teachers accountable for their actions in the classroom. This measurement of accountability can also serve as a motivator as well. It should motivate teachers to not only do their absolute best, but also to improve their teaching skills. This would then lead to a trickle down effect where better skilled teachers would naturally lead to students with higher test scores, and eventually better schools overall.

Pay for performance could do away with the desire for vouchers. With motivated and monitored teachers, pay for performance systems should lead to improved schools, across the board, as noted above. Improved public education would lead to the less likelihood of parents wanting to utilize school vouchers.

Potential Disadvantages of Pay for Performance:

In some instances, current educational systems have not tied their performance objectives with student achievement. Instead, they based their performance requirements on items that are less quantifiable and more subjective, such as education experience of the teacher, peer review of the teacher, perceived leadership, family feedback, and whether or not the teacher had skills in the areas that the school needs. The problem in this lies in the subjectivity. A teacher could provide excellent results when it comes to instilling knowledge in her students, but not be well liked by her peers. This could lead to an inability to attain these extra monetary incentives. The profession becomes more of a popularity contest, rather than a true measurement of skill as an educator. It could also be administered unfairly, which would be counterproductive as a motivator for enhanced performance.

In addition, giving monetary rewards for performance that should be achieved can redirect limited resources from other areas that may yield even higher levels of performance, for the teacher. This includes additional training for the teachers, or classroom resources. These may be more effective than the merit pay system.

Perhaps the most significant disadvantage of the pay for performance system is the possibility that teachers will simply teach to the test. In an effort to obtain the highest test scores possible, teachers may be tempted to simply teach their students the specifics of the test. This sort of narrow teaching is a significant detriment to students as they progress through the public educational system and into areas of higher learning and eventually into the real world.

Effectiveness of Pay for Performance in Denver School District:

Denver ran a Pay for Performance pilot program that was administered jointly by the district and the teacher association. The pilot program was implemented and reviewed and revealed significant improvements in the district. These improvements were shown in aggregate student achievement, as well as the opinions of the participants in the pilot program. However, they found that these improvements were not due to tying financial incentives to student results. They found that a strict pay for performance system, based solely on student achievement, is an inappropriate model for public education as it encouraged counterproductive, and sometimes unscrupulous behavior. They found that tying student achievement to teacher performance led to reverse incentives and negative consequences for everyone involved. (Gratz, 2005).

Teachers came on board quite quickly. They saw the pilot as getting paid extra for something they already did. They had been setting goals anyways, so this simply added a monetary incentive to the mix. Plus most teachers saw the pay for performance system as inevitable, and therefore wanted to be involved from the start of the plan (Gratz, 2005).

The pilot faced many challenges. Not the least, the district was faced with the logistical challenge of linking the students in various databases to the teachers. The internal systems for tracking student progress by teacher simply didn't exist. In addition, non-academic staff members had to have appropriate standards devised, such as nurses (Gratz, 2005).

The Denver pilot program experienced the difficulties that were quite unexpected with the implementation of a pay for performance system. The one result that was expected, improved student performance, was interestingly not due to the financial incentives offered. Instead, it came because of the district's commitment to enhancing the entire teaching process. By doing this, they were able to not only boost test scores, but create more effective schools in the process.

Relevant Considerations in Implementation:

There are certain considerations that must be taken into considerations when implementing a pay for performance system. First, the system must be aligned with the strategic direction of the district. Also, in order to attract, motivate and retain the best teachers available, the system must be competitive in financial rewards (Rishell & Becker, 2004).

Performance measurement and goal setting must be made at the district level, and supported at all levels. From the beginning, these measurements must be determined as well as the degree of judgment employed in making incentive award decisions (Rishell & Becker, 2004). but, to compliment this system, as Denver discovered, the entire teaching process must be supported, including career development and enhanced training for the teachers to facilitate their goal achievement.