Merit Pay for Teachers: Design, Administration, and Alternatives

Introduction to Merit Pay

Merit pay is defined as compensation based on performance and is most often referred to as an educational reform measure. It provides a monetary bonus to educators who have been deemed effective by assessing them against measurable criteria. Merit pay is arguably the most controversial issue related to education today.

Merit pay is not a new concept. It has a long—and some would say failed—history, having been around since the early twentieth century. According to one researcher (Guernsey, 1986), "during the 1920s merit pay plans gave way to the single salary system in an effort to end the salary discrepancies between elementary and secondary teachers." Interest in the concept is revived on a regular basis.

Proponents of merit pay believe wholeheartedly that it would lead to improved educational outcomes. In addition, they believe it appeals to stronger teachers who want their work appraised against national benchmarks. Those who oppose merit pay are equally vociferous—with the National Education Association the most vehement of all. The teachers' union holds that these politically motivated reforms do nothing to improve education. Supporters on both sides of the issue can point to substantial bodies of research to buttress their arguments.

The institution of a merit pay system in a district or building is fraught with complications that are not easily dismissed. The first is that the system cannot reward teachers solely for students' high scores on state and national assessments. There can be no argument that children in urban districts historically score lower than their suburban counterparts. Nor can one simply reward improvement in scores, because teachers whose students already post high scores have less room for measurable gains. Furthermore, merit pay tied to test scores opens the door to cheating on the part of teachers—a phenomenon not unheard of in educational circles.

Moreover, teacher evaluation is infinitely more complicated than judging educators against their students' test scores. The personnel administrator—or, in some cases, the principal—must be able to competently gauge the quality of instruction delivered by the teacher, which requires strong interpersonal and communication skills.

Finally, as global competition continues to grow and American students fall further behind, the call for meaningful and authentic educational reform will intensify, and communities will most likely turn to merit pay as one means of improving outcomes. It is therefore important to consider how a personnel administrator would develop and implement a merit pay program in their district.

The Structure of a Merit Pay Program

When a personnel director of a school district is charged with establishing a merit pay program, the first order of business is to research programs currently in existence around the country in search of a quality model to replicate. According to one study, merit pay "can be awarded on the basis of input criteria (teacher performance) or output criteria (student performance). Input criteria may include classroom management skills, preparation of lessons, knowledge of subject matter, instructional techniques, management of student, staff and public relations, professional ethics, and professional growth" (Ellis, 1984).

Ellis continues by offering additional examples of ways in which merit pay may be integrated into the evaluative process, including such factors as professional development, additional responsibilities, teaching at a high-priority location, contributions to the total school program, teaching subjects for which there is a shortage, and even outstanding teacher attendance. "Incentive pay" denotes programs that reward teachers for helping the school district achieve certain goals or solve specific problems.

How a Merit Pay Program Should Be Designed

Another expert in the field (Cramer, 1983) offers three core considerations that should guide the development of a merit pay program. First, what will be the objectives of the program? Second, what evaluation criteria and methods will be utilized? Finally, how will the implemented program be perceived by all those with a vested interest in its success?

Objectives should reflect the needs and goals of the district. They may include improved student performance, improved instructional delivery, attendance, and professional growth. Evaluation criteria should be developed collaboratively to ensure the buy-in of all stakeholders, and the size of the incentive should be meaningful enough to motivate improvement. Evaluations should be conducted fairly and impartially by a personnel administrator who has been trained to use the evaluation instrument.

An article by Heneman (1996) provides further clarification for the development of an effective merit pay plan:

Merit pay practices shown to be related to improved merit pay plan effectiveness include clarifying the link between pay and performance for the employee by increasing the frequency of appraisals, establishing developmental action plans, and developing a formal merit pay policy with safeguards to ensure employees' perception of fairness.

Heneman further notes that there is conflicting evidence regarding merit pay use across the country. Some studies find that personnel administrators are turning to it less and less, while others show increasing reliance on it to motivate workers. However, even if the number of organizations that institute performance pay programs is declining, it remains the most frequently used method of determining pay increases.

The findings of Gross (1993) identify some critical factors in the proper design and implementation of variable pay-for-performance plans. They mirror the conclusions of other researchers in this field and include: 1) senior management support, 2) employee acceptance, 3) clear goal definition and unambiguous performance measures clearly linked to employee efforts, 4) a supportive organizational culture, 5) clear communications, and 6) strong education.

The attributes of an effective merit pay program are thus relatively clear-cut, which simplifies the ultimate task of developing and implementing one.

Conclusion

In a difficult economy, unions have become embattled and with each passing year lose ground on the issue of merit pay. At the same time, many communities do not feel they are receiving adequate value from their investment in teachers, students, and schools. These two pressures have the potential to collide, and merit pay will likely become an increasing reality as citizens demand accountability and measurable improvement.

Personnel administrators in public education and elsewhere must meet the ever-growing demands of the communities they serve. They must simultaneously be sensitive to the needs of parents, school boards, and teachers—providing excellence in service as they discharge their responsibilities. While the number of merit pay programs currently in operation may be limited, the personnel manager should educate themselves on all sides of the issue and become informed about available resources. There is a very real chance that they will be charged with developing and implementing a merit or other type of performance pay program in their district. The well-prepared personnel administrator will help make the process less painful, and perhaps even successful.

References

Conte, A. (1972). Merit pay, problems and alternatives. New Jersey State Department of Education.

Cramer, J. (1983). Yes—merit pay can be a horror, but a few school systems have done it right. American School Board, 170, 28, 33–34.

Drevitch, G. (2006). Merit pay: Good for teachers? Scholastic.

Ellis, (1984). [Citation as in source].

Gross, S. (1993). The new variable pay programs: How some succeed, why some don't. Compensation and Benefits Review, 51–62.

Guernsey, M. (1986). Review of related literature and research: History of merit pay, differentiated staffing, and incentive pay programs.

Heneman, R. (1998). A survey of merit pay plan effectiveness: End of the line for merit pay or hope for improvement. Human Resource Planning.

Radtke, R. (1987). An alternative to merit pay. NASSP Bulletin, 71, 154.