ECIS Position Paper 1: Alternative Compensation Systems

POSITION PAPERS

ALTERNATIVE TEACHER COMPENSATION SYSTEMS ECIS Position Paper No. 2017-1

THE ISSUE

The topic of alternative teacher compensation systems arises regularly in the education sector.

The most popular versions are performance pay (salary scale adjustments and/or bonuses based on how students perform on selected assessments), merit pay (salary scale adjustments and/or bonuses based on improvements in individual performance, usually but not always related to student performance on assessments), knowledge-and-skills-based pay (permanent increases for acquiring and applying new skills, sometimes referred to as competency pay), and school-based performance pay (bonuses for all staff if students hit particular goals). It should be noted that performance judgements can also include information from classroom observations or feedback from students.

Whatever the alternative system chosen, the presumption is that these systems fix perceived performance problems, and that incentive pay is a way to correct these problems. However, there is inconclusive evidence for the success of any of these systems.

Using the Maryland Scale, a five-point scale designed by the University of Maryland (and used, among others, by the Government Social Research Service in the United Kingdom) to classify the strength of evidence, a recent enquiry into alternative compensation systems reduced the volume of evidence from 7,000 articles to a shortlist of 59, with only 16 of those in the education sector.

One of the key findings in this report (see “A Review of the Evidence” in Further Reading, below) was that “much research does not disentangle performance-related pay from wider issues of performance management, promotion and progression, and organisational change” (22). As but one example, when a new system is implemented, often what happens in short order is a renegotiation of performance standards and priorities. This renegotiation can provide a way to ‘game the new system’ in many cases; a new and unintended behaviour arises.

Importantly, the introduction of individual incentives within these alternative teacher compensation systems nearly always results in inequality in rewards. The intention behind the introduction of incentives, in theory, is to move away from distributing rewards equitably across the entire base of teachers, and to give more substantial rewards to those teachers who contribute most to the school’s performance. However, what transpires too often in the implementation of such incentive programmes is that there are marked differences in performance perception between managers (e.g. principals/heads of a division) and individual teachers, who almost always have opinions of their performance that are higher than those of the management. Consequently, as noted in an article on wage dispersion on satisfaction, productivity, and working collaboratively (see “The Effect of Wage Dispersion” in Further Reading, below), when there is a debate about relative merits, those teachers who receive smaller rewards than expected can easily come to resent the organisation and the manager(s) in question, leading to less collaboration and lower performance.

A key issue within the overall question of alternative teacher compensation systems is the failure, usually by governing boards, to recognise that ‘output’ is not easily measured in education.

Standardised assessments, a frequently-cited benchmark, are but one piece of the puzzle, when it comes to measuring the development of a young person. Schools, by nature, exhibit what economists term a ‘low time-preference,’ meaning that their ‘products’ (often referred to as responsible global citizens) are future-orientated, rather than present-orientated. Put simply, we cannot see the full fruits of students’ lives for many years; how, then, can we reliably measure the impact of a teacher on a student in the present moment?

Alternative Teacher Compensation Systems (ECIS Position Paper No. 2017-1)

OUR POSITION

Given the lack of evidence surrounding alternative compensation systems, our position is: • High-quality teaching is essential for improving student outcomes.

• Governing boards and school leaders should target resources at identifying, recruiting, and compensating high quality teachers, and at investing in quality, deeper-learning professional development opportunities that are designed to improve student outcomes.

• Alternative teacher compensation systems risk leading governing boards and school leaders to a narrower focus on the measures used to assess teacher performance, which could adversely affect other aspects of student learning.

FURTHER READING “Does performance-based pay improve teaching?” PISA In Focus No. 16 (OECD, May 2012).

Kimball, S., Heneman, H.G. III, Worth, R., Arrigoni, J., & Marlin, D. Teacher Compensation: Standard Practices and Changes in Wisconsin (WCER Working Paper No. 2016-5).

Marsden, David. “The Paradox of Performance-Related Pay Systems: Why Do We Keep Adopting Them in the Face of Evidence That They Fail to Motivate?” In Hood, C and Margetts, H, Paradoxes of Modernisation: Unintended Consequences of Public Policy Reforms (Oxford: Oxford University Press, 2009).

“Performance Pay” Teaching and Learning Toolkit. Education Endowment Foundation (February 2017).

Pfeffer, J and Langton, N. “The Effect of Wage Dispersion on Satisfaction, Productivity, and Working Collaboratively: Evidence from College and University Faculty” Administrative Science Quarterly 38 (1993): 382-407.

Pfeffer, J and Sutton, R. Hard Facts, Dangerous Half-Truths, and Total Nonsense. Profiting from Evidence-Based Management (Boston: Harvard Business School Press, 2006).

“A Review of the Evidence of the Impact, Effectiveness, and Value for Money of PerformanceRelated Pay in the Public Sector” The Work Foundation at Lancaster University (November 2014).

Alternative Teacher Compensation Systems (ECIS Position Paper No. 2017-1)

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