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December 1, 2010
Vol. 68
No. 4

Spend Money Like It Matters

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Our focus should not be on the pay—but on the way in which rethinking pay can help districts attract and deploy effective educators.
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Question: Do you think that employees who are good at their work ought to be rewarded, recognized, and have the chance to step up into new opportunities and responsibilities? I do. If you're with me on this, you embrace the principle of merit pay—whether you know it or not.
Because, although we all have that childhood friend or distant cousin who lives on a commune somewhere and inveighs against the evils of bourgeois materialism, most of us think it makes sense for a talented, hardworking engineer, dentist, accountant, or babysitter to be rewarded for his or her efforts.
There are two crucial provisos here. First, endorsing this principle doesn't mean signing on to the raft of slack-jawed merit-pay proposals that would-be reformers have championed in recent years. Merit pay is only useful if it's done smart, which entails using it to help attract, retain, and make full use of talented educators.
Second, understand that there's no proof that rewarding talented, hardworking folks "works." You can comb through decades of economics journals and issues of theHarvard Business Review without finding any proof that paying and promoting good employees yields good results. The premise just seems like a reasonable assumption; you either buy it, or you don't.
That's how I come at merit pay. I don't imagine that paying bonuses for bumps in test scores, as though we were compensating traveling encyclopedia salesmen in the 1950s, is going to improve teaching or learning. And I don't think that value-added calculations are themselves a comprehensive or reliable measure of teacher quality, even in grades where we can calculate such numbers with a reasonable degree of statistical accuracy. But money and metrics are invaluable tools in shaping a 21st century teaching profession.

The Point of Merit Pay

The point of rethinking pay is not to bribe teachers into working harder. Rather, merit pay is a tool for redefining the contours of the profession. Today's step-and-lane pay scales, built around seniority and credits completed, suggest that the primary way to determine how much teachers are worth is how long they've been on the job and how many courses they've sat through. I don't believe that's a good or useful way to gauge a teacher's value.
There's nothing innately wrong with step-and-lane compensation. Indeed, when introduced in the first decades of the 20th century, it was a sensible response to the massive gender in equities that characterized schooling. At that time, women were routinely paid half as much as their male counterparts. Because male teachers were far more prevalent in the high schools, many districts employed de facto pay scales in which high school teachers dramatically outearned their K–8 counterparts for no discernible reason. In that era, standardizing pay made sense.
By the 1970s, however, schools could no longer depend on a captive influx of talent regardless of the terms of employment. Whereas limited alternatives had meant that more than half of women graduating from college became teachers in mid-20th-century America, the figure today is closer to 15 percent.Meanwhile, new college graduates are much less likely to stick to a job for long stretches, the competition for college-educated talent has intensified, and we can now more or less distinguish teachers who excel at helping students master important content and skills.
All this adds up to a new workforce environment in which the step-and-lane, industrial-era model that flourished as a best practice in post–World War II auto and steel plants is unduly confining. Step-and-lane pay is ill-suited to attracting and retaining talent in the new world of career changers, scarce talent, and heightened expectations.
Merit pay is not a substitute for high-quality instructional materials, pedagogy, or curriculum. Rather, rethinking pay can help make employees feel valued, make the teaching profession more attractive to potential entrants, and signal that professional norms are displacing those of the industrial model. None of this "fixes" schools, but it does establish a firmer, more quality-conscious basis for dramatic improvement.

Problems with One-Size-Fits-All Pay

As cash-strapped states and school systems look ahead to lean years, it's vital to recognize that one-size-fits-all pay is insensitive to questions of productivity. Although the term productivityis regarded as an irritant in most education conversations, it refers to nothing more than how much good a given employee can do. If one teacher is regarded by colleagues as a far more valued mentor than another, or if one reading instructor helps students master skills much more rapidly than another, it's axiomatic that some teachers do more good than others do (that is, that some are more productive than others).
One-size-fits-all compensation means that we're either paying the most effective employees too little, paying their less effective colleagues too much, or, most times, a little of each. In a world of scarce talent and limited resources, this is a problem. Savvy leaders recognize the benefits of steering resources to employees who do the most good, as these are the employees whom schools most need to keep and from whom they need to most effectively wring every ounce of skill.
Thus, a crucial element of a well-designed merit-pay system is rewarding employees who not only do a terrific job but also do so in a way that extends their effect on students and schools. Rewarding prized mentors who choose to mentor more colleagues (while continuing to get high marks from them) or boosting pay for terrific classroom teachers who choose to take on larger student loads (while continuing to excel) are ways to use limited resources to amplify the contributions of skilled professionals.
One-size-fits-all pay also inhibits efforts to leverage the opportunities for differentiation and specialization that new technologies and staffing models offer, such as the use of part-time professionals by the Boston-based Citizen Schools. Today, school systems casually operate on the implicit assumption that most teachers will be similarly adept at everything. In a routine day, a 4th grade teacher who is a terrific English language arts instructor might teach reading for just 90 minutes. For schools blessed with such a teacher, this is an extravagant waste of talent, especially when one can stroll down the hallway and see a less adept colleague offering 90 minutes of pedestrian reading instruction. If we're sincere about the centrality of early reading proficiency, using these educators in this fashion is simply irresponsible.
One approach to using talent more wisely might entail overhauling teacher schedules and student assignment so that the single exceptional English language arts instructor would teach reading to every student in that 4th grade. Colleagues, in turn, would shoulder that teacher's other instructional responsibilities. However, this is not an even swap. Excellent reading instructors are rare; we should refashion compensation to recognize their importance. If that encourages other teachers to develop their skills and pursue this role, so much the better. Districts with a plethora of talent can then revise staffing accordingly. The point is that salary should be a tool for solving problems by finding smarter ways to attract, nurture, and use talent; it should not be an obstacle to doing so.
After all, we pay thoracic surgeons much more than we do pediatric nurses—not because we think they're better people or because they have lower patient mortality rates, but because their positions require more sophisticated skills and more intensive training and because surgeons are harder to replace. By allowing pay to reflect perceived value, law and medicine have made it possible for accomplished attorneys or doctors to earn outsized compensation without ever moving into administration or management. That kind of a model in education would permit truly revolutionary rethinking in how we recruit, retain, and deploy effective educators. That's a far cry from today's ill-conceived proposals to slather some test-based bonuses atop existing pay scales.

A Viable Path Forward

Unfortunately, too many would-be reformers hear the call for rethinking pay as a charge to impatiently rush forth and "fix" compensation in a furious burst of legislation. As a result, promising efforts to uproot outdated, stifling arrangements get enveloped in crudely drawn and potentially destructive policies.
Education reformers have trouble accepting that unwinding long-standing arrangements and replacing them with sensible alternatives will take time, humility, and a lot of learning. The fix-it-now approach to pay, with its overreliance on value-added measurements, turns a blind eye to the technical challenges involved and to the fact that reading and math scores are a profoundly limited proxy for instructional effectiveness. This approach also runs the risk of stifling the kind of smart use of personnel that reformers are trying to encourage. Principals who rotate their faculty by strength during the year or who augment classroom teachers with guest instructors or online lessons are going to clash with evaluation and pay systems predicated on linking each student's annual test scores to a single teacher. Even in the states that have spent the most time on these assessment and data systems, value-added scores are available for only a sliver of instruction and for only a minority of teachers. Devising new one-size-fits-all merit-pay systems around this limited population is both premature and nonsensical.
Right now, the smart move is to explore ways to base an increasing share of teacher pay on various measures of performance, drawing on potential metrics that seem useful and reliable in a given district. Labor market conditions should be a consideration; if it's more difficult to find effective math teachers than effective social studies teachers, pay should reflect that. In a world of accountability, there is an increased role for simple principal evaluation. Given the collaborative nature of much good teaching, it makes sense to import a key element of 360-degree evaluation and factor in systematic evaluations of teachers by their colleagues regarding which teachers make the largest contributions to the school and their peers. Measures of productivity; value-added calculations, where appropriate; and systematic classroom observation also have roles to play.
Just as many educators comfortable with step-and-lane pay recoil from such changes, many would-be reformers reject my counsel of patience and seek to "fix" teacher pay immediately. But K–12 is a sprawling, complex exercise. Spasmodic solutions born of frustration can lead to flawed policy—as with No Child Left Behind, which overreached in ways that undermined the law's more sensible provisions.

Doing Merit Pay Smart

Merit pay should reward performance, value, and productivity. We can measure these in many ways—by scarcity of individuals in the labor market, annual evaluation by peers, professional observations, supervisor judgment, and so forth. The contemporary obsession with student test scores as the only metric of interest has been an unfortunate distraction.
Student achievement must be an important factor, but we should employ it deliberately, with an eye to a teacher's actual instructional duties and responsibilities. Too often, we rely on test scores simply because we don't have anything else. That's not a problem specific to merit pay; that's our peculiar failure to import widely employed practices and tools from other professions.
Second, it's a mistake to imagine there's one universal way to design pay systems. Why debate about whether Google, the Red Cross, or Microsoft has the "right" compensation model? There are a slew of reasonable approaches, depending on organizational context and needs. Rather than searching for proven pay models, education leaders would be better off identifying the problems they're trying to address and asking how reconfiguring pay might help them solve those problems.
Third, the aim must be to craft systems that can evolve. The whole point of pay is to help attract and leverage talent. We need an approach that succeeds in tapping specialists, online instructors, part-time educators, and others who can best serve students. Rather than cement in place new merit-pay systems predicated on improving test scores for a teacher who spends 45 minutes a day for 180 days with the same 24 students, let's design systems that can reward unconventional forms of excellence.
For instance, an online tutor who lives thousands of miles away but who can help struggling students make remarkable leaps in mastery of algebra is an invaluable asset. The same is true of a retired army sergeant who may be ill-equipped to teach a middle school class but who may be able to inspire and mentor 15 middle school students or of a teacher who builds a dynamic arts or science program. Today, there is little room in teacher pay scales to recognize or reward—or, sometimes, even make possible—these kinds of contributions. The attempt to superimpose rigid hierarchies atop an otherwise unchanged profession was one of the big stumbling blocks for career ladders and merit-pay proposals in the 1980s. Let's take care not to repeat those mistakes.
Finally, today's test-based merit-pay systems have nothing to say when it comes to productivity. They funnel more dollars to teachers who yield higher test scores. The reward is a bonus for past performance; it does nothing to amplify a teacher's effect on students and schools. Well-designed merit-pay systems should reward teachers who choose to take up opportunities to do more good—such as instructing additional students, leveraging particular skills, or assisting colleagues—making their increased pay a pound-wise investment for their districts or schools.
This means that merit-pay systems are not, as some would argue, a frilly luxury that is unaffordable in today's bleak fiscal climate. Rather, they are an essential tool for designing schools and systems that can excel in tight times. Merit pay should shift dollars from employees and roles that do less good for students toward those that matter most. This will entail discomfort and disruption and require an array of compromises and adjustments. But if merit pay is to be more than a gimmick, it must be part and parcel of a push to rethink the shape of teaching and schooling.
End Notes

1 Loeb, S., & Reininger, M. (2004).Public policy and teacher labor markets: What we know and why it matters. East Lansing: Education Policy Center at Michigan State University, p. 11.

Rick Hess is a resident scholar and the director of education policy studies at the American Enterprise Institute (AEI), where he works on K–12 and higher education issues. He also founded and chairs AEI's Conservative Education Reform Network.

Hess's research and writings are found in many scholarly and popular periodicals, including Harvard Educational ReviewForbes, The Hill, Teachers College RecordPhi Delta KappanEducation WeekWashington Post, and U.S. News and World Report. He also writes Education Week’s blog “Rick Hess Straight Up” and serves as an executive editor of Education Next. Hess taught education and public policy at Harvard, Georgetown, and Rice Universities and at the universities of Pennsylvania and Virginia.

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