The Failure of Merit Pay Plans and a Simple Fix

I enjoy reviewing all the misguided merit pay plans that are presented as THE answer to either improved campus performance and/or teacher motivation.  The research is fairly clear; on the whole, merit pay plans are ineffective for a number of reasons.  Mostly due to the fact that far too many school performance issues are the result of leadership (and leadership failure), and a merit pay system is not leadership. Meaning that the merit pay plan is attempting to address a symptom of the problem, not the problem.  That being said, for those who want to use performance-based salary augmentation to address school performance issues may find the following useful.

First, recognize that working at a significantly more at-risk campus within a district should mean more money for the instructional personnel of the campus in question, either in base salary or as a stipend. For everyone who says that this is not “fair,” try this experiment.  Give every staff member at the non at-risk campuses the opportunity to transfer to the targeted at-risk campuses, no questions asked.  When next to no one takes you up on the offer you will have proof positive that regardless what their lips are saying, by their actions your staff admit that the jobs at non at-risk and at-risk campuses are not equal.  And providing the same pay for unequal work is patently unfair.

Second, reward team performance over individual performance.  This is where leadership has to look at the big picture and admit to what they really want to pay for and let the whiners just whine.  Here’s what I mean.  99% of the merit pay programs pay for individual performance out of one pool of money.  The more people who meet the given performance standard, the less money per person.  The fewer people who meet the standard, the more money per person. And this is how your ambitious and/or smart people can easily game the system (and they will).  

Under the system I just described, if I figure out a way to ensure that my students perform at a higher level, the most illogical thing I could do is share that knowledge with any of my co-workers.  To do so would take real dollars out of my pocket. Hundreds to thousands of dollars.  The merit pay “reform” has now created a very real structural roadblock to increasing staff capacity and decreasing staff isolation.  When you pit self-interest over community interest, self-interest always wins (even with educators).  If you choose not to believe this fundamental truth of human nature, re-read Hamilton, Madison and Jay. Over and over I observe lots of bright people make this very predictable mistake.

So what’s the answer? Team based incentives.  If the team is successful, the team shares in the reward.  If the team isn’t successful, no one gets the reward.  In this system, the district is actually aligning self-interest and community interest and here is how this is done. If I figure out a way to ensure that my students perform at a higher level, the most illogical thing I could do is to not share that knowledge with all of my co-workers.  To not do so would take real dollars out of my pocket, because if the team doesn’t perform, I get nothing extra.  We want to reward innovation that is scalable.  Proof of scalability is if my co-workers can replicate my success.

Now I understand that some employees on a campus have a more direct role in the overall success of the campus than others.  But remember, a staff is a team and every person on a team has some impact on the overall success or failure of the team.  An equitable way to solve this problem is to assign shares to team members based on the expected contribution of their overall role.  Here is an example:

Total Campus Performance Bonus Pool: $25,000

Staff Role	Share	Number of Staff in Role	Total Shares	Individual Performance Bonus Payout
Teacher – State Tested Course; Tested Grade	1 share	20	20	$574.71
Teacher – State Tested Course; Non-tested Grade	.75 share	15	11.25	$431.03
Teacher – Non-tested course	.5 share	12	6	$287.36
Instructional Aide	.25 share	4	1	$143.68
Principal	.75 share	1	.75	431.03
Assistant Principal / Dean / Instructional Coach	.5 share	3	1.5	$287.26
All other professional support staff	.4 share	3	1.2	$229.88
Non-professional office, custodial and cafeteria staff	.15 share	12	1.8	$86.21
Totals		70	43.5	$25,000.00

The math is simple, if the campus meets its overall performance goal, everyone receives his or her share of the performance bonus. If the campus misses its overall performance goal, no one receives a performance bonus.  Think of it this way, the worst player on the winning team still won.  And the best player on the losing team still lost.  Running a good school is a team sport.

The last thing for leadership to consider is the setting of campus performance goals.  Just note that in most cases THE GOALS FOR CAMPUSES WILL NOT BE THE SAME.  Campuses serve different client bases, hence the need for different performance goals.  Whereas the campus that serves a large population of poor, recent immigrant students may have the goal of meeting state standards, the goal of the semi-selective STEM magnet campus may very well focus on increasing the number of Commended performing students.  Always keep in mind the one fact that eludes most pro-accountability advocates; the most unfair system is the system that treats the at-risk and the advantaged the same.

Think. Work. Achieve.

Your turn...

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