Edwatch by Julia Steiny: ‘Merit pay’ costs more and delivers less

Edwatch by Julia Steiny: ‘Merit pay’ costs more and delivers less
01:00 AM EST on Sunday, December 6, 2009

No evidence anywhere shows that merit-pay systems, aimed at individual teachers, improve education. Incentives to groups of teachers are effective, but not individuals.

In education “merit pay” means that a school or district decides what “merit” means — usually certain gains in test scores — and dangles financial bonuses to entice individual teachers to work harder.

Intuitively, it sounds like it could work.

But in a 1998 Harvard Business Review, Jeffrey Pfeffer wrote an excellent essay called “Six dangerous myths about pay.” He blames economic theory for creating the myth “that individual incentive pay drives creativity and productivity, and that people are primarily motivated by money.… Despite the evident popularity of this practice, the problems with individual merit pay are numerous and well documented. It has been shown to undermine teamwork, encourage employees to focus on the short term, and lead people to link compensation to political skills and ingratiating personalities rather than to performance.”

He’s talking about the private sector, so imagine the boondoggle it becomes in the public sector.

The National Governors’ Association has awarded grants to six states to develop new merit-based teacher-compensation systems. Grantees Florida, Indiana, Kansas, Louisiana, Tennessee, Rhode Island — and for that matter all states — badly need to rethink the whole issue of incentives. What motivates adults or kids? I’m delighted Rhode Island is taking up this question. But what schools really need is flexibility. If science and math teachers cost more, fine. Design a way to accommodate that and other anomalies.

Because the moment you’ve drafted a complicated set of rules governing eligibility for individual “merit” pay, you’re instantly mired.

Boondoggle #1: Merit pay is money on top of the regular salary schedule and annual raises. Very expensive.

Teachers unions aren’t about to let anyone mess with their negotiated salary schedule. Merit will cost you extra. In the face of the financial melt-down, most merit-pay initiatives were quickly abandoned to save money. Yes, a couple of bold, rare experiments create merit-pay paths within the regular step schedule, meaning that a terrific evaluation earns a teacher a higher step raise than a lesser teacher. Whatever you may think of this idea — it’s supposed to keep costs in control — differentiated-pay strategies are a rock-hard sell to the unions. So, merit pay generally adds substantially to the price of doing business in education.

Boondoggle #2: Define “meritorious,” or even “good.”

Texas spent $300 million, over three years, to give excellent teachers bonuses of between $3,000 to $10,000. But without an iron-clad definition of “good,” clay-footed principals generally gave all teachers about $2,000, spreading the money evenly, broadly, politely. Student achievement didn’t budge.

Boondoggle #3: If your definition of “merit” mainly involves test scores, the performance of the “bad” kids will get worse.

Test-score-based merit pay encourages teachers to use political pull to get classes populated with “easy” kids who are set to make gains anyway. Teachers will play hot potato with the autistic, oppositional, low-functioning, boy-crazy, or disengaged kids, who are far less likely to get scores that will boost a paycheck.

Boondoggle #4: Merit pay encourages all manner of gaming the system.

A study of a large merit-pay system in Portugal found that the kids actually did worse. Teachers were busy inflating the kids’ grades and generally making it seem that kids were soaring academically. But when students took the national test, they bombed.

Mind you, great work should be honored. And I’m sure the Rhode Island group can find ways of incentivizing individual teachers without necessarily using money. Because financial incentives only work when offered as bonuses to groups responsible for all kids — talented, challenged or misbehaving.

This year Tony Bennett, Indiana’s superintendent of instruction, is giving $10,000 or $20,000 to his 12 high schools with the most improved graduation rates. The teachers can divvy up the money among themselves or use it to make life at the school better, with more technology, musical instruments or whatever.

Merit pay can also work well when given to a team — to the entire sixth grade or to the math department. A team is responsible for all the kids in their level or subject.

The problem with a group approach is what Pfeffer calls the “free-rider problem,” the deadbeats a team has to carry. But a team approach might inspire the good teachers to insist that their unions embrace helpful evaluations that also have teeth. Unions normally protect bad teachers from reputedly villainous administrations, but unions would be in a very weird spot protecting incompetents from the much-deserved wrath of ambitious, talented teachers who stand to lose the bonus thanks to the deadbeats.

The point is, after all, to improve teaching.

Pfeffer writes, “Most important, to my mind, is … the idea that any organization believing it can solve its attraction, retention and motivation problems solely by its compensation system is probably not spending as much time and effort as it should on the work environment — on defining its jobs, on creating its culture and, on making the work fun and meaningful.”

How about that? Incentivize teachers with fun. Now THAT would work for the kids AS WELL AS the test scores.

Julia Steiny, a former member of the Providence School Board, consults for government agencies and schools; she is co-director of Information Works!, Rhode Island’s school-accountability project. She can be reached at juliasteiny@gmail.com, or c/o EdWatch, The Providence Journal, 75 Fountain St., Providence, RI 02902.