Performance pay versus merit pay versus strategic pay

There are are two terms that are thrown out a lot regarding pay systems. Now that R2T has listed performance pay as a criteria for awards, many states have rushed to implement performance pay systems for teachers. Most of these are tied either exclusively or mostly to student achievement per Mr. Obama and Mr. Duncan's guidelines. Some have labeled these "merit pay" or "performance pay" systems, often interchangeably.

Here at the Charter School Insights blog, we've always advocated something slightly different from the student test based performance criteria. In fact, we've differentiated our system by using the term "strategic compensation." In our model, we want teachers (and optimally all employees of a school) to be paid on some combination of their value to the organization, the characteristics they display in doing their job, and the measurable outcomes of their performance. I suppose that this sounds much like the federal plan that many states have adopted, but there is a difference.

We do not begin with the premise that student test scores necessarily indicate the teacher's performance. As we've argued before, student test scores are affected by many variables, many of which are not within the teacher's control.

We begin by looking at the school and its constituents to see what they value. For example, one school may value character education more than another. One school may value science and technology more than another. One school may regard direct instruction more important than listening to student desires. In other words, we reward method and alignment with school values as part of "performance" or "merit." It may be that a school (parents, administrators, and teachers) decides that test scores are a high value and should be part of the measure. We disagree, but when we work with schools, we do not judge. We facilitate the process.

The key then is in developing the assessment tools that go along with the actual values to be measured. For example, how do you measure a teacher's ability to use the Socratic method? How do you decide if absolute test scores are important or if growth of students is important? What if one teacher's students grew more on average, but another teacher, whose average was lower, had more high growth students, but some falling behind? How much does working as a team player count? AND what tools do you use to measure it?

A school could combine administrator, parent, student, and peer assessments. This would take a lot of time and the person distributing the surveys would have to take the time to make sure the instruments were valid. In addition, if there is a fixed pool of money, peers have an incentive to grade down. If you get one parent who is irate, do you let outliers determine pay or do you throw out outliers?

In addition, there is a huge communication piece. Quite often in performance pay systems in industry, the rating is somewhat subjective. This may be the reason that the Federal guidelines include such objective measures as student test scores. Those are objective. Of course, using the wrong objective measure will decrease morale more than using the right subjective measure. At least if you use the right measure, employees have a chance to succeed. If you use the wrong measure, then the system is random, even if objective. The point is that whatever assessments you use, you have to communicate the results (along with the dollars) to the teacher. That means that principals need to have 1. confidence in the assessments and the results, 2. the confidence in themselves to deal with teachers who didn't contribute the strategic value as other teachers, and 3. the communication skills to clearly communicate with all employees.

The result of such a system should contribute to the strategic short and long term goals of a school. Through such as system, the school should be able to motivate teachers who display the characteristics that the school thinks will make it great; identify teachers who want to be great, but aren't great yet; and identify teachers who do not want to be great and help them find other occupations or other schools with whom the teacher can succeed.

The difference between a strategic system and a performance system is that often the performance system has the criteria for success spelled out before teachers and administrators get a say in what is important. In an era when no one seems to know what constitutes a good education, it seems that this strategic model is a better model. It directly aligns with the school's mission, vision, values and strategic plan. It's a plan that warrants national debate. Mr. Duncan?