Ensuring Rational Faculty Salary and Benefit Systems: Time for a Dialogue

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Ensuring Rational Faculty Salary and Benefit Systems: Time for a Dialogue

Where to Start?

Every school needs to develop a philosophy of faculty compensation that should be tied to the school’s mission. Very few schools have thought about this basic but important task.

Most will simply claim that benchmarking faculty salaries against those of a peer group of regional schools constitutes their philosophy of compensation. However, most school missions do and should differ somewhat, and for the majority, mission differentiation is key to their founding, success and sustainability. Should not the way a school compensates its faculty be unique to a certain extent as well in order to attract, retain and reward its most valuable resource?

Salary and benefit systems always convey a philosophy of compensation, even if not intended, and it is almost never publicly stated. All salary systems and benefits policies and how they deliver money send signals to teachers about the kind of staff the school wishes to recruit and retain. But most of the time school leaders are unaware of these messages. Such ideas are simply not high enough on the radar screen compared to, for example, such questions as: “Are our base salaries high enough?” “Is our percentage increase for teachers this year competitive enough?” “Are we losing good teachers to other schools?”

What Do a School’s Salary and Benefits Systems Say?

While 90% of the salary systems of international and public schools are salary grids based on experience and often advanced degrees or credits, about 50% of American independent schools have no published salary systems of any kind.

The existence of a published salary scale, while more transparent than the absence of one, does not guarantee a rational salary delivery system. These lane and track scales are fraught with anomalies that develop over time as different heads, faculty committees and groups with special interests tinker with them to recruit desirable new teachers or to keep current ones.

Schools with no published system may be perceived as biased, playing favorites, and striking special deals based on the influence and volubility of a teacher and the need to land or keep a valued hire.

Thus, everyone breaks the rules, everyone plays the game, and everyone finds ways to work around whatever restrictions exist in any salary structure in order for the head to manage one of his/her core responsibilities: finding, keeping, nurturing, developing and keeping happy the majority of the faculty. Most of these maneuvers are not transparent.

Schools, with or without a published salary system, usually raise base salaries annually by a least a cost of living increase. Percentage increases alone always benefit the higher paid and hurt the younger, lower paid teachers trying to make a living at the bottom of the salary system.

The complexity of the problem and the possible solutions, however, are found in a much deeper analysis of the salary and benefit patterns set in the school cultures over time. These DO influence teacher behavior even subconsciously. Thus, knowing more about these systems and the messages they send is a crucial skill for boards and heads.

What about benefits? A school providing 100% medical benefits for family members and 100% tuition remission for staff children is sending a powerful message, i.e. a philosophy of compensation. It is welcoming staff with families and sending an equally strong message of not caring as much about singles. Single teachers are very aware, even if they do not much talk about it publicly, that tax free dollars delivered in remission and family medical represent substantial school sums spent on others. On the other hand, schools that provide medical coverage for the employee only and need based financial aid with no tuition remission for staff children are sending an entirely different message, one friendlier to singles and those without children or with grown children.

School Example Number 1: The Absence of a Published Salary System

The Head of this School keeps a guide of sorts in his drawer so he can determine in hiring each new teacher where that person falls compared to all other new hires and current faculty. But this guideline is not published or known. Future increases are determined by board approved percentage increases. Many teachers think that all teachers receive the same percentage increase, but in fact every year a small group of teachers, who make a pilgrimage to the Head’s office and state their case, successfully secure a larger increase. How?

  1. They learned in talking with another teacher or new hire that their base seems unfairly low so they request an “equity” increase.
  2. They could get a better job down the road at a competing School and the Head believes that argument has some merit.
  3. They have a skill or special talent that the School cannot do without or that may be scarce in the local market.
  4. They have a personal circumstance, such as a pending home purchase, a medical issue, a new child, or some other experience that touches the Head.

In this School about 10 to 20% of the teachers over time have successfully negotiated a higher base pay than the published percentage increase. There is an underlying suspicion that the men, the more determined, and the braver teachers are the more highly paid.

At this School, salaries are very competitive, workloads are relatively low and benefits are above the norm. There are really very few, more attractive options in the area for teachers. The quality of the students, facilities, parents, local environment and professional challenge is exceptional. So teachers accept or ignore the rumors of “special deals.”

On the other hand, the Head is not comfortable with this complex set of arrangements that he inherited and as he tries over time to iron out inherited inequities, he wants a published salary system that can speak more openly to the faculty about core school values and is tied to the School’s mission. Yet he does not want a lock step salary grid which he knows presents its own fair share of problems.

The Head has asked for a process that will engage leaders of the Board, the senior management team and a cross section of teachers to review options that might represent a rational salary system combined with a fair benefits package and substantive evaluation process on which all can agree. He is seeking some compromise middle ground. This “middle ground” is a hot topic of conversation across schools, public and private, and around the world.

School Example number 2: The Long Present grid salary system

In this high school serving some 800 students, a salary “grid” which replaced the prior negotiated and discretionary system has been in place for 20 years. Faculty undermined the discretionary system by sharing salary information which pointed out the glaring inequities inherent in it. The grid system with 20 steps, however, has its own share of issues. The entry level salary is fairly low and thus the School finds it difficult to hire young, talented teachers, but the step increase from year 19 to 20 is over 18% so teachers with more than 20 years of experience earn a decent living. Over a third of the teachers are now in this group earning about $100,000 annually excluding extra pay. Clearly, at some point a group of senior teachers lobbied for this major bump.

However, those in the mid-range are hurting the most. They are struggling to make ends meet in this high cost of living City. Like teachers everywhere in these circumstances, they seek out every extra income producing opportunity available including coaching, tutoring, extra assignments, committees, debate, yearbook, service assignments, etc. As a result, more than 50% of the faculty carries extra assignments for more pay. The young mid career teachers often do summer school, summer camps and may even hold down a second, weekend job. Many seem tired from rushing from pillar to post to take on these extra duties. But clearly, they are a mission driven, dedicated group of young teachers whom the School wants to keep.

The School Leadership has historically made adjustments to the scale. There are several individuals who have requested to have their position on the scale reevaluated and negotiated placement on a higher step, and others have received a new assignment with a major stipend for an activity which previously had no extra pay assigned to it. There is also a longevity based stipend after 10, 15 and 20 years of service thus further strengthening the pay package for the more senior teachers.

In other words, management as well as teachers over time has negotiated around the scale, even though the scale was created to avoid “deals” and ensure greater transparency. Stipends have exploded in number and size as new quasi-administrative titles such as “Deans” have been added also. These titles are mainly going to rising mid-career teachers who are hurt by the official grid.

This School has the same challenges and problems as does the School in the first example: the salary system long in place does not meet the mission, does not ensure equity or fairness; and does not meet the needs now of mid career teachers or even newly hired ones.

What about Benefit Systems?

Every philosophy of compensation affects not only how a salary system should be designed but also how the benefits package should complement it and not convey a conflicting philosophical message. The same is true of the teacher evaluation process. It needs to be mission congruent and also be tied logically to the benefits system and the salary system design.

In the first School discussed above, when a teacher is hired, they may contribute to TIAA, but the School does not. There is no “cliff vesting”. As of year two, the School’s contribution of 7% is fully vested with the teacher. The teacher’s own participation is a required 3%.

BUT when the teacher enters the 6th year, the School contributes a generous 10% to base salary and the teacher’s own required contribution drops to 1%. That could be why when this Consultant interviewed teachers, he found that so many of them had little in their retirement savings despite the generous school contributions; they lost the incentive to increase their own contribution to retirement. There was no serious thought about the impact of this policy.

Also, this first School has a very generous professional development, recognition and innovation program or the equivalent of $3500 expended per teacher per year. That is one of the highest levels in the US. The Head realized that the old unpublished salary system placed him in a quandary, and he is now using professional development dollars as an alternative way to boost teacher income.

When one of these two Schools was about to lose a talented Teacher suddenly, it modified a key policy. The Teacher pressured the Head to recommend that the Board reinstate (at least temporarily) tuition remission which had been replaced with need based financial aid formula. As this school is single sex, the thought was been that tuition remission was discriminatory as only teachers with children currently at school and only of one sex could benefit.

Here again, leaders must find ways to recruit and keep valued and talented teachers and often in the absence of rational, mission based salary and benefit systems. Thus, heads are constantly in the process of redesigning systems and benefits on the spur of the moment to react to specific teacher needs and demands.

The Solution

The solution is really one which both of these Schools embraced: a complete review of current salary system practices and patterns, including an analysis of their histories and how and why they changed over time; a similar study of benefits practices and modifications; and finally a serious look at whether the evaluation systems in place (if any) were ones that could underpin logical compensation decisions. In other words, were these decisions based on a system of fair, effective and transparent criteria and procedures? Were they honestly and equitably applied across departments, divisions and teachers?

Like almost 2000 of their peer schools worldwide, Littleford & Associates was retained not to impose a solution, but to lay the ground work for an organic, positive dialogue that was mission and culturally sensitive and which involved compromises and engagement among teachers, board members and administrators. The outcomes of this process ultimately would either serve better the mission needs of the school OR make clear that the existing systems could serve the mission interests of the school, perhaps with more explanation, transparency and subtle but modest changes.

The dialogue is crucial. And it should involve teachers, administrators and board members.

John Littleford
Senior Partner