Why Mission Based Salary Systems are Crucial

Since NAIS first published our book, “Faculty Salary Systems in Independent Schools” for the first time in 1983, over 3200 schools worldwide have engaged Littleford & Associates to help them design mission-based salary systems. But what does that mean?

Salary systems affect teacher behavior often subtly but sometimes very overtly. The same is true for the structure of your school’s benefit package. No salary system is without flaws, and no benefit package is completely fair.

Salary systems (it is best to avoid the vernacular of “salary scale”) run from the sublime to the ridiculous. Most current heads inherit them, or they are borrowed from a public or other private school, or they are indigenous to the culture of the school but have been so tinkered with over time that they no longer make sense either philosophically or financially.

The key to any salary system is the message that it sends to a current or potentially new teacher about the values that the school seeks in a teacher but also about how the school will support, nurture, and retain teachers (and staff).

One relatively newly founded, international boarding School has a rigorous load for teachers of dorm duty, coaching, and teaching four classes. Because the founding Head had been there only four years and had to hire teachers quickly from the market, initially there was no time to develop anything but an ad hoc salary system. The mission of the School is unique and powerful, and the School wants its graduates to be beacons of prosperity and peace in its region, so the Head wanted to transition to a new salary system eventually.

This School tends to hire relatively young, ambitious teachers from strong New England boarding schools who also seem to be open to a compensation scheme that rewards more than just experience and credentials. The system that the Board, faculty, and administration ultimately designed collaboratively provides some degree of predictability in future earning power through a step system. However, it also generously provides for horizontal movement based upon demonstration of the key qualities that the school is seeking in its teachers. There are five bands designed to motivate teachers and meet their needs but with a focus on the School’s mission.

For example, according to this system, a young teacher in this School with five years of experience could potentially move horizontally across one or more of five bands and earn $85,000 (tax free) plus housing, food, flights, professional development etc.  The system recognizes that years in the classroom are important but not the main determinant of a great teacher. Teaching at this school is considered an attractive post for those who want the traditional teacher/coach/advisor role and who know that the School is willing to pay for it.

Many US based schools have implemented a similar system with bands that are mission-based and unique to their schools.

A longevity-based salary system is common in our public and independent schools and rewards longevity, loyalty, and experience. How do they influence teachers’ behavior? This system sends the message to them that to earn more pay, they only need to live another year or acquire credentials that may or may not be relevant to their teaching craft. We all know that a 10-year teacher with an MA is not necessarily a better teacher in the classroom than a 5-year teacher with a BA.

So how do schools recruit mission appropriate teachers?

Mission based salary systems mean that the mission should drive the salary system, the benefits package and evaluation/growth protocols. That means there needs to be a philosophy of compensation drawn from that specific mission and from that a salary system should be designed. We have seen some excellent mission-based philosophies of compensation. Being in the top 10% of NAIS schools regionally in teacher pay is not a philosophy of compensation. It is a dog chasing its tail. Everyone wants to be there but ultimately very few can ever be there.

Mission based salary systems should engage boards because one of the board’s main roles is fiscal oversight. Since 85% of most day school budgets are tied up in salaries and benefits, boards have a right to know how those systems are created, how they work and how financially viable and market competitive they are.  However, boards should not know the salaries of individual teachers.

In a South American country where we worked, several public and private schools have salary systems based on pesos per hour. What does this mean? Teachers do not know accurately their monthly or annual salary and measure everything in terms of hours worked. That creates a strong hourly focus and mindset rather than a holistic approach to the professional job of a teacher. This is another example of how salary systems do affect teacher (and staff) behavior.

What about benefits?

Benefit systems may also affect behavior. For example, a board informs the faculty and staff that the budget will include only a 2% raise for teachers in the next fiscal year.  In this school, the combination of tuition remission and a generous family medical plan may represent as much as $60,000 to $100,000 tax free to a teacher with a family, versus a single teacher. There is nothing wrong with that IF that is a mission-based decision. We want teachers who have children in the school. But what happens when even 75% remission for all employees with no limit on the number of eligible children begins to account for 10%, 15% or 20% of the enrollment in a school with wait lists? That is a lot of money in tuition remission on top of need based financial aid.

The question to ask: Is our package mission based or just accidental responding to the various pressures from various staff lobbying administration over time? Often schools end up with a hodge podge of unaffordable benefit options, and they have no idea how they got to that point.

Conclusion

Mission based compensation exercises should have these outcomes:

1. The systems that are developed are mission based, financially sustainable and market appropriate.
2. The process that leads to these outcomes should result in higher political capital for the head, greater faculty morale, and trustees and teachers understanding and appreciating each other more.
3. The school should be clear up front what kind of teacher /staff behavior they want and to be relatively sure that the systems chosen will result in these behaviors.

We have found that when done properly these collaborative processes can and often do result in much greater trustee generosity.

This is not just about teachers. It is also about the legions of non-teaching staff who may often feel left out. The same collaborative dialogue among a group of teachers, board members and administrators can be used with the non-teaching staff as well.

If a head of school has been in the job for at least a year or two and has sufficient political capital, then it is not too early to initiate such a process. Our Firm does not recommend launching it in a head’s first year unless that head is an internal appointee.

We advocate this collaborative process and feel that the timing is better now than ever before.