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Performance Pay Can Work In Independent Schools

The Best of Times For Independent Schools

Independent schools are experiencing the best of times. Fund raising as well as tuition are going up steadily. Most boards believe independent school teachers should be paid more competitively. In addition, salaries are going up in the public schools. Public schools are providing signing bonuses, helping young teachers to obtain mortgages and, yes, even providing performance pay opportunities based on teaching quality, as well as on the results of other criteria.

All salary systems are based on a philosophical premise (or multiple premises) , which sends signals to teachers about what a school values.

However, administrators over time have lost track of how those messages are read by teachers. Schools tinker with salary systems without a real intellectual dialogue about what the system is designed to achieve.

Teachers are not risk takers. They are care givers. Littleford & Associates has interviewed over 10,000 of them in the past 10 years in confidential interviews. Most do not know their exact salary and even fewer know even remotely their retirement accumulations. This brings us to the first principle of teacher compensation:

      1. Teachers want absolutely predictability of future earning power. That is why teachers want scales, as salary scares go up inexorably every year.

However, once teachers have absolute predictability of future earning power, they run into a problem. Teachers need to have a way to make more money to address the needs of a new child, buying a car, purchasing a home, etc.

That brings us the to second basic principle of teacher compensation.

      1. Teachers also want to be able to influence future earning power and to know the rules for doing so.

Salary scales are meant to do away with bias and favoritism in salary setting. Yet over 50% of all independent schools still retains systems whereby the head negotiates individual salaries upon employment and each year thereafter. Thirty percent of independent schools have adopted scales of some sort, usually the ones based on longevity of experience and advanced degrees. The remaining twenty percent are the ones experimenting or quite experienced with “performance pay” in some form.

      1. Individually negotiated salaries over time may result in patterns of age and sex discrimination and are viewed by teachers as unfair. Teachers believe those who can lobby most effectively do best under this approach.

However, schools with salary scales have an equal if not greater set of problems.

      1. All salary scales are undermined over time by the actions of both administrators and teachers. They are undermined in order to enable schools to recruit and/or retain talented teachers and/or to meet the individual needs of valued teachers.

Ways in which scales are broken are numerous and often insidious in their long term effects. They include:

        1. Step systems that were once capped, but now which add steps every few years to enable teachers to earn more.
        2. Advanced degree and graduate credit systems that help pay for teachers to earn an advanced degree and then pay them more when they do. These systems include paying teachers extra for extra credits earned, often by up to 120 credits or more with a BA and similarly with an MA
        3. Extra curricular or co curricular pay for coaching, clubs, activities and other assignments.
        4. These systems were once designed to help ensure workload equity. They have not achieved that. Instead the concept, once begun, may know no bounds as teachers compete to have their activity added to the extra curricular system and pressure to have these stipends raised according to every year of service in performing them.
        5. Stipends that are paid for department heads, grade level coordinators, and assistants of all sorts. Many schools have faculty rosters where almost all the teachers have a title beside their name.

This is an obvious effort by both the school administration and the faculty to negotiate ways to undercut the scale by asking for or being asked to take on additional assignments.

A teacher recently told our firm that he had taken the department head role not because he wanted to supervise, evaluate and help fellow faculty grow but solely because of the additional remuneration and status the title conveyed. He said he would gladly have gone without the title, if he could have figured out a way to be paid more based on the quality of his teaching.

        1. Moonlighting and tutoring are additional tools to which teachers may resort to make ends meet and to earn more money.
      1. Research for the past 30 years has shown that there is no correlation between effective teaching on the one hand and advanced degrees on the other. So why are so many salary systems based on advanced degrees? It sells well to parents and the logic is that if a teacher has an advanced degree, they must teach better. It is also a non judgmental way to make a salary decision. It lets administrators off the hook.
      2. This same research has also demonstrated that there is no correlation between effective teaching and longevity of teaching service beyond the first five years. So why are most salary systems based on longevity? It seems logical, it avoids controversy, and it supports seniority. Teachers are wiser and more knowledgeable about the mission of the school and its culture over time. But teachers do not necessarily get better with every additional year in the classroom unless they change their teaching practices and grow professionally along the way.
    1. The Legacy of Performance Pay

One group of teachers in a boys boarding school told us that they chose many extra duties and jobs in order to earn more money. Counseling, coaching, and other assignments were taken on because of the stipends. Once taken on, these teachers said they could not afford to give up the activity regardless of their age, energy level or effectiveness.

In response to the question: “How do you find time to prepare for class each day”, these teachers answered: “We are not prepared.” The follow up question was: “But teaching is the basic reason you were hired.” The answer was prophetic: “Yes, but we do not get paid extra for it!” This is the logical absurdity of paying extra for everything that once used to be the definition of a full time job in an independent school, but not paying for quality of teaching.

Most schools never provided performance pay. They had “discretionary pay” and the head or heads left a bad taste in the mouths of teachers who felt slighted by this approach.

The word “merit pay” or “performance pay” are usually met by teachers with the following concerns:

      1. How can you quantify teaching results? We are not making widgets like a company does.
      2. Merit pay may turn colleagues against one another in the pursuit of the almighty dollar.
      3. Bias and favoritism would naturally predominate
      4. There has been no history of fair and consistent evaluation in our school, so how could anyone know what is actually happening in and out of the classroom?

These are just some of many legitimate challenges that teachers will raise about performance pay. What IS performance pay?

Performance pay is money paid out differentially according to a credible evaluation process and based on a set of criteria and procedures set by the school and faculty together. It may or may not be added to base salary and might come instead in the form of a bonus, not added to base salary.

    1. Key Conditions for the Success of Performance Pay
      1. A credible evaluation process that has a set of criteria and procedures that the teaching staff as well as administration has played a part in developing
      2. Trust in the evaluators themselves and in the fact they are knowledgeable and trained to do this work.
      3. Trust that the performance pay decisions are made by a group of people, not a sole evaluator. This speaks to the need to have all evaluation be based on a team of administrators and teachers, not a single individual
      4. Trust that performance pay is not being developed as a way to reduce salaries or hurt teachers. Schools should only introduce performance pay when salaries are going up by a larger than normal annual amount. It is in this context that teachers see a “win-win” opportunity for them and the school.
      5. A majority of teachers should earn performance pay. Teachers resent it when a minority is doing well and a majority is not. It is a good idea to set a target for about 50%-60% of the faculty to earn performance pay in the first several years such a system is introduced. After a period of time, all but a few teachers should be earning performance pay. Performance pay is not a penalty. It is an opportunity.

One client recently asked our firm to evaluate how their so called “merit pay” system was working. We interviewed 30% of the faculty, some of whom were earning as much as a $4000 differential for the same teaching experience. The teachers who were earning merit pay had no idea why. The teachers who were not earning it, did not know why. The teachers who wanted to earn it, did not know how to do that.

This was not a “merit pay” system. This was the head’s personal discretionary pay approach and this reputation for unfairness and not knowing the rules of the game colors the opinion of many teachers and administrators toward performance pay.

Performance pay is pay set by a group of people in the administrative team, based on recommendations from a team of evaluators, based in turn on a set of criteria and set of procedures that are fair and open. Performance pay may be of varying amounts and not always added to base. It is important to keep this in mind. It means no one should be surprised in earning or in not earning performance pay.

Performance pay may or may not be a part of a formal “career ladder” compensation structure. A career ladder is a system whereby the school spends its scarce salary resources according to the talents that teachers demonstrate over time. Teachers can move along a salary system on criteria other than simply longevity of experience or advanced degrees. Quality of teaching and quantity of workload as well as other criteria can weigh heavily here.

Many schools have adopted career ladders over the years. These systems always involve some element of performance pay. Career ladders may be “instructor”, “teacher”, “senior teacher”, and “faculty leader.” A shift from one category to the other, based on effective evaluation of overall performance, may bring a substantial increase in base salary OR may bring a bonus of some size.

For example, some schools with a “faculty leader” category may pay a lump sum bonus of $4000-$5000 a year for two years, after which a teacher must be reevaluated. This designation is usually limited to a maximum of 10-20% of the entire faculty. Why? Why does a university not make all its teachers “professors?” They cannot afford it, not all deserve that designation, and grade inflation undermines credibility of judgment, whether in evaluating a student or a teacher.

Does performance pay work in independent schools? Yes, if the culture is ready for it, if it is developed for the right reasons and under the right circumstances and in combination with (and following) effective credible evaluation. However, there is an important proviso. Performance pay will fail if teachers in a school want it to fail. It will succeed if teachers want it to succeed.

Littleford & Associates has assisted over 500 independent schools world wide with analyzing their current salary structures and benefit plans to determine how to improve those systems in ways that best fit the culture of the school, and benefits the school and the teaching staff equally.

It is important periodically to hold an intellectual dialogue on the subject of a school’s salary system, its underpinning philosophy and how it is actually working. Littleford & Associates can assist with that dialogue. It is better to undertake such a review with no mandated change in mind, but rather with an open mind.

John Littleford
Senior Partner