Performance Pay: A rebuttal

found this at
http://www.epi.org/analysis_and_opinion/entry/the_perils_of_performance_based_pay/
;
it rebuts many of the arguments certain folks I know love to use to support
performance-based pay for teachers.


The perils of performance-based pay for teachers
Andrea Orr <http://www.epi.org/authors/bio/orr_andrea/> May 29, 2009

The growing interest in performance-based pay systems for public school
teachers has typically been supported by a simple and seemingly logical
argument: If it works for the private sector, it will work for schools.
In fact, performance-based pay in the private sector is far less common than
is often assumed, and those compensation systems that do include worker
incentives tend to be a lot more complex than the formulaic systems proposed
for school teachers, linking pay increases to some easy-to-measure benchmark
such as students’ standardized test scores.
EPI recently published the book, Teachers, Performance Pay, and
Accountability: What Education Should Learn From Other
Sectors<
http://www.epi.org/publications/entry/books-teachers_performance_pay_and_accountability/
>,
to examine the problems with this sort of compensation system. On May 28,
EPI hosted a panel exploring the ways schools might be able to reward
excellence in teaching without imposing arbitrary standards that discouraged
collaboration.
“Teachers cannot be judged accurately by student performance,” said Richard
Rothstein, a research associate at EPI and co-author of the Teachers,
Performance Pay, and Accountability book. Rothstein’s research into the
perils of quantitative performance accountability was based heavily on his
study of the economic system of the former Soviet Union, along with other
instances where performance-based pay backfired.
When the Soviet Union imposed quotas on shoemakers, he said, shoemakers
responded by using their limited leather supplies to make larger numbers of
smaller-sized shoes, resulting in a surplus of shoes for children and a
shortage of shoes for adults. When magazines such as U.S. News and World
Report started ranking colleges in part based on how selective their
admissions were, many colleges gamed the system by inviting large numbers of
clearly unqualified high school seniors to apply. More tragic, the United
States actually used body counts (ours vs. theirs) during the Vietnam War as
a tangible, but highly unreliable and destructive way, to measure its
success.
While Rothstein acknowledged that some companies in the private sector had
devised systems to link pay to performance, he said they usually involved
extensive feedback from supervisors, subordinates, and peers who could
collectively offer valuable insight into the worker’s contribution. “The
private sector is not a model for using narrow, quantitative measures,” he
said.
Scott Adams and John Heywood, both economists at the University of Wisconsin
and co-authors of the EPI book, elaborated on this fallacy that performance
pay was the backbone of the U.S. private sector. Adams calculates that only
one in 15 private-sector workers have pay tied to performance, or about one
in 10 when bonuses are factored in. But he stressed that bonuses were often
end-of-year or some other sort of reward that had little connection to
performance. Most private-sector employers, said Heywood, had learned the
same lesson as the Soviet leadership: “Workers can engage in a lot of
strategic behavior” to meet their goals, but this behavior does not
necessarily benefit overall performance or production.
One major way private-sector compensation does differ from the education
sector is that workers tend to have less job security. Janet Hansen of the
Committee for Economic Development noted during the EPI forum that the
typical private-sector business reserved the right to terminate employees
“at will,” while public school teachers usually earned lifetime tenure after
a few years. Although job security is desirable, she said, the knowledge
that employment could be terminated at any time could help motivate workers.
Hansen said she agreed that formulaic performance-based systems were not
useful, but argued that schools still needed to find a way “to make teacher
performance matter.”
“Teachers want higher salaries, and in some cases we need to be paying
teachers more,” she said. “But the public is not likely to support
across-the-board increases unless performance matters to some degree in
determining salaries.”
The nuance she identified that exists between ineffective performance-based
pay and some alternative system that would take more into consideration than
just academic credentials and years on the job, underscores the need for
more research, said EPI President Lawrence Mishel.
“There are a lot of people who talk very simply about merit pay,” Mishel
said. “Let’s move beyond a discussion of merit pay, the formulaic type of
performance pay, and have a full-bodied discussion of other, more promising
ways of changing teacher compensation systems.”