Recap of DMC's Fall Leadership Development Meeting. Nov 5-6, 2009.
District leaders gathered in Boston earlier this month for DMC's Leadership Development Meeting on Differentiated Compensation: Aligning Financial Incentives with Performance. The topic generated great interest among attendees from 35 districts and 21 states across the country as we focused on the theory of action, finding funding for performance pay plans, and structural considerations in crafting a performance pay plan.
The meeting also featured a case study on the Houston Independent School District, the largest urban school district to implement a pay-for-performance model. We were fortunate to have with us Dr. Abelardo Saavedra, recently retired superintendent of the Houston Independent School District (HISD) and DMC Senior Advisor, who shared his insights and experience of implementing the HISD plan. The case study was followed by a panel discussion between Dr. Saavedra and Dr. Jack Dale, Superintendent of Virginia's Fairfax County Public Schools (FCPS). Dr. Dale shared his district's very different approach to performance pay, and the panel discussion offered a great opportunity to juxtapose and compare and contrast the approaches pursued by HISD and FCPS.
The private sector has a long history of applying a broad variety of differentiated compensation vehicles to the workforce as approaches to influence behavior and outcomes. While many school districts across the nation attempted merit pay and variable compensation programs in the 1980s and early 1990s, these were largely unsuccessful and short-lived. Today, the single salary schedule still remains by far the dominant compensation system in use in the American public education system. But, interest in performance pay is now on the rise among districts and even among teachers, and is being further fueled by the Federal government. In recent years, we have seen renewed interest in innovative differentiated compensation models pursued at both the district and state levels. However, performance pay programs are but one category of differentiated compensation - other "inputs-based" models or hybrid approaches continue to be more common. While performance pay models focus on defined performance outcomes, inputs-based models reward activities like serving in hard-to-staff areas or advanced certifications that may or may not be correlated to actual district performance gains.
Several theories of action are used today to promote performance pay programs with the ultimate goal of increasing student achievement. Those programs encompass the ideas of "working harder" by using increased teacher effort to produce improved instruction; "working smarter" by using increased teacher focus to yield improved processes and practices or "improving the herd" by rewarding top performers and creating a system where good teaches stay and bad teachers leave, resulting in more effective instruction.
To look at performance pay models begs the fundamental question, "What motivates teachers?" Are they motivated by extrinsic rewards such as money or are they motivated by intrinsic awards such the importance of the work and the perceived gains in student achievement? Interestingly, research about motivation showed that people tend to think of themselves as motivated intrinsically, but think their colleagues are motivated extrinsically. The body of quantitative research on performance pay as a driver of student achievement is young and still emerging, though largely positive. Anecdotal and qualitative evidence also supports performance pay models as a strategy for improving student achievement, teacher behavior and cost effectiveness.
Formal research has not yielded significant insights regarding a preferred structure for performance pay programs. DMC believes there is no "one-size-fits-all" solution to be discovered, and design approaches must be adjusted based on program objectives and on district context. For districts considering a program of differentiated compensation, DMC offers a framework of three key design parameters to consider - the who, what and why of program design. Programs piloted to date span diverse combinations of these design parameters, with key design decisions adapted to local organizational objectives and key challenges.
In addition, DMC offers a framework to guide the design and implementation process for a new or revised differentiated compensation program.
Developing a variable compensation plan should be a collaborative effort that incorporates all of the stakeholders, including teachers, administrators, school board members, parents, and the general public. This increases the likelihood that the program will maintain widespread support in the face of the inevitable challenges and obstacles. Finally, a strong and coordinated communications strategy is essential the success of any variable pay campaign. Teachers must fully understand the proposed plan's impact on salaries and career progression as well as its effect on district schools.
To launch any sort of differentiated compensation model, districts must have a source of funding. Primary sources of funding usually include federal grants, state grants and appropriations, alternative public funding such as dedicated tax levies, redeployment of district funds, and philanthropic or corporate support. For example, the Federal Teacher Incentive Fund (TIF) supports a variety of performance-based teacher and principal compensation models to increase student achievement and to boost the number of instructors in hard to staff subjects and high needs schools.
At DMC, we are particularly interested in examining the redeployment of current resources as outside funding is inherently less within the district's control, and it is essential to ensure long-term viability of these performance pay plans in order to have an impact. We specifically discussed (1) reallocation of funding within the future compensation structure, (2) reallocation from lower value-added programs and services elsewhere in the district, and (3) systemic reduction in overall costs due to district performance gains. During the meeting, many participants concurred, for example, that the funds used for traditional salary schedule increases has little correlation to increased student achievement. This was an area where many saw a potential for restructuring of the compensation program and reallocation of resources.
Houston Independent School District was the first large urban district to adopt performance pay in 2006, and the performance pay plan has played an extraordinary role in raising student achievement, closing the achievement gap, and driving culture change. Dr. Saavedra presented the case along with DMC's Managing Director Nicholas Morgan. Please watch for a full case study and analysis to be featured in the upcoming issue of The District Management Journal and the District Management Resource Library.
The motivation behind Houston's program was a need to jump start growth after several years of flat performance. Saavedra, new to the job, saw several factors lining up in favor of performance pay. First, Texas is a "right to work" state with no collective bargaining, making it easier for him to implement and program that might have otherwise stalled in collective bargaining. Secondly, there had been some sporadic history of performance pay initiatives dating back more than 20 years. His board was receptive and he was able to allocate the funding to the program.
With access to a large research department, Houston made an important decision to measure growth versus achievement so it would be clear if a teacher had presided over the improvement in student achievement. In the first year, Houston used the state standardized test and the Stanford 9, a norm-referenced test to come up with a composite score. But in subsequent years, they outsourced the data, in part to bring greater objectivity to the process.
Initially, the program rewarded teachers of core subjects; later, school-based awards were added to recognize the contributions of teachers whose subjects, such as art were not measured by the traditional tests. Core teachers were eligible for greater awards, causing objections from non-core teachers, but the leadership in Houston decided to stick to the formula they adopted because the core teachers had much more at stake.
While HISD administration acknowledged that the program would have to be adjusted and improved over time, the administration believed that they needed to take a leadership role in implementing the program without waiting for perfection. Each year, the program evolves, but Houston already points to some very strong student achievement results that it feels were driven primarily by the performance pay impact. For example, the number of schools in Texas's "exemplary" category has increased 1400 percent in just four years. Houston also has the highest percentage of top rated schools of all the urban districts in Texas. They have also made significant gains in closing achievement gaps for their lowest performing schools and in closing the gap between white students and African American, Hispanic and economically disadvantaged students.
There have been some unexpected benefits as well. Because teachers are rewarded for growth, the performance pay model has made teaching in low income and low achieving schools more desirable than it had been. In these schools, ambitious teachers see the possibility of strong and consistent growth.
In Fairfax County Public Schools, Superintendent Jack D. Dale believes an entirely new model is needed for the teaching profession. His goal is to create a whole new role for teachers that both acknowledges the added responsibilities that have crept into the profession over the years, but also that expands the role with regard to responsibility for school improvement. He wants to move away from a "time clock" culture with isolated responsibility and a narrow job description to a more professional culture with shared responsibility and broader, more flexible roles. His goal is to acknowledge that the teaching profession has changed and reward teachers additional compensation to support the "year-round" nature of the work.
There is no "one size fits all" performance pay program. Performance pay programs must be tailored to the context of each specific district. DMC hopes that these frameworks help guide you in your discussions about structuring a performance pay program in your district. We look forward to hearing from you and working with you, and invite you to get in contact with us.
"DMC hits the bull's eye on how to support superintendent and team development, inspiring the functional areas we strive to continuously improve"Jim Christensen, Former Superintendent
Douglas County School District, Castle Rock, CO
50,000 students
Pay-for-Performance Programs: Strategies, Structures, and Funding
By Nicholas P. Morgan & Daniel Schiff
