In Chicago — Phony Merit Pay is Dead, Long Live True Merit Pay

September 19, 2012

The dust hasn’t yet settled from the resolution of the Chicago teacher strike, but it appears that the reforms the city were able to retain will result in a better “true” merit pay system than the “phony” merit pay plan they were forced to concede.

Let me explain the difference between true and phony merit pay.  True merit pay — the kind of compensation for job performance found in most industries — provides effective employees with continued employment and regular raises while ineffective workers lose their jobs.  If you do a good job you get to keep getting a pay check and if you don’t you have to look for work somewhere else.  That’s true payment for merit because un-meritorious workers stop getting paid altogether.

In phony merit pay — the kind that hardly exists in any industry — there is a mechanistic calculation of performance that determines the size of a small bonus that is provided in addition to a base salary that is essentially guaranteed regardless of performance.  You can stink and still keep your job and pay.  The worst that can happen is you miss out on some or all of a modest bonus.  To make it even more phony, in the few cases where this kind of phony merit pay has been tried, the game is often rigged so that virtually all employees are deemed meritorious and get at least some of the bonus.

According to the initial reports, the city of Chicago abandoned its efforts to institute this latter, phony merit pay.  As the Chicago Teachers Union put it: “The Board agreed to move away from ‘Differentiated Compensation,’ which would have allowed them to pay one set of teachers (based on unknown criteria) one set of pay versus another set of pay for others.”

But the city preserved key provisions that result in at least some amount of true merit pay.  Specifically, the city preserved the ability to continue opening new, non-unionized charter schools at a rapid clip.  It is already the case that almost 50,000 of the 400,000 students in Chicago’s public schools attend charter schools.  As students migrate from traditional to charter schools, enrollment in the unionized sector has plummeted, causing 86 traditional public school closures over the last decade.  Enrollment is so low in many existing traditional public schools that 120 additional schools are eligible for closure next year.  As long as the city can continue to open charter schools and as long as there is demand by students to leave for charters, traditional public schools will continue to be closed in large numbers.

When Chicago closes a traditional public school for low enrollment the teachers are laid off.  The new contract appears to place some limits on this, but the practice has generally been preserved.  In addition, unlike in some other big cities, principals in Chicago are free to hire teachers as they see fit and are not forced to take teachers laid off from school closures.  The new contract does require that half of all newly hired teachers come from those laid off and guarantees re-hiring only for the highest rated teachers, but according to the city’s summary of the agreement: “Principals maintain full authority to hire whichever teacher they deem best.”

The net effect of growing charter schools, closing under-enrolled traditional public schools, and only hiring back the best and most desired teachers from those schools is a true merit pay system.  Bad teachers are let go.  Good teachers not only get their job back, but they also get an extremely generous pay raise over the next four years for staying and being good.  That’s real merit pay.

The Gates Foundation, Michelle Rhee, and various other reform groups have pressed ahead with efforts to build a machinery to rate teachers and provide bonuses to the ones that have higher ratings.  They’ve pulled out the stops, devoted millions of dollars, and even twisted the truth to advance these merit pay systems because they are convinced that this is the most politically feasible and effective way forward.  Choice, especially vouchers, holds little appeal to them because they see it as a political dead-end.

As I think the events in Chicago help demonstrate and as I had feared in the Ed Next piece I wrote with Stuart Buck, the political calculations of these reformers are entirely mistaken.  Building reform around a top-down system of teacher evaluations and merit pay is too easily blocked, diluted, or co-opted.  But expanding choice continues to be a political winner and will result in real merit pay… and I believe real progress in student learning.

Sweet are the Uses of Adversity

September 23, 2010

(Guest Post by Matthew Ladner)

Jay has lost that loving feeling after the failure of the merit pay plan in Nashville. Mike Antonucci quite rightly points out that “If we want to evaluate teachers on their performance, we should be prepared for performance pay programs to be evaluated on their performance.”

It was worth trying, but it merit pay didn’t work, so should move on to more promising reform strategies, right?


What this study seems to show is that the Nashville program didn’t work. That’s valuable information, and we might want to figure out why a program in Little Rock found positive results, while the one in Nashville did not. Inch by inch, we just might figure something out.

Greg and I have each noted in different ways that getting this figured out is a very tricky business. We agree that maximizing competition within the system is key to sorting out the incentives properly. The Nashville study seems to reinforce the view that this about drawing the right people into the teaching profession rather than dangling a carrot out in front of your current teachers. This subject however deserves careful study across multiple programs over a long period of time.

When results by teacher vary so profoundly, it strikes me as inconceivable that we cannot develop a system to treat teachers like professionals. A profession that offers summers off and high job security but has a union negotiated pay scale that incrementally rewards you for getting old doesn’t seem likely to garner as many highly capable people as needed into the profession.

A Nashville pilot program dangling out a $15,000 carrot doesn’t seem likely to get the best and the brightest out of Vanderbilt to forego that MBA and go into teaching. It didn’t seem to motivate the teachers who were already there either.

I don’t know the answers. I do know that we need a lot of people trying a lot of different things and sharing their results and experiences-that’s the primordial soup of innovation. Schools run by the teachers like law firms, parent and student satisfaction measurement models, hybrid model schools with rolling thunder value added assessment systems, and whatever else we can come up with- bring it on.

How about a 33 year old hedge fund manager turning out killer content from a closet? Yes please!

The same logic applies for merit pay- we need experimentation and study. There were many failed attempts to build a plane before the Wright Brothers, and even the Wright Brother plane was more likely to get you killed than fly you to another city, state or country.

We all need to take a deep breath, keep our expectations reasonable, and learn from failures like the Nashville program.

Merit Pay Bust

September 22, 2010

For some time now I have expressed disillusionment with merit pay as an ed reform strategy. In a paper Stuart Buck and I produced last spring for a Harvard conference on performance incentives we wrote:

All of this leads us to measured skepticism about the merit of merit pay, unless coupled with other reforms such as competition between schools. After all, merit pay boils down to an attempt to recreate a market system within a tightly controlled state monopoly. This is an objective fraught with peril. Even if wise and benevolent state actors manage to get the incentives right at a particular moment in time in a particular place, their actions can always be undone by immediate successors. Those successors may well be more influenced by the powerful special interests that want to block merit pay, loosen the standards, or even to call a system “merit pay” while rewarding behavior that has no relation to actual achievement.

Now we have additional reasons for skepticism.  A well-designed random-assignment experiment led by Vanderbilt’s Matt Springer found:

While the general trend in middle school mathematics performance was upward over the period of the project, students of teachers randomly assigned to the treatment group (eligible for bonuses) did not outperform students whose teachers were assigned to the control group (not eligible for bonuses).

Keep in mind that this experiment only tests whether financial incentives increase teacher motivation, resulting in higher student achievement.  It does not address whether merit pay might change the composition of the teacher labor force, attracting and retaining more effective teachers.

Still, color me even more skeptical about the promise of merit pay as an ed reform strategy.  It may well be that the current crop of teachers we have believe that they are doing their best, so offering them money for trying harder doesn’t result in a significant change in effort.  And given the political and organizational barriers to merit pay, I hold out little hope that a well-designed program can be sustained long enough to effect the composition of the teacher labor market.

In the last week, I hope ed reformers have learned that we can’t really improve the school system by maintaining the same centralized system while trying to sneak a reformer into the control-room (a la Michelle Rhee).  And I also hope we’ve learned that we can’t tinker with the incentives within that same centralized system ( a la merit pay).  The key to effective reform is decentralization of control via school choice, including charters, vouchers, tax credits, weighted student funding, etc…
(edited for typos)

Incentives and Motivation

December 9, 2009

Surely we can find a happy medium?

(Guest post by Greg Forster)

I’ve just read a fascinating article – Frederick Herzberg’s “One More Time: How Do You Motivate Employees?” from the Harvard Business Review. The 1987 version, an update of the original 1968 article of the same title, went on to become HBR’s most requested reprint ever.

I can see why. Partly it’s the humor value, which  is considerable. “What is the simplest, surest, and most direct way of getting someone to do something?” Herzberg’s first answer: the KITA. (Hint: KIT stands for “Kick In The.” Herzberg claims original authorship of this acronym, and given that the article first appeared in 1968 I believe him.) The KITA comes in many forms, including what Herzberg dubs the “negative physical KITA,” i.e. the literal kick. But there are numerous problems with using the negative physical KITA to motivate employees, not least that “it directly stimulates the autonomic system, and this often results in negative feedback.” Translation: the subject may kick back.


Negative autonomic feedback

But Herzberg also makes a substantial contribution to organizational theory, one that’s forced me to do some new thinking on the regular debates we have on the role of incentives in education.

After a brief discussion of the negative physical KITA, Herzberg moves on to what he dubs the “negative psychological KITA,” i.e. making people feel bad unless they do something. The advantages of the negative psychological KITA over the negative physical KITA are considerable, including: “since the number of psychological pains that a person can feel is almost infinite, the direction and site possibilities of the KITA are increased many times”; “the person administering the kick can manage to be above it all and let the system accomplish the dirty work”; and “finally, if the employee does complain, he or she can always be accused of being paranoid; there is no tangible evidence of an actual attack.”

But it is pretty clear to most people that both types of negative KITA do not really produce what we usually call “motivation.” What they produce is movement. The subject moves, but does not become motivated. Hence – and this is the important part – the method is of limited effectiveness. As long as you keep applying KITAs the subject will keep moving, but only as long as you keep kicking and only as far as you kick. To be really effective, you need to do something to get the subject to keep moving – produce ongoing motivation.

Hence most organizations, sensibly enough, turn to positive incentives and discourage managers from using negative ones. And here things get really interesting. Herzberg argues that most of the positive incentives normally used in an attempt to produce motivation are really very similar in their outcomes to negative KITAs – producing movement rather than motivation. The subject subjectively experiences them as positive rather than negative, but objectively the result in terms of work output is similar. You’re just pulling rather than pushing. The subject only moves as long and as far as you pull. Herzberg thus gives these incentives the somewhat paradoxical label “positive KITAs.”

A positive KITA?

Herzberg’s examples of positive KITAs include pay and benefit increases, reduction in work hours, and improved workplace relations (i.e. communications and “sensitivity” training for managers, morale surveys and “worker suggestion” plans).

The positive KITA, Herzberg argues, despite being ubiquitous in the business world, is actually not much more effective than the negative – and it’s a lot more expensive. This is especially true since positive KITAs (unlike negative ones) must be progressive. If you give the worker a $500 bonus this year, when last year you gave him a $1,000 bonus, this objectively positive action will actually be subjectively experienced as negative.

Herzberg argues that a real, self-sustaining motivation can be produced in employees by something he calls “job enrichment.” That sounds like something the warm and fuzzy folks would advocate, but Herzberg actually spends a good deal of time taking the warm and fuzzy folks to task for their inanity. (This provides much of the humor value. It’s also historically interesting – it’s amazing to see how far the warm and fuzzy disease had already spread by 1968.) What Herzberg is arguing for is something more serious than the label implies.

His underlying psycological and organizational theory is a bit too much to recopy it all here, but here’s a capsule summary. He and others did a large number of empirical studies and found that job satisfaction and job dissatisfaction didn’t usually come from the same sources. For example, having a jerk for a boss produces job dissatisfaction, but having a nice boss usually does not produce any job satisfaction. Niceness in bosses simply prevents workers from feeling dissatisfied; it doesn’t actually make the job satisfying.

The key insight to get here is that removing dissatisfaction doesn’t produce any satisfaction, and highly effective motivation comes from producing satisfaction rather than from removing dissatisfaction.

His meta-analysis of the empirical research finds that pay and benefits, job security, company policy, working conditions and on-the-job relationships are all normally associated with levels of dissatisfaction, but rarely with levels of satisfaction. On the other hand, levels of satisfaction are associated with achievement, recognition for achievement, responsibility, advancement, aspects of the work itself, and development of one’s capacities to do the work.

Herzberg’s idea of “job enrichment” is to increase worker’s experiences of the things that provide high levels of satisfaction. Give workers more responsibility and more opportunity to achieve, and then recognize success – most importantly with advancement that brings still more responsibility and opportunity for achievement. The converse of this is that failure must also be “recognized” – primarily through withholding advancement and responsibility rather than through negative KITAs.

I find his theory and evidence persuasive. And it has helped me see a little more clearly the underlying logic behind some objections to education policies like merit pay.

Yet I don’t think this analysis actually does take anything away from the case for merit pay, still less from the case for other education reforms like school choice. If anything, it makes them stronger. And taking account of this analysis will help us make the case more effectively.

Some of the objections to merit pay are based on an essentially Herzbergian conception of worker motivation. Smart people don’t deny that money plays some role in motivating people to do more work. But even among those who don’t advocate touchy-feely romantic delusions about teachers who are angelic beings with no connection to the material world, there is a lot of skepticism that you can get them to work all that much harder just for “a few extra sheckels” (as one of the more sensible critics once put it in a comment here on this blog).

Yet consider what would have to happen for Herzbergian “job enrichment” to occur in the teaching profession. First of all, you’d need an objective measurement of achievement. Then you’d need to give teachers autonomy in the classroom and hold them accountable for results on that metric. And for the accountability to take the form of advancement and increased autonomy (and accountability), you’d need to remove the one-size-fits-all union scale and work rules that dominate the profession.

In other words, it’s not so much the pay that makes merit pay worth trying, as it is the fact that merit pay creates tangible recognition for success. The current system seems almost deliberately crafted to deny teachers as many opportunities for satisfaction as possible. Merit pay is an attempt to create more such opportunities.

It’s worth noting that Michelle Rhee’s proposed two-track system in DC labels the old, union-dominated track the “red” track and the new, merit-based track the “green” track. Rhee understands that what she’s offering isn’t just, or even primarily, more money. She’s offering DC teachers their professional pride.

But school choice looks even better by this light. Test scores would be a limited basis for creating opportunities for Herzbergian satisfaction. On the other hand, if your objective measurement of job performance is parental feedback, the sky’s the limit. In this context it’s worth noting that Herzberg says the only meaningful measure of job performance is ultimately the client or customer’s satisfaction; using any other measure is taking your eye off the ball.

You could even combine the two to create a truly graduated scale of autonomy and accountability. New teachers could be required to use a standard curriculum and be evaluated on how their students – all types of students, not just the rich white ones – progress in basic skills. (That, of course, is the real primary function of test-based accountability – ensuring that kids who face more challenges aren’t just warehoused for twelve years while the rich white kids get an education.) Teachers who prove they can deliver the goods on reading and math for students of all backgrounds could then be given more classroom autonomy and evaluated based on parental feedback rather than test scores. Freedom from test-based accountability is the payoff for proving you can teach basic skills reliably. Schools could set up any number of intermediate arrangements in between “pure” test scores and “pure” parental feedback, with teachers earning more and more recognition and autonomy as they prove more and more their ability to teach effectively.

Looking back at my previous posts on teacher autonomy and satisfaction levels in public v. private schools, the poisonous influence of one-size-fits-all pay scales, and the union-driven destruction of the teaching profession, I can see this is really the framework I’ve been trying to articulate all along. The unions keep bleating about how teachers should be treated like professionals. I agree. They should have autonomy, like professionals – and they should be held accountable for results.

What Is “Merit”?

September 16, 2009

(Guest post by Greg Forster)

As JPGB’s friend Marcus Winters notes on NRO today, the Obama administration has been staying the course on this issue, denying “Race to the Top” funds to states that disallow the use of objective measurement in evaluating teachers. Marcus also rightly links this to the topic of merit pay, which the president repeatedly embraced during the campaign. One of the biggest obstacles to enacting real merit pay is making sure that the measurement of “merit” really measures merit. Too many experiments with “merit pay” have really been experiments in peer evaluation pay, grade inflation pay, and so on. Check out Marcus’s article for more.

Merit Pay Smackdown

May 1, 2009

My colleague, Gary Ritter, and NEA boss, Dennis Van Roekel debated merit pay on the PBS NOW web site.

At the bottom you can vote for who you think won the debate.  Gary currently has 67% of the vote.  Bam!

Pay No Attention To My Legislative Agenda

March 11, 2009

President Obama gave a great speech yesterday in which he strongly endorsed charter schools and merit pay.  He also emphasized the need to remove ineffective teachers from classrooms and to expand access to pre-school.

The problem is that these words bear almost no resemblance to the education priorities contained in Obama’s legislative agenda.  This is really strange.  I’m accustomed to presidents exaggerating the attractiveness of their proposed policies.  But Obama is the first president that I can think of who pushes the attractiveness of policies that he is hardly pursuing in legislation while concealing the bulk of his actual efforts.

I’ve previously written about how the bulk of Obama’s increased education spending goes to status quo programs, such as Title I, special ed, Pell Grants, school construction, and generally holding localities harmless against losses in tax revenue.  Almost no money has been devoted to charter schools, merit pay, efforts to remove ineffective teachers, and even pre-school (which received only $4 billion of the $800 billion stimulus package, and most of that was for propping up status quo Head Start programs).  All of the great (and not so great) education policies that Obama talks about are almost completely absent in legislation that he has backed.  And he hardly says a peep about all of the education policies that he does throw money at. 

Obama just distracts us from his actual efforts with pretty words about things that he is hardly doing.  Of course, the most obvious thing he was distracting us from with his speech yesterday was the Senate vote to begin the execution of the DC voucher program.  He didn’t say a word about yesterday’s actions, knowing that all of the headlines would be about the reforms he did endorse (but has done almost nothing to actually enact).

PJM on Merit Pay in D.C.

September 8, 2008

(Guest post by Greg Forster)

Today, Pajamas Media carries my column on Michelle Rhee’s push for a limited, voluntary merit pay system in Washington D.C.:

To see how much has changed, just consider the amazing fact that about one out of every three public-school students in D.C. attends a charter school — government-owned but non-unionized, privately operated, and (most important of all) chosen by parents — instead of a regular public school. “We lost 6,000 students last year,” says Parker, referring to the number of students who moved from regular schools to charters. Six thousand students is over 13% of the city’s remaining enrollment in regular public schools — in one year.

Rhee isn’t the force behind charter schools or vouchers in D.C. She’s in charge of the regular public system. But the same widespread mandate for reform that made charters and vouchers successful have allowed Rhee to succeed with reforms like closing schools that were only there to create patronage jobs, introducing curriculum innovation, and taking on the unbelievable amount of bureaucratic waste in the system. And as vouchers and charters have sent a message that the system can’t take students for granted any more, the pressure for reform has only increased — strengthening Rhee’s hand.

By coincidence, the Washington Post‘s Marc Fisher has a column today emphasizing how the explosion of charter schools in D.C. was decisive in bringing the unions to the bargaining table, even on the issue of reforming the structure of teacher pay. Just as competition from globalization forced the private sector unions to start the long, slow process of giving up the ridiculous extravegances that they won from management in the 1960s and 1970s, thus rescuing the American economy from disaster, now competition in schooling is forcing the teachers’ unions to start the same process of giving up their own ridiculous extravegances – the biggest of all being a system of hiring, firing and pay that bears no serious relationship to job performance.

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