Pay for Performance in Public Education

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           Pay for Performance in Public Education

                        Alice M. Foster

                     Southwestern College

A Paper Submitted in Partial Fulfillment for the Requirements of

       LEAD575 Organizational Structures and Behavior

                          March 2011
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                                     Executive Summary

       Pay for Performance in public education has become a hot button issue in the

United States as schools are failing to meet the basic requirements of educational

standards. In a decades old decline of the perception of successfully educating students,

the time has come for public education to consider that the old ways of doing things isn’t

working and it is time for a change. Teachers across the US are represented by unions

who collectively bargain on their behalf, pay is based on length of time teaching and on

degree level achieved. There is no incentive for a teacher to perform exceptionally

because the high performers are paid exactly the same as the low performers which has

the negative impact of decreasing motivation. Pay for performance can dramatically

impact the motivation of teachers, eliminate the sense of inequity that exists across core

subject fields and increase team cohesion with the overall impact of increasing the

effectiveness of public education.

       A review of the research in employee motivation as an element of organizational

effectiveness shows that pay for performance and equality of input being proportionate to

output is important. That comparatively speaking employees need to feel compensated

fairly, and that if they work harder they should be paid better than others who don’t work

as hard, and that this has a dramatic impact on motivation. Beyond the research the

development of a program for improving reward effectiveness must take into

consideration what has been done in the past as well as what the organization wants to

accomplish in the future. To improve reward effectiveness the plan must link the rewards

specifically to performance, ensure that the rewards are relevant, use team rewards for

interdependent jobs, ensure that rewards are actually valued by the teachers and pay
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particular attention to the possible unintended consequence (McShane & Von Glinow,


         Combined together, the pay for performance and adequately designed system for

reward effectiveness can create an environment in public education where focus is placed

on educating students. Studying the concept of self-leadership and changing hiring

practices to reflect the need to hire internally motivated employees can make the

difference in the future for our education and our standing in the international

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                               Organizational Performance

       Organizational performance has been defined “as achieving or surpassing

business and social objectives and responsibilities from the perspective of the judging

party” (Hersey, Blanchard & Johnson, 2008, p. 284). Performance is impacted by the

structure of the organization, the knowledge within the organization, the human

processes, strategic positioning and nonhuman resources. By and large the most

important and dynamic aspect of organizational performance is the organizations strategy

for human resources management “focusing on a firm’s human resources could provide a

significant opportunity to secure a sustained edge over competitors” (Hersey, Blanchard

& Johnson, 2008. p. 283). Unarguably, companies that develop human resources through

an intense focus on appropriate skills and thoughtfully considered motivational strategies

will gain an advantage over competitors.

       Pay for performance has long been identified as a component of employee

motivation. “Motivation refers to the forces within a person that affect the direction,

intensity, and persistence of voluntary behavior” (McShane & Von Glinow, 2008, p.

134), financial consideration in exchange for effort is the fundamental basis of employee

and employer contracts. “At the most basic level, financial rewards represent a form of

exchange; employees provide their labor, skill, and knowledge in return for money and

benefits from the organization” (McShane & Von Glinow, 2008, p. 168), pay for

performance as an incentive for employee motivation refers specifically to additional pay

for above average performance. The focus of this paper will be pay for performance as a

motivational strategy that impacts individual performance in public education.
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                              Employee Motivation Research

        There are numerous theories which attempt to explain employee motivation in an

effort to impact employee behavior. Hughes, Ginnett and Curphy (2006) discuss eleven

motivational approaches which have been developed over the years in an effort to help

organizations understand what motivates employees. With this understanding, the hope

is that leadership will learn to alter their own behaviors and organizational structures in

an effort to increase the motivation of the employees. The authors discuss four different

categories of motivation; needs, individual difference, cognitive and situational.

       In the category of needs motivational theories, Hughes, Ginnett and Curphy

(2006) discuss Maslow’s hierarchy of needs and Alderfer’s ERG theory. McShane and

Von Glinow (2008) also discuss both hierarchy of needs and include other theories for

discussion, based on the concept that needs create internal drives, with a focus on the

Four-Drive Theory and the Theory of Learned Needs. Hughes, Ginnett and Curphy also

introduce within the needs driven motivation theoretical discussion the concept of

individual differences in motivation with a focus on achievement orientation, values and

intrinsic motivation.

Need and Drive Theories

       Maslow’s hierarchy of needs bases the theory of motivation on satisfying basic

human needs to change behavior. Maslow’s concept of changing behavior and

motivating people by satisfying needs come with the caveat that to move to higher level

needs the lower level preceding needs must be satisfied first. Maslow’s categories of

needs starts with the most basic needs, physiological which encompasses the needs to

sustain life; food, water, shelter, air, etc…the next level of needs is defined as security
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which encompasses safety and security (McShane & Von Glinow, 2008). The needs

escalate and move to higher level needs of belongingness then up to esteem and then to

self-actualization, what motivates people is what level of needs they currently have.

       Alderfer’s existence-relatedness-growth or ERG theory is very similar to

Maslow’s Hierarchy of needs with the main difference being Alderfer’s reduction of five

levels of needs into three. Within the existence level under the ERG theory is the same

basic needs that Maslow’s placed in the physiological needs and security needs levels. In

the relatedness level of ERG is similar to Maslow’s belongingness and esteem needs and

the last level of ERG is the growth level which relates directly to Maslow’s self-

actualization needs (Hughes, Ginnett & Curphy, 2006).

       The Four-Drive Theory focuses on the drive to acquire, the drive to bond, the

drive to learn and the drive to defend as the primary human drivers, “these drives are

innate and universal, meaning that they are hardwired in our brains through evolution and

are found in everyone” (McShane & Von Glinow, 2008, p. 138). The four drives are also

said to operate independently of each other and can run more than one at a time. The

Four-Drive Theory is very similar to achievement orientation, values and intrinsic

motivation in that they are all based on the inputs being evaluated and decision making is

based on cultural and moral expectations both within the employee and in the


       The Theory of Learned Needs is very similar to the other needs based theories in

that there are classifications of needs that will drive people towards satisfaction. It is this

desire to satisfy a need that compels the employee to act in a certain way. For the Theory

of Learned Needs the needs are classified as the need for achievement, the need for
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affiliation and the need for power with the distinction being that these needs are learned

and can be strengthened (McShane & Von Glinow, 2008).

Cognitive Theories

       The Expectancy Theory is “the motivation theory based on the idea that work

effort is directed toward behaviors that people believe will lead to desired outcomes”

(McShane & Von Glinow, 2008, p. 143). This theory is very useful for clarifying and

predicting what people will do or what action they will take and what they will obtain in

return, what rewards or outcomes they will achieve (Hughes, Ginnett & Curphy, 2006).

The expectancy theory is a rational approach to understanding motivation, there are two

assumptions that the theory makes; “(a) motivated performance is the result of conscious

choice, and (b) people will do what they believe will provide them the highest (or surest)

rewards” (Hughes, Ginnett & Curphy, 2006).

       Goal Setting Theory is simply “the process of motivating employees and

clarifying their role perceptions by establishing performance objectives” (McShane &

Von Glinow, 2008, p. 146). The process of setting goals and developing a plan to attain

those goals is a very satisfying experience that increases satisfaction and improves

motivation through achievement orientation. For goal setting to be an effective tool

impacting motivation six conditions should be met to increase performance; specific

goals, relevant goals, challenging goals, goal commitment, participation in goal formation

and goal feedback (McShane & Von Glinow, 2008).

       Equity Theory and distributive justice is “a theory that explains how people

develop perceptions of fairness in the distribution and exchange of resources” (McShane

& Von Glinow, 2008, p. 152), the basic assumption of the theory is that people value
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fairness. This theory focuses on the belief that people are most motivated when they

perceive that the effort they expend and what they get back are roughly the same as what

other people put in and get back. According the McShane and Von Glinow (2008) when

a perceived inequity exists between what a person puts in and gets back and what another

person puts in and gets back the person will inevitably try to correct the inequity in any

one of the following ways: reduce the inputs, increase the outcomes, increase the

comparison other’s inputs, reduce comparison other’s outcomes, change perceptions,

change the comparison other or leave the field.

       In layman’s terms, inequality can cause an employee to perform at lower levels,

ask for a pay increase or use company resources without approval, try to make others

work harder, try to force a stoppage of favorable treatment, change who the comparison

is made against, take sick leave, quit the job, move from the department, etc…However,

a review of the literature provides much insight into the concept that regardless of which

theory an organization subscribes to, inequality in work input and rewards will inhibit

motivation and quite possibly lead to negative consequences for organizational


                                     Public Education

       In the field of public education, pay for teachers has been designed around the

single salary schedule, since WWII. Teacher salaries became based on length of service

and education, essentially removing politics, race and gender from public education and

making the field equitable (Koppich, 2010).

       As our education system moved toward a focus on outcomes and results,

       particularly levels of student achievement, the single salary schedule began to
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       look more like an artifact of a bygone era. It treats all teachers as if they’re the

       same, offering few rewards for stellar accomplishment and few consequences for

       underperformance. It makes little provision for areas of need or shortage, and it

       provides little incentive for teachers to improve their practice. In short, the single

       salary schedule produces neither professionally competitive nor market-sensitive

       salaries (Koppich, 2010).

       As Koppich also points out, changing the single salary system is not a simple task

in and of itself. Collective bargaining, unionization, equitable pay and always knowing

exactly what the expected wages would be, is an ingrained part of the culture in public

education. Teachers expect to make the same amount as their counterparts, regardless of

what subject they teach, regardless of how engaging they teach, regardless of how well or

how inadequately their students learn the material or gain knowledge…the pay is the

same. The only differentiation between pay for teachers is based on length of service and

how much continuing education the teachers have, there is more pay for teachers who

pursue higher education.

       With collective bargaining pay is not the only employee benefit that is controlled.

The single pay system is aligned with days worked per year, hours worked per day, what

duties are included, what duties are outside the purview of the pay, sick days,

etc…Virtually every aspect of the teachers outcome is predetermined and is not impacted

by the individual input, with no direct link between input and outcomes there is virtually

no sustainable motivation for increasing input to improve organizational effectiveness.

Thereby exists the justification for designing and implementing a pay for performance

system in public education.
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       As measurement and quantification of education has become prevalent in all

schools across the US with the implementation of No Child Left Behind, it has become

increasingly apparent that Public Schools are deficient in many areas. With a single

salary structure there is little or no incentive for individual teachers to exceed

expectations, engage or motivate students, the pay is the same regardless of how well or

how poorly the students perform. Along with the review of the research into the theories

of motivation the assumption can be made that with little hope of satisfying the basic

needs, with little hope of achieving personal status, with no hope of recognition for

achievement which will have a basic needs impact. In a situation where there is no

allowance for differences in levels of achievement orientation, engagement, thought

processes, learning abilities, passion, drive, where there are no rewards for additional

effort, according to the cognitive theories employees would be more likely to do less to

achieve the same rewards they have always received.

                                Performance Based Rewards

       “It is hardly surprising that linking pay to performance can help increase

employee productivity, but the issue is not quite as simple as just introducing incentive

pay systems” (Hill & Jones, 2007, p.125). Performance based rewards must be analyzed

and designed to make the greatest impact on organizational effectiveness and motivate

teachers. “Good teaching – teaching that is engaging, relevant, multicultural, and

appealing to a variety of modalities and learning styles – works well with all children”

(Cole, 2008, p. 1). Employees receiving rewards or individual bonuses for exceeding

expectations are a way of communicating to the employees that the organization wants to

exceed its expectations.
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       Performance based rewards should be delicately balanced between individual

rewards for exceptional teaching abilities, strategies, results but also combined with team

rewards for exceptional level performance. McShane & Von Glinow (2008) suggest five

strategies to improve the effectiveness of pay for performance rewards; linking the

rewards to specific performance, ensuring that the rewards are relevant, using team

rewards for interdependent jobs, ensuring that rewards are valued and watching out for

unintended consequences.

Linking Rewards to Performance

       Designing an effective performance based rewards system with the specific goal

of increasing student engagement and performance I s a daunting task. Designing a

system that is fair, balanced, quantitative, documented and attainable requires a

tremendous understanding of the dynamic environment in which teachers operate.

Questions must be asked such as “should individual teachers or teams of teachers be

rewarded, or perhaps a combination of both? Should the measure be based on student

growth or attainment? What criteria should be included?” (Springer & Gardner, 2010).

Does the performance measurement system take into consideration student test scores

that are subject specific, grade specific, grouping specific, does it take into consideration

special education populations or are they measured separately, should evaluations from

principles and peers be included with department head evaluations? Once all of the

different metrics determined what will be the weight given to each measurement?

       McShane and Von Glinow (2008) simply state that an effective pay for

performance program be a program that pays more to employees that perform higher and

pay less to employees that perform lower. In its simplicity lies its complexity, who
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determines what high performance and low performance is and how does it get

quantified. In the current educational environment public schools are required to

evaluate certain grades one time per year, should teacher evaluations be linked to these

State mandated tests?

       Normative assessments are when students are compared with other students in

their age bracket and in their grade, “another use of normative assessment is to evaluate a

school’s performance by comparing the scores achieved by students at one school with

the scores obtained by students at other schools” (Sagor, 2003, p. 19). If it is specifically

for certain grades and not for all grades then are only the teachers whose grades are

evaluated eligible for performance pay increases? Can these normative assessments be

linked to individual performance when the scores are representative of what the students

achieved or learned the prior year, do the rankings take into consideration low income

populations that are often transient and lower performing due to socio-economic

considerations rather than teacher performance? Questions remain to be answered, but

consideration must be given to the concept of moving beyond the single pay system to a

system that rewards high performing employees.

       For the pay for performance reward to be effective there must be a direct link

between the reward and the performance. With the advancement of technology in the

school system, there are many different options available for measuring, analyzing and

quantifying student achievement as it relates to teacher performance. One process is a

standardized assessment system that is geared towards measuring the knowledge, skills

and abilities of students in each grade with a beginning assessment, and four assessments

throughout the school year. This measurement will determine the beginning, growth and
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the ending progress of students in each grade as it relates to the specific teacher

performance. This measurement directly relates to the ability and skills of the teacher to

not only teach the material, but to engage the students in learning the material and

applying it.

Ensuring that rewards are relevant

       Rewards, in this situation, pay for performance needs to be aligned with

performance that is directly within the control of the teachers/instructors “the ore

employees see a line of sight between their daily actions and a reward, the more they are

motivated to improve performance” (McShane & Von Glinow, 2008, p. 174). Rewards

should be relevant to what the organization wants to accomplish, if the goal of public

education is to teach students, then the rewards should be linked directly to achieving that

goal. If the secondary goal of public education in some areas is to improve educational

opportunities and success for underprivileged students then that secondary but equally

important goal should be measured and rewarded as well.

       To delineate the relevance of rewards individual school districts must first

prioritize their goals and then understand what achievements or milestone can be

measured and rewarded to motivate teachers to achieve these goals through pay for

performance. If the teachers perform then they receive additional pay, if they do not

perform then they do not receive the reward. According to the Equity theory of

motivation this disparity of input/output should incentivize other lower performing

employees to increase performance, that even though pay is not equal, the perception that

increasing inputs would increase outputs and rewards should be enough to motivate

others to respond accordingly.
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Using team rewards for interdependent jobs

       It takes a village to raise a child! Education does not happen in a bubble, it is an

interdependent series of interactions involving the student, counselors, teachers from all

academic arenas and the supporting structures that the school has in place to facilitate

learning. Team rewards in the current situation are not allowed in any way shape or form

because to reward one would be perceived as a punishment for another, equality in

everything in the single pay system.

       In the current educational climate, each department is strictly aligned within its

specialty; English of all grades completes workshops, in-service training and special

training and events with all other English teachers, same with Math, Reading and

Language Arts, Physical Education. Cross functional teams that interact and create links

between teachers for individual students where time, effort and consideration is given to

individual performance throughout all classes rather than just individual classes will

undoubtedly improve performance. These interdependent teams should be rewarded for

success based on measureable metrics of success based on effort, “interdisciplinary

projects promote thinking strategies that cross content areas and transfer solidly into real-

life applications” (Cole, 2008, p. 12).

Ensuring that rewards are valued

       Along with implementing a pay for performance system to increase motivation in

teachers, in designing the system implementers must be sure that any rewards are valued.

Having a pay for performance system is in an of itself a reward for effort put in, the

output will be proportionate, however when evaluating the rewards for team participation

there must be an understanding of what the teachers value as a reward. With
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teachers/instructors basic needs taken care of and there being a sense of equity in that

input and output are fair across the board, they may prefer team rewards that are tied to

specific needs for teaching. If new computer systems are being installed, the teams can

compete for reengineering first; teams can compete for having administrative days off

where the school administrators teach for a day or become the teacher’s assistant. The

rewards for exceptional teaching and partnering to make a difference in interdependent

tasks need to be valued to provide the sincere level of motivation teachers/instructors


Watching out for unintended consequences

        “Bad incentive plans encourage people to do the wrong things in the wrong way,

and they lead to cynicism, anger, and indifference” (Thompson, Strickland & Gamble,

2010, p. 557), setting the system up for failure is in effect setting the employees up to

fail. Any employee reward system can be abused and/or cause unintended consequences.

In setting up the pay for performance system to improve motivation in public education,

much thought and consideration must be giving to the possible actions that the system

can motivate the employees to take which would be negative in connotation.

                                    Motivating Teachers

        Much research has been dedicated to understanding how to improve public

education, Springer and Gardner (2010) suggest that teachers and unions are coming to

the realization that the way things were done in the past are no longer effective. The

world has moved into a stage of globalization where every student needs to be impactful

and have the education and knowledge to move forward rather than become stagnant. If

the US wants to be competitive in the future then we must educate our future generations
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better than we have in the past. Much thought and consideration must be given to the

idea that the way it has always been done might not be the best way any more. It is time

to change, analysis of the criteria used, the system that is developed and the interests of

the stakeholders must be balanced to find a system that will be effective and have the

desired impact.

       With all the research that has been conducted on motivating employees’ one

theme that is recurrent throughout all the literature is that hiring the right people in the

first place will have a dramatic impact on organizational effectiveness. McShane & Von

Glinow (2008) state “certainly these theories and practices are valuable; but they

overlook the fact that the most successful employees ultimately motivate and manage

themselves” (p. 184). Initially hiring teachers that are internally motivated, what

McShane and Von Glinow refer to as self-leadership will improve an organizations

ability to be effective and would have a great impact on public education. Having

teachers who engage in self-leadership will produce and influence students who engage

in self-leadership.

       Engaging in self-leadership means that individuals practice five elements in an

effort to influence “oneself to establish the self-direction and self-motivation needed to

perform a task” (McShane & Von Glinow, 2008, p. 184). The five practices are personal

goal setting, constructive thought patterns, designing natural rewards, self monitoring and

self reinforcement. Personal goal setting means effectively setting goals for oneself for

their own work effort, but the goals are specific, relevant and challenging. These goals

are goals that are set for oneself by oneself, as opposed to having them assigned by a

supervisor or someone else who controls what goals are to be accomplished. Having the
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desire and ability to set goals for self creates the sense of ownership in the goal as well as

dedication to achieving the goals.

       The second element in self-leadership is constructive thought patterns; basically

the employee is the type of person who engages in positive self talk and mental imagery.

An employee that talks to themselves about their own thoughts or actions in an effort to

increase self confidence is engaging in positive self talk, giving self pep talks as a course

of action rather than as a necessary task for motivating or keeping momentum frees up

time for supervisors and creates continued effort without diminished input. This self

motivation, including pep talks and the ability to mentally practice the task and visualize

the successful completion of the task, will ensure continuity in effort and organizational


       The elements of designing natural rewards, self-monitoring and self-

reinforcement are intrinsic elements that can keep an employee motivated based on

internal behaviors and attitudes. Being able to effectively alter the tasks of the job and

make them more interesting, keeping track of their own progress and giving oneself

positive reinforcement frees up time and resources for the organization. The natural

assumption would be then to have an employment and recruitment system in place that

would focus on finding teachers/instructors that practice self-leadership. This in an of

itself will reduce the needs and requirements of developing an intricate system of pay for

performance and focus on public education as a means of educating students and

preparing the future generations. With employees that are already practicing self

leadership a simple plan to enhance performance and pay for motivation which is fair and

equitable would meet the requirements of the teachers for needs fulfillment.
                                           Pay for Performance in Public Education        18


       The research is clear on the matter of employee motivation; the motivation of the

employees is directly related to organizational effectiveness. In public education having

teachers that are motivated and engaged have far reaching implications for not only the

organization but also for the students and their futures. Removing the single pay system

that has been in place in public education for generations may just be the key to providing

the turn around that public education needs. Implementation of a well thought out and

designed pay for performance system can be the key to success for the future. Motivating

employees may well be one of the most difficult tasks in organizational management

today, but the impact that a motivated workforce can have on an organization is well

documented and is a strong predictor of success. Pay for performance may be only one

way to increase employee motivation, but it is one way that when implemented correctly,

has been shown to be effective.
                                         Pay for Performance in Public Education       19


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