Some people say the recent cheating scandal in Atlanta area schools gives rise to the ugly side of performance-based pay. Critics loudly shout that teachers cheating on standardized test scores only to earn better compensation, proves that pay for performance doesn’t work. Equally loud critics on the other side of the argument shout that pay without performance has been proven, over many years, to work when used properly. Both sides believe that our priority should be educating our students to be among the best in the world. Who’s right? Both sides are.
Paying people without any link to active performance (we will remove tenure from this conversation) seldom, if ever, works. Linking pay to performance without controls, audits and failsafe mechanisms is also destined for failure. Our problem with educator pay is far more fundamental.
In Atlanta, employees of schools that performed well on standardized tests earned a $2,000 bonus. This meant that teachers, custodians, administrators and others could all earn some extra cash, if they worked together to increase scores. In theory, this is a great idea. In reality, I believe the problem was a mirror reflection of some of the egregious excesses we saw (and sometimes still see) in financial services incentive compensation.
Good performers in financial services have the potential of earning truly astronomical amounts of incentive pay. These large variable pay amounts are required because the individuals involved make great base pay and can often survive quite well performing at 75-85% of their best effort. It takes a lot of money to incent them to push for that final 15-25% that will make their employer super successful. They don’t NEED the money, so companies have to make the amounts large enough for people to WANT the money.
Even the best teachers in the United States don’t make much. Their pay seldom keeps up with that of those with whom they graduated from college. Their pay has generally not kept up with inflation over the past few decades, while their responsibilities have often increased. When you feel you are underpaid, even a small amount can be tantalizing. In the teaching world, where few brass rings have been within reach, a $2,000 bonus can be mesmerizing. Many of these teachers actually NEED the money. They may not WANT to cheat to get it, but the feeling of being underpaid for long periods of time can provide reasonability to completely unreasonable decisions.
There is, of course, no true defense for anyone cheating to earn performance-based pay. There is also no real argument for not paying people fairly (either too much or too little) for the work they perform. Performance-pay should be focused on above average achievement, and base pay should ensure enough motivation to achieve the expected.
We should expect that our students pass standardized tests at a reasonable rate. Our teacher’s base pay must be enough to meet this expectation. If we want to motivate educators (or anyone) to perform above and beyond we must first ensure that they have been paid enough to live a life commensurate with their position. Only then will incentives motivate achievement, instead of degrade integrity.