Case Studies: Overview | Eagle County | ProComp | Q Comp | TAP
The current emphasis on teacher quality, coupled with the increased demands of the new global economy, has stimulated interest in differentiated compensation initiatives. Though these initiatives vary in design, forms of differentiated pay can be categorized in the following ways:
- Extra pay for superior individual performance. Teachers receive bonuses based on student growth or achievement in their classroom.
- Extra pay for superior group performance. Teachers receive bonuses based on student achievement or growth at the school level.
- Knowledge and skill-based pay. Teachers receive bonuses for increasing knowledge and skill (could be test or observation based).
- Job-based pay. Teachers receive extra pay for extra work.
- Market-based pay. Teachers receive bonuses for teaching in hard to staff or hard to serve positions.
Numerous studies now demonstrate that the two factors that drive the traditional single salary schedule - acquisition of advanced education credentials and years of service - have little if any impact on student learning. Nonetheless, well over 90 percent of the school districts today are still using a single salary schedule to deliver pay raises to teachers and administrators. This has led many policy makers to question whether the current compensation system can effectively attract, reward, motivate, and retain high quality educators. In a time of economic crisis, since teacher pay is by far the largest line item in most districts’ operating budget (often 50-70 percent), officials are under intensified pressure to ensure that these dollars are strategically spent on improving student learning.
Advocates of reforming compensation practices contend that differentiated pay has the potential for both short-term and long-term impact.
- Recruitment and retention. In the long-term, compensation reform can help districts succeed in recruiting and retaining a larger share of the best and brightest college graduates.
- Motivation and reward. In the short-term, incentives can help motivate teachers to change their behavior and try new instructional strategies to improve student achievement. They can also be a powerful tool for recognizing and rewarding excellence.
- Alignment. Aligning pay with outcomes sends important messages about what the organization values and how employees must adapt to meet new goals. Differentiating compensation can serve as a means of reinvesting taxpayers and the general community in schools.
- Student achievement. Given the recent nature of these reforms, no conclusive evidence relates changes in compensation to increased teacher effectiveness. However, some preliminary research shows that when implemented as part of a comprehensive approach, pay-for-performance programs can contribute to increased student achievement.
Characteristics of pay-for-performance systems – such as eligibility and the type and amount of award offered – vary considerably. Though research is not able to prescribe which of these characteristics are most effective, several recommendations can be offered based on current research and publications. For additional resources, see the websites and tools section. Since the knowledge base around performance incentives is still underdeveloped, policy makers will need to be prepared to revise programs as more information becomes available.
- Use multiple (and fair) measures. Differentiated compensation systems should base awards on multiple measures that capture a complete picture of teacher and school effectiveness. Value-added assessment can be used to gauge teacher and school impact on student learning, and performance rubrics can be used to evaluate teacher and administrator behaviors (see the Teacher Evaluation and Administrator Evaluation pages). For more information on how multiple measures have been used as the basis of differentiated compensation systems, see the case study pages.
- Provide sufficient and ongoing training. For performance pay to be motivating, teachers must trust the criteria used to gauge effectiveness. The challenge for policy makers is not only to design measures that produce accurate results, but further to define performance in a way that teachers view as fair. This will require providing sufficient training to help educators understand the metrics and utilize the results in productive ways to improve their effectiveness. See the Value-Added Training page for more detail.
- Promote collaboration not competition. Many teachers fear that differentiated compensation will foster competition rather than promote collaboration. To ensure that this is not the case, districts should use an external growth standard so that teachers compete only with themselves to surpass a set benchmark. Further, districts should offer a combination of both individual and group performance based awards to incentivize school-based collaboration. See the TAP case study page for an example of how a system can balance individual and group awards.
- Offer additional support. Pay for performance, while necessary, is far from sufficient. For incentives to be motivating, teachers must believe that through increased effort they can improve their performance. This means that they must be provided with necessary supports, such as principal leadership, strong mentoring programs, and high-quality assessment feedback. All elements of the system – both rewards and supports – must be aligned with the goal of increased student learning. For more information on designing these supports, see the Support for Educators page.
- Build ownership and sustain commitment. Whether districts can successfully adopt and implement reforms has been shown to depend on teacher buy-in, particularly from the unions. As such, districts should ensure that teachers play an active role in the initiative’s design and that funding is available to sustain the reforms. For more information on how to build ownership and sustain commitment among all stakeholders, click here.
To see how these recommendations have been implemented, refer to the case study pages.
The National Center on Performance Incentives (NCPI) and the Center for Educator Compensation Reform (CECR) have conducted extensive research on performance pay plans. Several of their studies have been highlighted below, but a comprehensive list of publications and case summaries are accessible on their respective websites.
- Creating a Successful Performance Compensation System for Educators
The Teacher Advancement Program (TAP) outlined the lessons learned from TAP’s years of field experience implementing differentiated compensation programs around the country. This paper serves to inform policy makers of the critical decisions and considerations involved in the creation of performance-based compensation systems. The authors discuss the following implementation recommendations: (1) sufficient and stable funding; (2) communication and teacher buy-in; (3) skilled leadership; (4) target high-need areas; (5) include a program evaluation and monitoring system; and (6) integrate and align other systems. - Diversifying Teacher Compensation
(Jennifer Azordegan, et al., Education Commission of the States, December 2005)
The Education Commission of the States and The Teaching Commission collaborated on this issue paper to provide an overview of the research on compensation systems, key issues that have been raised by previous experiments, a broad overview of recent attempts at differentiated compensation, and a comparison of leading programs. The authors emphasize the following elements of successful programs – stakeholder involvement, educator support and training, sustained commitment, and consistent communication. - Reforming Teacher Pay: The Search for a Workable Goal-Driven Compensation System
(Reino Makkonen and Kristin Arnold, WestEd Policy Center, 2005)
This Policy Trends issue examines the growing interest in differentiated compensation, identifying the ways in which it is used and the challenges of rewarding educators for improving student performance. Drawing on the literature as well as interviews with district personnel across the country, the authors outline several key considerations for others interested in designing differentiated compensation policies: (1) identify program design components; (2) support teachers to reach their professional goals; (3) ensure adequate program funding; (4) manage a performance-based system; (5) engender buy-in through effective communication; and (6) evaluate for continuous improvement. - Teacher Performance Pay: A Review
(Michael J. Podgursky and Matthew G. Springer, National Center on Performance Incentives (NCPI), November 2006)
This NCPI comprehensive report reviews the history of teacher pay policy in the United States, examines earlier attempts at performance pay, explores the traditional arguments against merit pay, and reviews the rigorous empirical research on the subject. The analysis of both international and state pay-for-performance plans revealed a consistent impact on teacher behavior, which tended to result in positive gains in student achievement. However, the authors caution that much still needs to be learned and recommend that researchers pay careful attention to how teacher effectiveness and student achievement are measured. For an executive summary, read the research brief. - Teacher Performance Pay: Synthesis of Plans, Research, and Guidelines for Practice
(Herbert G. Heneman III, Anthony Milanowski, and Steven Kimball, Consortium for Policy Research in Education, February 2007)
This Consortium for Policy Research in Education brief examines the various components of performance pay plans, reviews the existing research, and offers important considerations for districts to keep in mind. Before implementing a pay-for-performance plan, the authors recommend that several prerequisites be in place, including access to stable and adequate funding, a total compensation package, a performance measurement system that provides reliable and valid performance scores and a metric for gauging teachers’ reactions. They also advise that districts include principals and administrators, align human resource systems for performance improvement, engage the teachers association, and build capacity. - Teacher Turnover, Teacher Shortages, and the Organization of Schools
(Richard Ingersoll, Center for the Study of Teaching and Policy, January 2001)
While money may not be the sole or primary motivating factor for teachers, research does show that salary influences teachers’ decisions to leave the classroom. An analysis of the Teacher Follow-Up Survey indicates that lack of rewards was a major cause of dissatisfaction-related turnover. 46 percent of teachers cited “poor salary” as a source of dissatisfaction and 9 percent indicated that “no opportunity for advancement” played a role in their decision to leave the classroom.
The following resources offer guidance to state and district policymakers interested in implementing a pay for performance system. The majority of these tools have been categorized by the work of two organizations – the National Center on Performance Incentives and the Center for Educator Compensation Reform. These resources provide additional information on how to design initiatives, engage stakeholders, and sustain performance-based compensation systems.
- This Teacher Compensation Handbook, created by Allan Odden and Marc Wallace, guides state and local policy makers interested in redesigning teacher compensation structures. This tool addresses many fundamental issues facing any district attempting to implement pay reform including setting adequate beginning and average teacher pay levels, structuring bonus programs, reinforcing student achievement through base pay progression, measuring teacher performance, and funding teacher pay reform.
The National Center on Performance Incentives (NCPI)
The NCPI site features a host of policy briefs and research reports in the field of compensation reform focused in 5 areas: student achievement, teacher behavior, organizational dynamics, unintended consequences, and cost effectiveness.
- State-by-State Resources. NCPI has created a dynamic map that highlights national, state, and local incentive programs. This resource can be used to learn more about initiatives happening in your area.
The Center for Educator Compensation Reform (CECR)
The CECR site contains a wealth of research and tools to support policy makers with the design and effective implementation of new compensation programs.
- Data quality essentials. This resource outlines the 6 dimensions of data quality systems that must be in place in order to properly support a performance-based compensation system.
- Stakeholder engagement and communication. Changes to the longstanding salary schedule will likely be met with apprehension and opposition. This document created by CECR lays out the necessary strategies for engaging and communicating with stakeholders throughout the design and implementation of a new compensation program.
- Implementation checklist. This checklist provided by CERC lists the major components, considerations and steps district and state officials will need to work through when crafting a new compensation system.
- Paying for and sustaining a performance-based compensation system. Before launching a performance-based compensation plan, districts must first ensure that they can afford to sustain the program year after year. The CERC provides tips and guidelines to help interested districts and states craft financially viable compensation plans.
- How to Create World Class Teacher Compensation
(Allan Odden and Marc Wallace, Freeload Press, 2007)
This book covers a variety of issues related to designing new compensation structures for teachers, including a chapter on developing a compensation strategy, ideas for creating a variety of pay elements based on knowledge and skills, an appendix on a new performance assessment or evaluation system for teachers, and a balanced scorecard for providing bonuses to individual teachers or groups of teachers based on improvements in student performance. - Paying Teachers for They Know and Do: New and Smarter Compensation Strategies to Improve Schools, 2nd ed.
(Allan Odden and Carolyn Kelley, Corwin Press, 2002)
This book looks at state and local efforts to change teacher compensation and proposes strategies that are appropriate for education. The authors give examples of changes in compensation that are being implemented in schools across the country and suggest ways that states and districts can achieve better progress on this important agenda. They discuss how new methods of compensation used in other organizations – including competency-based pay, contingency-based pay, and group-based performance awards – have potential in education as well, and are already being tried in many states and districts. The updated edition is a "how-to" on teacher compensation, bringing new information, insights, and innovations to an increasingly challenging discussion.
For additional books on Teacher Compensation, see the Consortium for Policy Research in Education’s list of publications.