On 7 February 2007, the then-Federal Education, Science and Training Minister, Julie Bishop, announced that ‘like other professions, teachers should be recognised and rewarded on merit.’ This policy announcement, made despite the Federal Government having no legal authority to set pay or conditions on public schools, was based on the pervasive private sector management practice of performance-related pay (PRP) and the incentive principles of inherent in neo-liberalism (economic rationalism). It purported to create an incentive in the employee (teacher) to improve his or her work performance, in order to improve the quality of output (education) that customers (students) receive. The key criteria which merit pay was to be decided upon, as outlined in the Minister’s speech, would be literacy and numeracy scores of students. PRP is a method by which proponents of market-based governance seek to introduce private-sector management techniques into the public sector to lead to better out-puts, greater cost-efficiency, and a ‘customer service’ ethos.

[box border=”full”]Update: More evidence that performance pay is regressive and ineffective.[/box]

The day after May Day in 2011, Julia Gillard announced that Labor would introduce performance related pay for teachers in this year’s Federal Budget.

“We want to reward great teaching so the individuals who are doing it experience the benefits of those rewards so we can model what great teaching is to the rest of the teaching workforce,” Ms Gillard said.

“If you monitor and give feedback so that you identify great teaching, that does put you in a virtuous circle where great teaching does become more and more prevalent and that’s what we want to see.

“We know independent research conducted as recently as this year shows that a system of meaningful appraisal and feedback for teachers can increase their effectiveness by 20 to 30 per cent.”

Performance-related pay has a long history in Australia and around the world, with teachers in Australia, England and the United States paid according to ‘pupils’ ‘results’ as assessed in examinations, tests, and visits by “Inspectors”’ as far back as 1862 (Ingvarson, Kleinhenz, Wilkinson, Research into Performance Pay for Teachers, Australian Council for Educational Research, 2007, page 67). This system sought to improve the performance of teachers, increase the quality of education received by students, and use pay incentives as the chief means to do so. This system saw no appreciable improvements in students’ education, or morale or quality of teachers, and so was discontinued in the early 20^th Century, and was not revived until the 1980s.

Australia’s teachers are currently paid through an annual incremental salary system, with advancement to the next increment reliant on the teacher passing a review by the school principal (or ‘supervisor’), and based on ‘performance management appraisals’.  The salary cap is generally reached after a number of years, meaning that the bulk of Australia’s teachers are paid at the top salary increment. A number of incentives exist for teachers to gain additional income, most notably through the teacher agreeing to take on additional non-teaching responsibilities (generally of an administrative nature). All teachers’ pay and conditions are set out in industrial Awards or Collective Agreements, which lay out the pay increment progression and additional entitlements from professional knowledge, training or supplementary duties.

In the United States of America, the Bush Administration introduced a number of education reforms, including PRP programmes and ‘test-based accountability’ systems (Ingvarson, et al, p.68). The most recent programme was the establishment of the Teacher Incentive Fund that gives up to 100,000 teachers in the United States a reward of $5,000, in an attempt to increase the number of states using incentive-based PRP systems (ibid, p.7).

In Florida, the Florida Department of Education introduced a system called STAR (Special Teachers are Rewarded) that will gave a 5 per cent pay increase to ‘the 25 percent of teachers with the highest ratings in two areas: an evaluation from their superiors, and improvements in student test scores, notably the Florida Comprehensive Assessment Test.’ Massachusetts also introduced a programme to link teacher pay to evaluations of student performance’ with the goal of providing ‘incentives for high-performing teachers’ and placing teachers on a ‘comparable standing’ with private-sector employees ‘where rewards for performance have steadily increased’. California Governor Arnold Schwarzenegger called in 2005 for merit-pay to ‘usher California’s schools into the modern era’ and that it was the duty of government to ‘financially reward good teachers and expel those who are not.’ (Tannock, “Yes, Let’s Talk About Merit”, in California Public Employee Relations Journal, Is.171, 2005, p.7 and p.5)

Numerous other states have introduced PRP programmes into the public education sector, almost all of which include bonus pay, and most bonuses linked to improvements in student test (or other measure) scores. Most PRP systems in education sector in the USA ‘base performance on limited criteria, including tests of student achievement’, and have a life of four to five years.

There is a great deal of literature on the effectiveness of PRP programmes in the teaching profession, including a 1998 Senate inquiry, A Class Act, and research commissioned for the Minister for Education Training and Science by the Australian Council for Educational Research. Numerous reports and studies from the British and American experiences also exist. The research suggests that since the 1980s – a period that marked a spurt of PRP proposals for teachers – performance based pay plans have been introduced as a result of market governance and NPM pressures on the public sector, specifically to improve the outputs of public education.

It is the view of the ACER report, and the majority of reports on PRP programmes in the USA, that ‘there was no evidence… to support the position that it was pay-for-performance which improved student achievement’ (Ingvarson, et al, p.17). There is further literature that suggests that there is little effectiveness at all in PRP systems either in the public sector or the private sector, in terms of increased productivity and outcomes (Pfeffer, “Six dangerous myths about pay”, Harvard Business Review, v.76, Harvard Business School Publishing, 1998, p.114). The concerns raised by opponents of the introduction of PRP programmes into public education are the same as those reported in the Harvard Business Review: PRP programmes have

been shown to undermine teamwork, encourage employees to focus on the short term, and lead people to link compensation to political skills and ingratiating personalities rather than to performance. Indeed, those are among the reasons why W. Edwards Deming and other quality experts have argued strongly against using such schemes (Ibid, p.114).

This view is repeated in the ACER report: ‘incentives in themselves did not necessarily improve what teachers knew and could do, or lead them to teach more effectively. Improved student learning outcomes were more likely to result from long-term, high quality professional learning promoted by knowledge- and skills-based approaches to performance-based pay’ (Ingvarson, et al, p.17).

A study by Stuart Tannock (professor at the Graduate School of Education at the University of California) for CEPR reported that despite the appeal of PRP systems when they are regularly introduced in states around America, a series of negative, unintended consequences arose (Tannock, p.7-9):

• competition between teachers for limited performance bonuses fostered ‘jealousy, resentment, and divisiveness, and undermine the spirit of workplace collaboration’;
• morale amongst teachers plummeted, and perceptions of ‘merit’ awards were viewed as ‘subjective, arbitrary, unfair, and prone to favoritism and discrimination’;
• performance criteria create incentives for teachers to ‘teach to the test’, narrow curriculums to focus on those that are part of the PRP measure, and often cause teachers to ‘shun low-achieving students and “hard-to-serve” schools, where gains in student test scores or other measures of learning often are more difficult to produce’; and
• administrative costs (mostly through lack of productivity) sky-rocket as principals or other school supervisors spend time reviewing teacher performance, and overall costs of teacher salaries rose, resulting in PRP being capped or suspended.

Even those stakeholders that oppose PRP acknowledge that two forms of PRP can be successful in improving standards of teaching: ‘when given a choice, most teachers much prefer task accomplishment to salary’ (Firestone, “Merit Pay and Job Enlargement as Reforms: Incentives, Implementation, and Teacher Response”, Educational Evaluation and Policy Analysis, Vol. 13, 1991, p.280). Most criticism is leveled at ‘true merit pay’ and ‘job enlargement’ PRP programmes, due to the reasons noted above by Tannock. The OECD study into performance-related pay in England and Wales questioned whether PRP achieved its sought-after goals, with the overwhelming view of classroom teachers and school heads opposing PRP until it moved away from ‘true merit pay’ and focused instead on skills development, qualifications and professional development of teachers (OECD, p.185-57). In particular, there was evidence that many school heads acted ‘like a shop steward, keen to ensure that her or his staff got the pay increase from the government’ (Ibid, p.188).

The overwhelming evidence in both England and the USA suggests that a more effective way for teaching standards to improve is through improving professional development, accreditation and qualifications, measures that are not necessarily encapsulated in performance-pay.

Update

My article has been reprinted in the March issue of the Australian Education Union’s South Australian journal.

Download the pdf here.