Performance Related Pay

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Performance Related Pay by Mind Map: Performance Related Pay

1. Political Agenda

1.1. Education

1.1.1. One of the toughest subjects in classrooms at the moment is the recruitment and retention of teachers. Their level of pay is often cited as a problem – and possibly part of a solution.

1.1.1.1. trends in teacher recruitment and retention data show that schools continue to face substantial pressures".

1.1.1.1.1. "the number of qualified teachers leaving the profession for reasons other than retirement has continued to rise, and teacher retention rates have deteriorated

1.2. STRB recommended

1.2.1. Linking pay to Performance

1.2.1.1. New PRP

1.2.1.1.1. Improve quality of teaching

1.3. MPS

1.3.1. DFE Recommends

1.3.1.1. Assessing teachers performance on:

1.3.1.1.1. Pupil Progress

1.3.2. The quest to improve public education has led policymakers and researchers to focus on how to increase teachers' effectiveness. One obvious means is compensatiON.

1.3.2.1. a pay system that reflected the different contributions of school staff.

1.3.2.1.1. Believe: quality of teaching is fundamentally linked to school standards

1.3.3. Similar System in Sweden found in a report

1.4. many identified areas for improvement.

1.4.1. policy makers who believe the pay system should do more to reward those who make the greatest contributions.

1.5. Old PRP

2. NEW PRP

2.1. CONS

2.1.1. NEU opposes the use of performance-related pay (PRP) in schools - it is unfair and ineffective

2.1.1.1. undermines professional co-operation and hampers school improvement.

2.1.1.1.1. reform removed the requirement for pay “portability

2.1.2. Theory

2.2. PROS

2.2.1. Recruit and Retain

2.2.1.1. Raising education standards

2.2.1.1.1. Flexibility to schools to meet their needs

2.3. Will it work?

2.3.1. individual PRP is more likely to be successful in schools where: teachers accept its principle and legitimacy; goals set are clear, achievable but challenging; and teachers accept the assessments of their performance.

2.3.1.1. Many schools, when they did increase teacher pay, were still awarding annual increases in line with the previous

2.3.1.1.1. to support schools to make more effective use of their autonomy on pay matters; this included providing training for school leaders on setting pay policies, and embedding the idea that managing such policies was an integral part of school leadership. She acknowledged, however, that the system is still in its infancy and it would take time for schools to start utilising their autonomy.

2.4. What it is:

2.4.1. Removing pay progression based on length of service

2.4.1.1. teachers’ pay at different rates based on their performance.

2.4.1.1.1. Giving schools more freedom to determine starting salaries of teachers

3. OECD

3.1. Stratagies To attract the most talented teachers

3.1.1. Competitive compensation

3.1.1.1. responsibility as professionals

3.1.1.1.1. PD time outside school

3.2. Measures of teacher performance need to be valid, reliable and agreed by teachers themselves to be fair and accurate

3.2.1. Surveys show that teachers welcome appraisal and feedback

3.2.1.1. many report that a good appraisal too often does not lead to any recognition or reward.

3.3. During recent decades, new pay systems have been widely introduced in Organization for Economic Co-operation and Development (OECD) countries

3.3.1. The new pay systems differ from country to country; however, a common feature is pay flexibility, implying the differentiation and individualization of wages. This includes pay related to performance of one kind or another (OECD, 2005b). Pay is now a management tool

4. Alienation

4.1. a lack of voice, person–job fit and meaningfulness lead to alienation at work

4.1.1. Marx conceptualised alienation as the separation of a worker from the product that was created,

5. Sutton Trust

5.1. research finds that teachers are the most important factor within schools that policy makers can directly affect to improve student achievement

5.1.1. evidence shows that improving the effectiveness of teachers would have a major impact on the performance

5.2. Helping under performing teachers by looking at:

5.2.1. the selection process

5.2.1.1. teacher training

5.2.1.1.1. PD

5.3. to improve teacher effectiveness:

5.3.1. Teachers should be able to opt out of the standard promotion and pay system, and instead choose a more radical version which rewards high performers with extra pay and opportunities for faster career progression, but penalises under-performance.

6. Teachers important?

6.1. Goals:

6.1.1. Sutton trust: improve the academic performance of his or her pupils

6.1.1.1. A teachers value is indescribable

6.1.1.1.1. Teachers' contributions to student learning are multifaceted;

6.2. UK

6.3. Literally hundreds of research studies have focused on the importance of teachers for student achievement

6.3.1. First, teachers are very important; no other measured aspect of schools is nearly as important in determining student achievement.

7. Teacher Education/ Experience

7.1. Even value added teacher performance measures have been shown to be unstable8 and contain potential biases

7.1.1. Value added measures of teacher effectiveness, which assess progression rather than just the absolute level of attainment, have faced criticism in terms of their validity, stability and precision

7.2. CONS

7.2.1. Sutton trust: here is almost no link between teachers' prior education or experience and the achievement of their pupils

7.2.1.1. Evidence suggests that qualifications and tenure should not play such a major role in determining a teacher’s prospects. In other professions employees are rewarded according to how productive they are in the workplace

7.2.1.1.1. Assessing how salary and working conditions affect teaching quality is complicated. Be- cause traditionally accepted measures of teacher quality, such as experience and years of schooling, are only weakly linked with stu- dent achievement, they are not reliable prox- ies for effective teaching

7.3. The second argument made in favor of merit pay is that uniform pay scales do not accurately reflect teacher effectiveness. In most developed nations, teachers are paid primarily on experience and academic qualifications

7.4. OLD PRP

7.4.1. Knowledge- and Skills-Based Pay Knowledge- and skills-based pay rewards teachers for acquiring additional knowledge and skills thought to improve a teacher's overall effectiveness.

7.4.1.1. It was widely felt too that the then existing salary system was failing to motivate teachers because so many (about 60%) were stuck on the top pay grade, and was encouraging them to take on additional nonteaching duties for more pay which diverted them from the classroom, and so made raising standards even harder to achieve.

7.4.1.1.1. As part of its modernization agenda, and, in particular, the performance thrust, the UK’s Labour administration decided, in 2000, to introduce a form of performance-related policy for teachers in England and Wales

8. Pay Linked to Teachers?

8.1. Yes

8.1.1. improve the cur- rent educational system both by clarifying teaching goals and by attracting and retaining the most productive teachers

8.1.1.1. diagnosis was that ‘good teacher performance is not sufficiently recognized

8.1.1.1.1. When employees learn that certain skills or speci c behaviour are rewarded in a performance-related pay system, they also learn what it is that their employer considers important

8.2. NO

8.2.1. implementing pay for performance poses many practical chal- lenges, because measuring individual teachers' performance is difficult

8.2.1.1. can lead to teachers' directing their efforts exclusively to rewarded activities.

8.2.1.1.1. salary increases for teachers would be both expensive and in- effective.

8.2.1.2. Practical challenges faced by performance-related pay, Lavy says, can be addressed through careful design of the system. he emphasizes that setting up a performance-re-lated pay system that works is not a one-time task

8.2.1.2.1. Money, though motivating, is not the only reward teachers value

9. PRP

9.1. Public Sector

9.1.1. he use of PRP 95 PRP in the UK public sector was always intended by government to individualise the employment relationship in the public sector as part of an explicit attempt to undermine the role of trades unions in collective approaches to pay bargaining

9.1.1.1. evidence from the UK public sector is limited, and many conclusions are made from international studies

9.1.1.1.1. Outside of teaching, there is clear evidence that performance pay leads to higher worker productivity in some private sector firms

9.2. Private Sector

9.3. Pros

9.3.1. PRP WAS widespread use in other occupations.

9.3.1.1. use of pay incentives to motivate performance has long attracted interest in the academic literature

9.3.1.1.1. In education PRP was seen to result in positive implications for students’ performance in standardised tests

9.4. Cons

9.4.1. PRP may generate dysfunctional behaviour where employees switch their efforts towards behaviour that is directly rewarded,

9.4.1.1. For some critics, the PRP proposals are a further stage in the rise of the ‘managerial’ culture

9.4.1.1.1. incentive pay is taken to threaten the continuation of a ‘collegiate ethos’ within the teaching profession

9.5. Types

9.5.1. Individual PRP

9.5.1.1. individual-level teacher incentive pay mostly points towards a small positive impact of pay-for-performance on student outcomes

9.5.1.1.1. The existence of substantial free-rider effects suggests that individual-based incentive pay systems may be more effective

9.5.1.1.2. Individual teacher-based incentives all use some form of value-added measure as the basis for awards. Importantly, teacher value-added tends to exhibit considerable year-to-year variation within teacher that is suggestive of a substantial amount of noise in this performance metric

9.5.1.1.3. But as of right now, there is little evidence that team compensation dominated individual compensation for motivating teachers.

9.5.2. Group PRP

9.5.2.1. Teachers work fewer hours per week under team-based performance pay

9.5.2.1.1. Teachers who supported each other found the experience rather more positive than those who carried out the task in isolation

9.5.3. There are a multitude of different PRP schemes,

9.5.3.1. The evidence for the effectiveness of such schemes, however, is mixed both in the USA and UK. In the USA, for example, Heneman et al. (2000), claimed that performance increases in two thirds of cases where PRP has been introduced, with organizations more competitive, focused, adaptable and collaborative.

9.5.3.1.1. studies by Beer and Casson (2004) in the USA and Procter et al. (1993) in the UK indicate that there is not a simple path between PRP implementation and better performance.

9.6. Effective PRP systems:

9.6.1. individual, clear goals

9.7. What is it?

9.7.1. hinges on student outcomes attributed to a particular teacher or group of teachers rather than on "inputs" such as skills or knowledge-a critical distinction that is emphasized later in this review.

9.7.1.1. believe that pay and performance management for teachers can make an important contribution provided the right system can be found (OECD, 2005)

9.8. USA evidence:

9.8.1. a number of school districts experimented with performance-related pay

9.8.1.1. these programs highlighted the difficulty inherent in creating a reliable process for identi- fying effective teachers, measuring a teacher's value-added contribution, eliminating unprofessional preferential treatment during evaluation processes, and standardizing assessment systems across schoo

9.8.1.1.1. While there is an emerging body of research into PRP in schools in the UK, there has been far greater evaluation of such schemes in the USA where they became widespread in the 1980s

10. Teachers Role

10.1. is a complex activity, involving a wide variety of other inputs, multiple objectives and multi-tasking

10.2. are demoralised and stressed as a result of the daily assault by the government on their pay and working conditions

10.2.1. The evidence suggests that qualifications and tenure should not play such a major role in determining a teacher’s prospects.

10.2.1.1. the recent studies find that teacher effectiveness is not closely related to observable teacher characteristics such as teaching qualifications

10.2.2. Second, it has not been possible to identify any specific characteristics of teachers that are reliably related to student outcomes. Understanding these findings is central to the subsequent discussions of policies and their underlying economics

10.2.3. research, which looked into teachers' levels of job satisfaction and wellbeing, found that respondents' biggest concern regarding their job is their workload (79%), following by pay and pensions (66%)

10.2.3.1. Teachers in these schools were sustained by their belief that they could help their pupils, and make a difference to their lives, but they felt undervalued by the outside world, and in some cases by parents and the local communit

10.2.3.1.1. There is a large body of research on how important teachers are to the academic outcomes of their pupils. The research finds that teachers are the most important factor within schools that policy makers can directly affect to improve student achievement

11. Improving Teacher Quality

11.1. wealth of research evidence about them as possible remedies to improve the existing stock of teachers

11.1.1. Another possible solution is to increase the rate at which teachers’ pay rises with their level of experience

11.1.1.1. One solution is to provide an incentive mechanism for existing teachers to improve quality by paying them according to the percentile performance (in value added terms) of their pupils.

11.1.1.1.1. one further characteristic, often neglected by economists, needs to be discussed: teamwork. The overall effectiveness of schools depends in part on the ability of teachers to work together to produce local public goods.

11.1.2. lower barriers to becoming a teacher and to link compensation and career advancement more closely with performance

11.1.2.1. As both researchers and policy makers increasingly seek to use different sorts of teacher effectiveness measures, it is important to investigate the “hidden” judgments and dilemmas embedded in various approaches, including often tacit conceptualizations of teaching and assumptions about the sources of variation and influence affecting teaching practice.

11.2. A very appealing though untested approach to raising teacher quality would move the focus away from the state legisla- tures and schools of education and toward principals and other adminstrators

11.2.1. n the presence of incentives such as expanded choice, school report cards, or other types of accountability systems, administrators would likely alter their behavior and personnel policies in ways that benefit students. In particular, there would likely be much more focus on stu- dent outcome.

11.2.1.1. here is strong reason to be- lieve that a closer link between rewards and performance would improve the stock of teachers. Of course inappropriate incentives likely lead to adverse out- comes, and it is imperative that schools learn from their mistakes and evolve toward more effective system of governance.

12. Alternative to PRP

12.1. countries do not necessarily have to pay higher salaries to secure better pupil outcomes

12.1.1. f a country is not prepared to pay teachers relatively well, then it will have to go a long way down the road of reducing class sizes to compensate them

12.1.1.1. thus, education policymak- ers need to be careful in designing such programs, and must expect to continually refine the programs as they learn about behavioral responses. (Podgursky and Springer, 2007).

12.1.1.1.1. Since the design of an incentive program can lead to dra matic effects on students, teachers, and administra tors, we must take the lessons learned from these evaluations and continue to both evaluate and refine programs to maximize their effectiveness.

12.2. , it is not enough simply to raise the quality of new teachers. It is more important to raise the standard of those already in the classroom, many of whom will be working with young people for decades to come.

12.2.1. The foregoing analysis has also implicitly suggested an alternative approach to simple performance pay that could be more cost effective. If there is an accurate screen on teacher effectiveness, many of the properties of a performance pay scheme can be achieved by eliminating low performing teachers and paying the remaining teachers higher but relatively flat salaries.

13. Students Performance

13.1. teacher quality is not the only factor that affects student achievement. The student's own motivations and support from family and peers play crucial roles as well

13.2. The best way to improve the quality of instruction would be to lower barriers to be- coming a teacher, such as certification, and to link compensation and career advancement more closely with teachers' ability to raise student performance.

13.2.1. pupil achievements are largely dependent on schools maintaining a strong cadre of teachers. This will require school leaders and governing bodies to make best use of their people

13.3. We find that test scores are higher in usa schools that offer individual financial incentives for good performance.

13.3.1. emonstrate that students learn more in schools in which individual teachers are given financial incentives to do a better job,

13.3.1.1. The evidence of a positive association between merit pay and student performance should be interpreted with caution

13.4. USA

13.5. What is performance

13.5.1. ‘performance’ is perhaps debatable and probably regarded differently in different contexts and among different occupational groups

13.5.1.1. Armstrong (2000: 3) argues, ‘performance is about doing the work as well as being about the results achieved’.

13.5.1.1.1. In doing so, it argues that we need to broaden current theories linking pay to performance, and consider the way performance is defined, through goal-setting and the potential element of individual negotiation in this process.

14. Assessing teachers

14.1. From a theoretical standpoint, Neal (2009) argues that merit-pay schemes should include multiple outcome measures, each of which are adjusted for the composition of the student body

14.1.1. Indeed, performance management can be regarded as primarily a form of control, not for incentivising individuals (Forrester, 2001).

14.1.1.1. The increasing status of performance management systems and the oppressive use of inspection and audit regimes displaces any notion of professional self-regulation in the lecture theatre and classroom

14.2. Indentifying effective teachers

14.2.1. All three experiments resulted in high agreement among judges but low ability to identify effective teachers

14.2.1.1. judges, no matter how experienced, are unable to identify successful teachers

14.2.1.1.1. n such a working environment, it is difficult to measure the contribution of any given individual. As teachers often work together.

14.2.2. Necessary

14.2.2.1. Findings such as these are convincing as to the importance of having an effective teacher but do nothing to tell us how to identify an effective teacher when we see one

14.2.2.1.1. evaluative measures to assess teacher performance are advanced even further

14.2.3. VAM

14.2.3.1. Often, and including in the programs studied in this paper, performance pay programs provide teachers bonuses based on their valuea dded.

14.2.3.1.1. Loosely, a teacher’s value-added is the average gain in test scores experienced by his or her students during the academic year

14.2.4. We have assumed that the overall effectiveness of a teacher is comprised of two components – teacher talent and teacher effort

14.3. Tests

14.3.1. Tests have become increasingly important as a tool-arguably, now the central tool-for holding educators and systems accountable

14.3.1.1. use of tests typically rests on two assumptions: that students' scores are a reasonable measure of educational output, and therefore that holding teachers ac- countable for them will provide appropriate incentives to improve the performance

14.3.1.1.1. However, given the current emphasis on educational accountabil ity, it is also difficult for incentive pay programs to totally ignore student test scores or test score gains when measuring teaching performance.

14.3.2. Cons

14.3.2.1. t overly simplistic reliance on achievement tests in accountability systems can produce perverse incentives and seriously inflated estimates of gains in student performance

14.3.2.1.1. , test-based merit-pay schemes are criticized on the basis that they may cause teachers to focus on a narrow subset of activities, or to ‘teach to the test’

14.4. Observations

14.4.1. T The other way to assess teaching ability is through personal evaluations. These can be informal, with impressions of teaching ability being formed over time by a head of the school or head of department. The advantage of this method is that it is harder for the teacher to manipulate,

14.4.1.1. There can be value in using external expertise both to develop an effective approach and to benchmark standards.

14.4.1.1.1. Effective training in observing teachers will also give teachers confidence in their evaluation, knowing that that it is meaningful and unbiased

14.5. Appraisals and measured performance in the classroom have been found to be highly correlated: teachers with high value added tend to receive good evaluations from heads32. Therefore there is a strong argument for measuring teachers’ performance using a combination of these two, with each approach compensating for the shortcomings of the other, but also incorporating a third element – external teacher appraisals.

14.5.1. , the evidence also suggests that schools should rely on a combination of approaches to gain a fuller picture of teacher effectiveness, and that teachers should be assessed on their cumulative performance over several years rather than on the data from a single year

14.6. use both methods

15. Theory

15.1. Goal-setting theory complements expectancy theory by further describing the conditions under which teachers' actions are likely to be changed by the incentive. Under goal-setting theory, teach ers are predicted to respond to the incentives if the goals under the performance pay systems are clearly defined, moderately challenging, and accepted by teachers

15.1.1. . In addition, goal-setting theory suggests that teachers' effort will be influ enced by a number of factors, such as their under standing of the incentive pay program and its goals (Kelley, 1999) and perceptions of the fairness of the program (Heneman & Milanowski, 1999).

15.2. Economic Theory

15.2.1. Cons of PRP in the public sector:

15.2.1.1. productivity that is hard to measure, outputs produced by teams of people (a maths department for example), as well as concerns about the unpopularity of PRP among teachers and their unions. Finally, PRP was introduced at a time when many schools were facing a tight financial situation, limiting scope for increasing teacher pay.

15.2.1.1.1. The principal’s interest is that a worker works as hard and efficiently as possible to maximise profit, but the agent aims to minimise their effort to reach the basic standards needed to receive pay

15.3. Formal economic theory usually justifies incentives to individuals as a motivation for efficient work. The underlying assumption is that individuals respond to contracts that reward performance

15.3.1. economists suggests that teachers may improve their teaching in response to financial incentives

15.3.1.1. The economic argument for improving the effectiveness of teachers is also strong

15.3.1.1.1. We perform a parallel calculation for the UK using more conservative assumptions25, and find that bringing a poorly performing teacher up to the average would increase the lifetime earnings of a single class of 30 by £240,000-£430,000 (in present value terms).

15.4. Performance Mentoring

15.4.1. Assessing

15.4.1.1. A major argument against merit-based pay programs concerns the difficulty in monitoring teacher perform

15.4.1.1.1. teacher performance is more difficult to monitor than performance in many other professions because output is not readily measured in a reliable, valid, and fair manner.

15.4.2. team work

15.4.2.1. Introducing performance-related rewards at the individual teacher level might reduce incentives for teachers to cooperate and, as a consequence, reduce rather than increase school performan

15.4.2.1.1. Performance management is a process originating in the private sector which has subsequently been adapted by the public sector into an audit mechanism for improving the performance, productivity, accountability and transparency of public services.

15.4.3. Good performance management is about operating a process which increases the likelihood of achieving performance improvements.

15.4.3.1. Managerialism can essentially be understood as a set of beliefs and practices which have been adopted and utilised in various ways in order to reshape public sector organisations and agencies, practices, culture and ideology in order to improve efficiency, cost-effectiveness and organisational performance

15.5. Output vs Input Theory

15.6. Theory of Compensation

15.6.1. general theories of compensation should apply to teaching. Those theories suggest that output-based pay is best used when output is well defined and easily measured.

15.6.2. context of the teaching profession, payment on input means payment on the basis of skills and time worked,

15.6.2.1. whereas payment on output usually refers to some metric of the performance of the students whom they teach.

15.6.2.1.1. When feasible, payment on output has two advantages over payment on input. The first, most frequently emphasized, is incentives. The second, equally important, but receiving less attention, is sorting or selection.

16. Teacher Retention

16.1. Worldwide survey

16.1.1. ‘What type of change could best make the teaching profession more attractive?’

16.1.1.1. respectively “a higher salary” and “a more recognised social status and a better image of the profession

16.1.1.1.1. common factors that spur teachers worldwide to leave the profession include low salaries, quality of teacher preparation programs, overwhelming workload, and poor working conditions.

17. My argument

17.1. This paper highlights the roles of performance feedback and measurement precision as key design features in an individual incentive pay program that have not received sufficient attention in prior research.

18. Social Justice