According to Bruno S. Frey and Margin Osterloh, authors of, Stop Tying Pay to Performance (HBR Dec/Jan 2012), the evidence is overwhelming: it doesn’t work.  The authors mainly refer to business models based on pay for performance, but of course, there are connections to our current education system’s obsession with this ill conceived concept. The authors state that in the business world, CEO compensation has sky-rocketed ( Example US S&P 500 where the ratio of average CEO pay to average employee salary went from about 40:1 in the 1970s to 325:1 in 2010) with very little to no correlation with increases in company performance.  The same is true of education systems that have employed pay-for-performance schemes.

According to the authors all variable pay-for-performance schemes suffer from four flaws.  I have refocused Frey and Osterlohs’ lens from business to education, but for the most part, the four flaws below are nearly direct quotes from their article:

1. In a modern world, where kids still sit in rows listening to teachers lecture, it’s impossible to determine what instructional practices will need to be employed in the future precisely enough for pay for performance to work well.
2. Teachers subject to variable pay for performance don’t and clearly won’t accept the criteria.  As we have already seen, unions and governments spend a lot of time, money and energy trying to manipulate the criteria in their favor.
3. Variable pay for performance often leads teachers to focus exclusively on areas covered by the criteria, neglect other important work with students.  They are motivated to teach to the test.
4. Variable pay for performance tends to crowd out intrinsic motivation and thus the joy of fulfilling work.  Such motivation is of great importance to schools because it supports innovation and encourages beyond ordinary contributions.

The research is clear, it’s not about the money.  Pay for performance causes more problems than it solves and, “there’s no proof that it helps achieve its intended purposes, and other approaches not only work better but also strengthen employee loyalty.”

Most of us got in the business of education because we care for students and have a huge belief in the rock-bed of this country, public education.   We value recognition from our peers and superiors and we do the work because we find it challenging and worthwhile.  Given these obvious truths, the authors suggest we do the following things:

1. Hire folks who are truly interested in the work that needs to be done.
2. Pay fixed compensation but adjust it on the basis of a comprehensive evaluation of an employee’s work.  To do this right, I feel we must look at a triangulation of data which should include: student performance on state tests, evidence of student work (I imagine digital portfolios stocked full of authentic student work that demonstrates their improvement in reading, writing, speaking, viewing, listening, and critical thinking), and finally, satisfaction survey results from the people educators serve: students and parents.
3. And finally, we need to award and recognize educators, students, community members and parents often.  Celebrate success at staff meetings, through blogs, newsletters, personalized letters, plaques, trophies, etc.