Archived Information

CPRE Policy Brief: Reinventing Teacher Compensation Systems - September 1995

Design and Development

Generally, notions of skills- or competency-based pay, pay-at-risk, and group-based performance awards are new to schools and education systems. However, several states and districts are attempting to better align their compensation systems with current educational goals and the organization of schools.

Kentucky, South Carolina, and Texas have developed school-based performance awards for improvements in student performance over time. Douglas County, Colorado; Rochester, New York; Boston, Massachusetts; and Dallas, Texas are districts that have developed alternative compensation systems, incorporating principles of skills-based pay, individual-, group-, and school- based performance awards, and job-based pay. Further, a growing number of districts have agreed to reward teachers for participating in or successfully completing the National Board certification process. Early results suggest that these efforts have the potential to support teacher professional development and encourage teachers to focus on improving student achievement. (Programs in Kentucky, South Carolina, Douglas County, and Dallas are described briefly in the sidebars included in this brief.)

In contrast to education, other enterprises have been using these forms of pay for several years and their early experiences provide some lessons that may be applicable to education. Interestingly, studies show that the process issues are even more crucial than the technical issues (Jenkins, et al. 1992).

Process Principles

Ten key process principles are important to the successful development, design, and implementation of a new compensation system that incorporates any or all of the elements of skills-based pay, pay-at-risk, or group-based performance rewards.

  1. Involvement of all key parties, and especially those whose compensation is being affected, is the preeminent principle for successfully changing compensation policies. Teacher unions, administrators, school boards and the public all should be centrally involved in the process of development, design and implementation.

  2. Broad agreement on the most valued educational results is also crucial. All parties--teachers, administrators, board members, parents and the public--need to agree on the results that are most valued.

  3. Sound, comprehensive evaluation systems need to be in place to assess teacher knowledge and skill development in a skills-based pay system, and to evaluate organizational products and processes to be rewarded through group-based performance awards. Assessment mechanisms might include measures of student achievement, parent satisfaction, and teacher and administrator skills, knowledge, and performance.

  4. Adequate funding which is integrated within the school finance structure is less likely to be vulnerable to cuts than a separate funding pool. Lack of funding and a lack of a long-term funding commitment have been key aspects of the downfall of many efforts to reform compensation in education. Transition funds often are needed to move from the old to the new structure, and performance bonuses need a stable funding pool.

  5. Investments in ongoing professional development are key to skills- and competency-based pay structures. Such investments should be in the range of 2-3 percent of the operating budget.

  6. Quotas should be avoided. All schools meeting performance-improvement targets should be rewarded, not just a fixed percentage of schools. Organizational excellence is dependent on consistent rewards for improvements in performance.

  7. General conditions of work must be addressed. The better the conditions of work in a school (teacher involvement in decision-making, sound facilities, availability of materials, safety, etc.), the more likely a new form of compensation can be implemented successfully. A corollary to this principle is that the compensation system should be designed with the general conditions of work in mind. For example, skills assessment in a high-involvement school should incorporate teachers fully in the assessment process.

  8. Management maturity is also important. Administrators and the school board should have good working relations, and the administration should develop a history of working cooperatively with teachers and their unions to further system goals and objectives. Restructuring the salary schedule should occur in an environment characterized by interest-based bargaining, in which each party recognizes the interests and concerns of the other parties.

  9. Labor maturity goes hand-in-hand with the behavior of the administration. Teacher associations, and their members, need to have positive commitment to the academic goals of the school, good working relations among themselves, and a tradition of working with management toward education system key goals.

  10. Persistence until the plan is "perfected" is the key to long-term success. Most plans have initial "bugs" and are viewed with skepticism by some employees. Thus, persistence is needed to continue implementation, to revise the plan when problems are identified, and to encourage full participation to see how the plan works when fully implemented.

Model 4
A Comprehensive Skills-Based Teacher Compensation Schedule High School Version
First Content Specialty Second Content Specialty School-Site Expertise (examples) Breadth Skills Management Skills
Spanish Fluency Counseling Decision-Making Team Leader
Provisional License Provisional License Hmong Fluency Professional Development School Operations
Professional License Professional License

Advanced 1 Advanced 1 Korean Fluency Curriculum Development Budgeting
Advanced 2 (Tenure?) Advanced 2 (Tenure?) Reading Recovery School to Work Transition Accounting and Financial Mgt
Advanced 3 (Recertification?)
Computers and Technology Marketing
Advanced 4
Community Outreach Program Evaluation
Advanced 5
Family Liaison
National Board Certification

Model 4 builds on Model 3, but adds opportunities for teachers to receive pay increments for demonstrating skills and competencies identified by the school or district as important for achieving local educational goals. This model provides for tailoring of teacher skill development to needs of the local school context, including specific depth and breadth skills geared to the local student population, and management skills which may be required for local school operations. Specific dollar amounts would need to be identified for each cell in this model.

Technical Principles

Although there are numerous technical design issues, any new compensation system must first be perceived as fair by everyone involved. The system must also be communicated in a way that can be clearly understood by all those affected. And the new system must provide incentives that will lead to the desired teacher behaviors such as working collegially in schools, actively learning new skills and competencies, and seeking to improve learning among all students. In addition, there are specific design issues associated with each type of compensation.

Skills- and competency-based plans should include:

Pay-at-risk plans should include:

Performance awards plans should:

Performance-based plans should also give teachers professional control over the work environment. If teachers are to be held responsible for student results, they need to have the capacity to improve organizational effectiveness. Knowledge, power, and information should be devolved to teachers to give them the capacity to make the changes needed to create performance improvements (Wohlstetter and Mohrman 1994).

[Elements of New Compensation Systems] [Table of Contents] [New Structures and Approaches to Compensation]