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).
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.
- 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.
- 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.
- 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.
- 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.
- Investments in ongoing professional development are key to skills- and
structures. Such investments should be in the range of 2-3 percent of the operating budget.
- 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.
- 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.
- 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.
- 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.
- 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.
A Comprehensive Skills-Based Teacher Compensation Schedule High School
|First Content Specialty
||Second Content Specialty
||School-Site Expertise (examples)
||Decision-Making Team Leader
|Advanced 2 (Tenure?)
||Advanced 2 (Tenure?)
||School to Work Transition
||Accounting and Financial Mgt
|Advanced 3 (Recertification?)
|Computers and Technology
|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.
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:
- clear, specific and measurable skill blocks. Skill blocks should be directly related
to the needs of a particular school or district and provided in written form with clear standards.
They could be designed locally or could be based on national standards developed by
- an objective, sound, and credible assessment system that involves teachers and
administrators. In the long term, core curriculum and instruction skill blocks should probably be
assessed by a state or national teaching standards board, as is
done in many other professions (Kelley and Taylor 1995).
Pay-at-risk plans should include:
- identification of tasks critical to a district's top education goals; and
- selection of one to two tasks that both teachers and the district can readily
implement, such as ongoing training and an ongoing quality review.
Performance awards plans should:
- be given on a group basis, not based on individual performance. Usually this
means everyone in a school--professional and classified staff--would be eligible.
- clearly state what performance is most valued--such as student achievement,
student/teacher attendance, and parent satisfaction. The system will get more of what is in the
performance measure and less of other system results. Thus,
if the system focuses on achievement, it should incorporate a full
range of achievement measures, over a range of subject areas.
- be given based on improvements over some historic base, should reflect local
context, and should set timetables for reaching goals. The performance assessment should also
recognize changes in the student population, such as student mobility, which may impede accurate
measures of progress.
- be funded at levels that reward all schools meeting performance targets. Stability
in performance award funding is essential for the awards to serve as an incentive for
future performance improvements.
- provide rewards that are valued by teachers. Such awards could be salary
bonuses, or dollars for school improvement activities or professional development.
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]
[New Structures and Approaches to Compensation]