Op-Ed: Better Pay Formulas Are Not the Answer to Teacher Compensation

Arnold Kling | October 10, 2011 | Opinion
Local autonomy, rather than inflexible formulas, is the key to gauging teacher performance

New Jersey Gov. Chris Christie would like to improve the way that teachers are compensated. He wants to get away from the rigid, credentials-based and tenure-protected system that exists today. Instead, he proposes to convene a task force that will “be charged with recommending a system that elevates the role of student learning in evaluations and fairly and transparently assesses teacher and principal performance.”

The current approach to compensation in primary education certainly is flawed. Quality teaching does not come from credentials. Instead, good teachers make themselves, through relentless effort at self-improvement. Seniority is not a meaningful indicator: some teachers use their years of experience to learn and grow; others merely stagnate.

So, yes, the formulas for compensation that are in use today fail to reward good teachers or to provide incentives for teachers to get better. But, no, the answer is not to put new factors into the formulas.

If you look around at the private sector, you will see very few professionals whose compensation is driven by a formula. Think of middle managers at large firms, for example. Like teachers, middle managers are faced with multi-faceted jobs, complex environments in which to make decisions, significant interactions with other people, and effects on outcomes that are hard to measure in the context of other factors.

In this environment, how do large organizations choose to compensate middle managers? They do not use rigid formulas. Instead, within broad guidelines, they give discretion to supervisors to set compensation. Supervisors have the local and tacit knowledge that is needed in order to arrive at a reasonable evaluation of the middle manager’s contribution to the organization.

Giving supervisors the discretion to set pay is not perfect. Supervisors can be biased in their assessments. But in a complex environment, they do a better job than rigid formulas.

Now, consider teaching. Student test scores are a very noisy indicator of teacher performance. Many factors affect test scores that are beyond a teacher’s control. Moreover, we look to teachers to contribute in other ways than just boosting test scores. We want them to be team players, not just focused on their own classrooms. It is impossible to reduce the teacher’s contribution to a formula.

When you take a complex job and boil it down to a formula, you induce professionals to figure out how to game the system. That is, they learn how to get the most out of the formula while doing the least to achieve the overall goals of the organization. In recent years, many financial firms have learned the hard way that their bonus formulas were not inducing behavior that was healthy for the long term. The best organizations stay away from formulas because of this gaming the system problem.

A better approach to improving teacher compensation would be to increase local autonomy. Instead of imposing a new formula designed by a task force, give principals and department chairs more flexibility in setting pay. This will require removing the barriers to flexibility created by both state bureaucracies and union contracts.

Local autonomy would be enhanced by respecting the opinions and decisions of parents. If choosy parents are requesting some teachers and avoiding others, then this ought to factor into the decisions that principals and department chairs make regarding teacher compensation.

The solution for teacher compensation is not a better formula. It is more local autonomy.

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