Teacher Performance-based Compensation Reform: A Path for Success

BOSTON, Sept. 25, 2012 /PRNewswire/ -- Retaining excellent teachers is perhaps the single most important driver of student learning and achievement, but also one of the most challenging to achieve. With teacher effectiveness and tenure rising to election-year discussion, a new paper from The Parthenon Group examines performance-based compensation for teachers, offering recommendations to guide reform and improve systems.

"Observations from the Field: Practical Reflections on Teacher Performance-based Compensation" comes as the Department of Education prepares to award the latest round of the Teacher Incentive Fund (TIF), which will soon allocate $285 million to support performance-based compensation and professional development.

"The debate over compensation reform generally misses the point that it must be part of a bigger human capital strategy to identify and retain the highest-performing teachers over time," said Seth Reynolds, a partner in the firm's Education Practice and co-author of the paper. "Forcing performance-based compensation plans onto systems that don't differentiate by performance is like trying to put a square peg in a round hole and therefore ultimately won't get the kinds of results that our students deserve."

According to recent data[1], 29 percent of teachers are likely to leave the profession within the next five years, up from 17 percent in 2009, and just 44 percent are "very satisfied" with their jobs, down from 59 percent three years ago.

"These statistics don't bode well for teachers or students," added Reynolds. "Tying instructional quality and student learning to increased compensation will actually improve high-performing teachers' sense of value in the workplace."

Past attempts at incentive-based compensation were unsuccessful largely because they were layered on an evaluation system sharply at odds with compensation objectives, he noted. Further, even among districts that invested in reforming evaluation systems, few ventured into forward-looking territory that would replace a salary system based on service time or degrees with one accelerating pay for high performers. Rather, most focused on bonus systems that left teachers unclear on what they did to improve student gains or what they could do to improve student performance.

Based on this and The Parthenon Group's work with states and districts across the country, Reynolds highlights a practical approach to compensation reform:

• Put the foundation in place first: The most important precursor for successful performance-based compensation systems is a teacher-evaluation system that has multiple measures of performance, differentiates among performance levels and provides specific, actionable feedback. With no connection to a clear evaluation system, bonuses for high student test scores, for example, feel more like a lottery than a reward for truly influencing learning gains.
• Make attracting and retaining effective teachers the main goal:  Most teachers already work tirelessly for their students, yet incentive systems are usually focused on annual performance bonuses with an implicit – and misguided – goal of getting teachers to work harder or better. The focus should instead be on recruiting high-potential teachers to the district or school and over time, retaining more of the top performers.
• Reexamine the focus of incentives: Incentives should be focused on increasing student learning rather than more traditional measures such as accumulated service time and increased levels of degrees, which offer little evidence of driving student performance. In a survey of teachers in a large urban district, more than 70 percent – regardless of tenure or seniority – said that instructional excellence should be a top factor in determining a teacher's compensation.
• Recognize that money does matter: Compensation alone won't solve teacher recruitment, performance and retention issues – school leadership support and individual professional growth are critical. But all else being equal, The Parthenon Group's survey found that money can be an important factor, with over 50 percent of highly effective teachers who left one large urban district citing a higher salary as a top inducement to stay.
• Keep it simple: Teachers need a clear "line of sight" on how to influence their growth and future worth in the new system. Many innovative compensation systems across industries, including education, make the mistake of developing complicated plans that pursue the right goals in theory, but are not transparent to employees in practice. Thus behaviors critical to improving performance system-wide are not clear and encouraged.
• Invest in implementation: Careful transition planning and implementation are key to success, right down to making sure the simplest of processes work (e.g., issuing paychecks). It also requires ongoing communication, particularly with teachers, administrators and community focus groups. Unions and other key stakeholders should be at the table early on. But don't confuse buy-in with pure democracy; the final decision rests with the local Board of Education.

"The most critical goal for any performance-based reform is to, over time, shape teaching staff – recruiting and retaining high performers," said Reynolds. "This requires a solid foundation, wise spending and an evaluation system strong enough to support this ultimate goal."

About The Parthenon Group

The Parthenon Group is a leading advisory firm focused on strategy consulting with offices in Boston, London, Mumbai, San Francisco and Shanghai. Since its inception in 1991, the firm has embraced a unique approach to strategic advisory services built on long-term client relationships, a willingness to share risk, an entrepreneurial spirit, and customized insights. This unique approach has established the firm as the strategic advisor of choice for CEOs and business leaders of Global 1000 corporations, high-potential growth companies, private equity firms, educational institutions, and healthcare organizations.

For more information, please visit http://www.parthenon.com.

CONTACT:  Brianne O'Donnell, 212-220-4444

[1] MetLife Survey of the American Teacher: Teachers, Parents and the Economy (released March 2012).

SOURCE The Parthenon Group