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Lessons learned from imposing performance-related pay on teachers

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Lessons learned from imposing performance-related pay on teachers

One of the toughest subjects in classrooms at the moment is the recruitment and retention of teachers. Their level of pay is often cited as a problem – and possibly part of a solution.

In England, the public sector pay freeze of recent years has meant real terms pay cuts for many teachers. But another part of the picture is the procedure which decides how much an individual teacher gets. Until recently this has been the pervasive public sector approach under which pay has generally increased automatically over time.

But what if that were changed? Could the profession be made more attractive to high performers? Could more teachers be persuaded to keep on teaching?

Back in 2013 the British government introduced one of the most wide-ranging reforms to teachers’ pay for many years. The most striking element was the requirement for all Local Authority (LA) maintained schools to introduce “performance-related pay” (PRP) for all teachers. Set points for teacher pay (known as “spine points”) were abolished and instead pay increases were decided by the school.

Part of the government’s thinking behind this was to attract more high performers to the profession – and retain them. But the reform deliberately came without a centrally mandated framework. Aside from some very general advice, schools were left to design their own pay schemes and choose their own performance measures (though many adopted union or LA recommended templates).

The other main element of the reform removed the requirement for pay “portability” which had guaranteed teachers at least the same pay in an equivalent new job as the old. This meant that teachers quitting one job for another could now in principle be paid less in the new one.

Our report provides the first in-depth analysis of the impact on pay of this major reform using the the School Workforce Census, a national census of all English state school teachers.

The report also presents the results from a survey conducted by the National Foundation for Educational Research which explored teachers’ views of the reforms, including their implementation, the performance management system and its perceived fairness.

Clearly it is the level of pay that matters most to many of the players in this market, not least teachers themselves. But our focus was on how the pay reforms affected the teacher labour market across state-funded schools. Did the variation in pay increase? Did teachers start to move to jobs with lower pay?

Test results

We know that teachers’ performance differs dramatically, so any reasonable measure of performance coupled with even a moderate incentive scheme should yield substantially higher variation in pay. However, the data showed that while there is greater variation in pay since the reforms, the increase is small.

Pay protest. Shutterstock

That small increase in variability is present across both primary and secondary education, all school types and all the teacher characteristics we included from the School Workforce Census, including whether they were teaching a shortage subject (one where teachers are in particularly high demand, such as physics) or not.

Even in the range of annual pay awards, the story is of some slow change. Many schools continued to award annual pay increases that closely mimicked the old system. For these schools, the requirement to differentiate pay by performance does not appear to be something they wanted to embrace – and it seems that they simply did the least they could to comply with the directive.

Other schools are clearly moving away from the spine point system and differentiating pay awards for their teachers. Overall, the percentage of teachers (below the top level) receiving an annual pay increase in line with the spine point system has fallen, from 76% between 2011 and 2012 to 40% between 2014 and 2015.

In general, after two years of a mandatory policy to base pay on performance rather than tenure, some schools are starting to use their new freedoms. Not all schools, and those that do, not by much. Since the impact on pay and incentives has been minimal, we would expect little early impact on recruitment and retention.

A for effort?

But how can this be? In the survey, 99% of headteachers reported that they had implemented the reforms (as they were required to do).

What this suggests is that, for many schools, any implementation was largely symbolic. Actual pay awards varied little from the old system and supposed links to performance were minimal. Given that no performance management system was imposed on schools, they were clearly free to pick metrics that did not discriminate much between the performance of different teachers.

So why did so many schools decide that a stronger approach to PRP would be unwise? Perhaps it’s not so unexpected: economic theory suggests a number of reasons why a straightforward private sector logic for PRP might not translate into the public sector – and teachers in particular.

These reasons include productivity that is hard to measure, outputs produced by teams of people (a maths department for example), as well as concerns about the unpopularity of PRP among teachers and their unions. Finally, PRP was introduced at a time when many schools were facing a tight financial situation, limiting scope for increasing teacher pay.

It’s too early to say how the system might yet evolve. As with any major change, meaningful implementation is likely to be slow, even for something schools are required to do.

Of course, the true test of the policy will be whether there is an impact on pupil attainment from the incentives. While the international evidence is split, there is certainly reason to think it might appear.

But the key point is this: a lot of evidence shows that people respond very precisely to what they are incentivised to do. The exact performance metrics that schools have chosen are therefore key to the success of this policy and are largely unknown. Design is key. The decision to allow schools to pick their own may yet come back to haunt the government.