Bob is a founding teacher in our school. I used to play on a basketball team with his brother Dan. Dan is an un-moveable rebounding force. So his semi-retirement has negatively affected my satisfaction. However, that is not what I'm blogging about today. Dan is also operations manager at a local fuel company called Dennis K Burke. And I wanted to know how they do pay-for-performance. He explained:
We do offer a safety bonus program and it is amazing the impact that it has. Definitely works to make guys focus on what they're doing and ensure that operate safely.
Our program is $100/year for every consecutive accident/incident free year. At an annual meeting, Ted comes in with a big stash of $100's and hands them out in front of every driver so everyone sees the results. Quite impressive. Some guys get $2,000+.
I know it has an impact as you hear guys talk about it in the field. Our safety record (based on a federal score that is published) is within the top 20% in the country and I believe the safety bonus is largely responsible.
Of course, the negative with pay for performance is that you end up with some gray areas that if not properly managed can cause some negative reaction in the organization. Additionally, we can justify paying $40,000 out annually to our guys for safe performance vs paying it to the insurance company for higher rates if we were not as safe. Not sure the educational setting would provide that "pay for itself" idea.
Feel free to pay me for my performance in this e-mail if its been exceptional.
Dan makes an interesting point. If a private school had excellent teaching, it could -- in theory -- raise its price. Parents would pay more. So if merit pay led to attracting better teachers or improving the teachers already there, it could "pay for itself" -- a virtuous loop.
But in public schools -- traditional or charter -- the government pays exactly the same per-student amount whether the kids learn a lot or a little. Since the total pie can't get bigger, merit pay raises tend to be zero sum. This, of course, is less attractive to teachers.