What We Can Learn From Business About Merit Pay

For years educators have heard that schools should be run like businesses, as an educator, for once I agree. I think that it would be nice if we would note what is currently in the news concerning what business has learned about evaluating its employees.


Much has been written of late on the clear demise of what has come to be called the “Rank and Yank” system of evaluation in business (a.k.a, forced ranking, stacked ranking, forced distribution, etc..). Former Chief Executive Jack Welch of General Electric popularized the system in the 1980’s as a way to impose the bell curve on his evaluation of employees. Under this system personnel would be rated and forced into five categories ranging from the top 10% of performers - to the bottom 10% of performers. The system was used to reward the top employees, and cut the bottom.


I don’t know about you, but to me, this smacks of the current wave in education to use an evaluation system called, “Merit Pay”. In this system, top performers in schools will receive a bonus if their students outscore other students in their district on state mandated tests. As to what happens to low performers…. GE’s former executive said it best: ““Some think it’s cruel or brutal to remove the bottom 10% of our people. It isn’t, there is no cruelty like waiting and telling people late in their careers that they don’t belong.” I wish it were as simple as he thought it was, but I must say it, “You don’t know Jack!”


Before we jump on the “Merit Pay” bandwagon let’s look at what businesses are doing with old Jack’s system. According to articles in Computer World, Market Watch,Business Insider, and yes, even the Wall Street Journal the system is counter productive to collaboration. In fact, there is an often cited example dealing with Microsoft not selling an iPad version of Office because the Windows group overruled the Office group. The reason that they squelched the deal: because if the Office group prospered the Windows group would have fallen in the rankings, and thus would missed promotions, or bonuses.


Just take a moment to google “merit pay effectiveness in education” and you will find that “Merit Pay” does not improve teaching. It does not improve student scores. It does not foster educational reform. It does foster competition which gets in the way of collaboration.


Where “Merit Pay” has worked, it worked because there was no competition. In a study done by Mathematica, teachers were hired based on their ability to raise scores of low performing students. They were payed $20,000 over two years regardless of student achievement. In short, they were not competing with each other. And to those that think, “We need to get rid of those old teachers,”  the average age of the teachers was 42 with at least 12 years of teaching experience. These veteran teachers significantly raised test scores. Clearly, experienced staff members are the key to high performing schools.


A deeper lesson to take away from this discussion is simply this: at the end of the day, we aren’t looking at whether or not, as educators, we make a bonus. I’ve never met an educator who came into the field to get rich. No, most educators entered teaching because they felt that they could make a difference. That they could impart their love of learning to a new generation, and touch the lives of others in a positive way.


Merit pay seeks to pit teacher against teacher. It becomes a win-lose world in which teachers are constantly seeking an edge to win. And here is the sad part….if your kid’s teacher loses, so does your kid. Education should be about sharing the best practices to all teachers so that everyone wins: your teacher, your school, your state, your nation, your world. Oh yeah, YOUR CHILD! So here’s a novel concept: Let’s reward teachers who share their secrets for success. Let’s find a way to pay those who make a difference to the community as a whole, and not rate teachers from high to low. The true merit is when we commit to ensuring that ALL children learn. And that is what is called a Win-Win. Sorry, Jack.