Is merit pay the best way to retain top talent in schools?

Teaching is also a profession with a high attrition rate, particularly in the first five years. Merit pay has been suggested as a means to mitigate the problem. President Obama endorses a merit pay system. Merit pay places money in the hands of the best teachers, an incentive to continue in the profession. Money, however, may not be enough, according to some studies.

The merit-pay concept has considerable appeal. The greatest single factor that contributes to student achievement is teacher effectiveness. Investing dollars in such teachers as a motivator to perform and incentive to retain makes intuitive sense. After all, corporations routinely give bonuses to employees who perform.

In education, however, some studies show merit pay can have a positive effect on student achievement, but other studies show it has no effect. One study from India showed improvement for two groups that used incentive pay, the best results being for teachers who were given incentives individually. A Denver study shows teachers who participated in a merit pay program had higher rates of retention, but this was not shown to correlate to student achievement—the measurement used in many merit-pay systems.

Low teacher-retention rates are costly. A district must spend to recruit and train replacements for each teacher lost, an expense that can come to millions of dollars over time. Nearly a third of the recruits are likely to be new teachers, up to half of whom can be expected to leave the profession in the first five years. Taking the projected financial loss from teacher attrition and placing it into a merit pay system that would reduce the number of teachers who quit seems, at first glance, to be the natural thing to do.

In fact, new teachers face a wide variety of obstacles to career satisfaction. They cite relationships with peers and students, school policy and administration issues, and fairness. Educators also cite a lack of recognition for achievement. These factors have little if anything to do with merit pay.

Other studies suggest similar conclusions. According to a study by the City of New York, new teachers are frustrated by lack of support as well as low salary and benefits. An analysis of the Indian merit pay study shows a stronger correlation between retention and the amount teachers were observed than with the actual pay increase.

Dan Pink, author of Drive: The Surprising Truth About What Motivates Us, shows that incentive rewards boost performance on menial tasks but have little effect on tasks in altruistic professions. He indicates that research shows jobs requiring a high degree of knowledge and thought, such as teaching, are not affected by incentive pay. He suggests most teachers want sufficient income to remove the issue of money from their lives and the freedom to innovate within reasonable limits.

For new teachers, low pay is a large factor in decisions to stay in the profession. New teachers often find themselves working harder for less money than they made in previous careers or could make in the private sector. Merit pay and performance bonuses may contribute to retention, but they are not the only factors that keep experienced teachers in classrooms.

In the end, it is probably fair to say that merit pay is one of multiple factors that contribute to teacher-retention rates. A well-designed evaluation system that identifies highly effective teachers can provide additional incentives to stay in the profession. Talented new teachers who find success in such a system may be more likely to stay, but the overwhelming issues facing new teachers will still need to be addressed to see more retention in this group. Besides pay issues, teachers need collegiality, fairness, competent and supportive administration, and more, in order to be happy in their jobs.