Mexico 11-12 December2008
Incentives and stimuli
11
Goals for the workshop
The case for incentives
Salary scales
Design of incentive systems
What is rewarded
Who is rewarded
Who decides on award
Mexico 11-12 December2008
Incentives and stimuli
22
Goals for the workshop
The case for incentives
Salary scales
Design of incentive systems
What is rewarded
Who is rewarded
Who decides on award
Workshop goals - today
Mexico 11-12 December2008
Incentives and stimuli
33

Share best practices and review lessons of policy
implementation with the establishment of incentive
systems in other countries
from the perspective of those in government who initiated
related policies and practices…
… as well as those who were confronted with delivering them
at the frontline

– Government
– Why and how did governments conceptualise incentives
– What did they do to implement them, and what obstacles did
they face during implementation
– What results did they get out of this
– What would they do differently if they could start all over
– The profession
– To what extent where the reform goals shared (and why)
– How was the implementation managed and perceived
– What would they do differently if they could start all over .
Workshop goals - tomorrow
Mexico 11-12 December2008
Incentives and stimuli
44

Implications for Mexico



Points of agreement as to what Mexico can learn from
other countries’ experiences
Prioritising the challenges which Mexico will face in
establishing incentives structures and stimuli
Implications for the work of the Allianza
Mexico 11-12 December2008
Incentives and stimuli
55
Goals for the workshop
The case for incentives
Salary scales
Design of incentive systems
What is rewarded
Who is rewarded
Who decides on award
66 The quality of educational outcomes cannot
Percentiles
Student with highperforming teacher*
Student performance
Incentives and stimuli
exceed the quality of teachers
90th percentile
Mexico 11-12 December2008
Two students with
same performance
Student with lowperforming teacher**
* Among the top 20% of teachers
** Among the bottom 20% of teachers
Source: Sanders & Rivers Cumulative and Residual Effects on Future Student Academic Achievement
37th percentile
The case for incentives
Mexico 11-12 December2008
Incentives and stimuli
77
r
Incentives are about…

r
Giving teachers signals that better work will
make a difference for them
Incentives have many dimensions…




Fostering an attractive work environment
Establishing and facilitating career perspectives
Providing access to professional development
Identifying and spreading effective teaching
practices
… better pay for better work is just one of them.
The case for incentives
Mexico 11-12 December2008
Incentives and stimuli
88
Incentives can…



Be a catalyst for change
Improve efficiency of recruitment
Support a culture based on evidence and data
– Better access and use of student achievement data allows
teachers to better identify and address key needs, set more
appropriate achievement targets, and more closely monitor
progress

Unleash initiative for teachers to look actively for ways
to improve their performance and increase their
interest to actively taking advantage of opportunities
… if they are supported by


Accurate and reliable data on the quality of outcomes
Strong feedback mechanisms and access
to professional development
– Ensuring that teachers not receiving merit pay understand
what they can do to improve performance and have incentives
to change behaviour

Effective human resource management and
school leadership .
The case for incentives
Mexico 11-12 December2008
Incentives and stimuli
99

Single-salary schedules had their time…


Combat inequities in job allocation
Eliminating unprofessional preferential treatment during
evaluation processes
… but may not take education to the level of
productivity needed


Most of teacher effects are not explained by teacher
characteristics and formal qualifications
In the absence of externalities or information problems,
payment for outcomes always trumps payment for inputs
in terms of raising overall productivity
– Hiring practices: Information deficiencies in the hiring process
can be ameliorated by subsequent employer performance
assessments
– Labour-market selection: A performance-related pay programme
will attract and retain individuals who are particularly good at
what the incentives are attached to
The case for incentives
Mexico 11-12 December2008
Incentives and stimuli
10
10
Replacing single salary scales with systems
that connect the difference teachers’ make to
their compensation…
… in meaningful ways that can be embraced by
employers and teachers…
… faces tough requirements
r




Individual, team or organisational outputs can be
accurately and meaningfully measured
Outputs contribute to organisational performance
Pay can be administered in a way that capitalises on
its expected incentive value for potential recipients
Better pay eventually translates
into better teaching .
Mexico 11-12 December2008
Incentives and stimuli
11
11
Goals for the workshop
The case for incentives
Salary scales
Design of incentive systems
What is rewarded
Who is rewarded
Who decides on award
Comparing teacher salaries
Mexico 11-12 December2008
Incentives and stimuli
12
12

In purchasing power parities

Easy to do but not always relevant
– Mexican teachers may care less about whether they can buy
more groceries than Japanese teachers than whether their
salaries are competitive compared with other similarly skilled
professions

Relative to average national income

Depends on national job structures
– Comparing Mexican teachers with the average farm and
industrial worker?
– Highly qualified young people today may be less interested in a
fair day’s pay for a fair day’s work than in an outstanding day’s
pay for outstanding work

Other factors entering the equation, e.g.

The way in which countries trade off salaries, class
sizes, student-staff ratios, teaching hours for teachers,
instruction hours for students…
… determines costs per student
… creates the working conditions that attract or deter teacher
recruitment and retention
Teachers’ salaries (minimum, after 15 years experience,
and maximum) in lower secondary education (2006)
Annual statutory teachers’ salaries in public institutions in lower
secondary education, in equivalent USD converted using PPPs
Salary after 15 years of experience/ minimum training
Equivalent USD
converted using PPPs
Starting salary/ minimum training
Salary at the top of scale/ minimum training
140000
120000
100000
80000
60000
40000
20000
0
D3.2
Luxembourg
Switzerland
Korea
Germany
Japan
Ireland
Scotland
Netherlands
Australia
Spain
England
United States
Belgium (Fl.)
Denmark
Austria
Belgium (Fr.)
Finland
New Zealand
Norway
France
Portugal
Greece
Italy
Sweden
Slovenia
Iceland
Czech Republic
Mexico
Israel
Hungary
Chile
Estonia
Mexico 11-12 December2008
Incentives and stimuli
13
13
Incentives and stimuli
Structure of salary scale of teachers in selected
countries, lower secondary (2006)
90000
Mexico 11-12 December2008
14
14
40000
80000
Salary in US$
70000
60000
Australia
50000
England
Hungary
Korea
30000
France
20000
Switzerland
10000
0
1
4
7 10 13 16 19 22 25 28 31 34 37 40
Number of years teaching
D3.2
Luxembourg
Switzerland
Korea
Germany
Japan
Ireland
Scotland
Netherlands
Australia
Spain
England
United States
Belgium (Fl.)
Denmark
Austria
Belgium (Fr.)
Finland
New Zealand
Norway
France
Portugal
Greece
Italy
Sweden
Slovenia
Iceland
Czech Republic
Mexico
Israel
Hungary
Chile
Estonia
Mexico 11-12 December2008
Incentives and stimuli
15
15
Ratio of salary after 15 years of experience
to GDP per capita in lower secondary education (2006)
2.50
2.00
1.50
1.00
0.50
0.00
Mexico 11-12 December2008
Incentives and stimuli
17
17
Adjustments to base salary
Additional yearly payments received for the following criteria
(28 countries providing data)
Criteria
Years of experience
Management
responsibilities
Additional
classes/hours
Special tasks (e.g.
counselling)
Number of
countries
Criteria
9*
Higher initial
qualifications
18*
Higher level of
certification/training
9*
Outstanding teaching
performance
14*
Location allowance
18*
Special activities (e.g.
sports)
9
Teaching special needs
11
Teaching a specific field 8*
* Including Mexico
Number of
countries
8*
8*
7*
Completion of professional 5*
development
High performance in entry 2*
exam
Family status
9
Age
2
19
19 Influence of school evaluations by an inspectorate
Mexico 11-12 December2008
Incentives and stimuli
-Lower secondary education 2006 ( no, low, moderate, high impact)
Country
Australia
Performance
appraisal of
individual
teachers
Assistance to
teachers improve
their teaching
skills
Financial
bonuses to
teachers









England



Iceland



Ireland



Korea



Portugal



Scotland



Sweden



Turkey



Estonia



Belgium (Fl)
Czech Republic
Mexico 11-12 December2008
Incentives and stimuli
20
20
Goals for the workshop
The case for incentives
Salary scales
Design of incentive systems
What is rewarded
Who is rewarded
Who decides on award
Design of incentive systems
21
21
Mexico 11-12 December2008
Incentives and stimuli

Incentives in use in OECD countries
 Signing bonuses and forgiveness of teacher education
 Higher compensation in the early years
– To attract people concerned about initial pay and less
interested in the benefits they get as they become older
– Australia, Denmark, England, Finland, Norway and Scotland

Escalating pay in the later years
– To retain experience teachers who might otherwise leave
– Austria, Japan, Portugal mid-career, Greece, Hungary and New Zealand
experienced teachers



Extra pay and benefits to attract teachers of shortage
subjects or to challenging schools
Bonuses based on teachers’ contributions to improved
student performance
Salaries based on agreements teachers
work out with principals
– To respond to principal’s priorities for the school .
Design of incentive systems
22
22
Mexico 11-12 December2008
Incentives and stimuli

What is rewarded?

Market incentives
– Getting teachers into remote areas or challenging schools

Knowledge and skills / qualifications
– Increased pay linked to additional qualifications or demonstrated skill
– Establish a career path for excellent teachers to remain in classrooms
– Spread innovation beyond classrooms and school

Merit
– Rewarding teachers for their performance and that of their students
– Ranges from compensation based on supervisor evaluations and portfolios
created by teachers to payments awarded on the basis of student growth at
the teacher, group and or school

Who is rewarded?

Team or group-based incentives
– Should incentives be directed to individual teachers or the teams or
schools they serve?

Who decides / adjudicates?

What are the criteria for awarding incentives and what is the
role of school leaders and external evaluators in assessing
these?
– Trade-offs between objectivity and relevance
– Principal evaluation remains a predictor of student achievement even
when teacher value-added is included in the model .
Design of incentive systems
Mexico 11-12 December2008
Incentives and stimuli
23
23

(1)
Some challenges

Devising evaluation systems that accurately measure the
contribution of teachers to the education of students
while avoiding that
– Structural misalignment between the mission of schools and
the outcomes to which incentives are attached: A focus on
what can be easily tested can narrow teaching and the
curriculum
– Bonuses based on student performance on low level reading
and math tests are unlikely to produce high level performance
in any subject
– Short-term priorities for improving immediately observable
outcomes can undermine more desirable long-term outcomes
– Almost any incentive system can be gamed and needs to be
monitored

Initially, pay may be determined by student performance
on tests of literacy and mathematics, to the exclusion of
many other no less important areas of learning, but the
use of such measures may decrease as teachers become
more comfortable with the basis on which school leaders
make their decisions on who should be hired and who
should be promoted
Design of incentive systems
24
24
Mexico 11-12 December2008
Incentives and stimuli

Some challenges

(2)
Separating the contribution of previous teachers from
those of current teachers
– Major advances in longitudinal student-level data increasingly
allow to estimate value-added contributions at the school,
grade and teacher levels

Avoiding that the competition for higher salaries
sacrifices collegiality of teachers
– Individual rewards may reduce incentives for teachers to
collaborate and, as a consequence, reduce rather than
increase school performance, or the team dynamic between
teachers and with administrators can be damaged
– Particularly when incentives are awarded in a ‘zero-sum’ game
– Team incentives may work well in small teams where there is
mutual monitoring coupled with an easy information flow
among team members and options for teachers to reciprocate
among each other

Determining the ‘right amounts’
– Performance bonuses that are a fraction of what they are in
private industry cannot be expected to produce the same
results
– Avoiding that bonuses distort outcomes .
Design of incentive systems
Mexico 11-12 December2008
Incentives and stimuli
25
25
r
r
r
Limited empirical evidence
Lots of initiatives short-lived
Some of the more successful examples
started with…
… Defining a set of standards for teacher
performance together with measurement systems
for teacher performance that both teachers and
administrators agree will fairly evaluate teachers
against the standards
… Group-based systems based on teachers’ knowledge
and skills .
Swedish system of individualised school-based pay
introduced in 1996
Mexico 11-12 December2008
Incentives and stimuli
26
26

Criteria for salary decisions
%


Teacher qualification areas
Approval rating of the system as
100
Labour-market
situation
surveyed
by the Swedish Teacher Union
90
–80
In regions or subjects with acute shortages salaries
can be higher
70

Teacher
performance
60
–50
Pay rises linked to performance

Range
40 of responsibilities
30
 Evaluation
20 authorities and unions run joint Council to determine

Local
10
long-term
effectiveness of the system
0 group is conducting its own evaluation

Each
-10
1996
1999
2004
-20
-30
-40
Mexico 11-12 December2008
Incentives and stimuli
27
27

www.oecd.org

Email: Andreas.Schleicher@OECD.org
Thank you !
… and remember:
Without data, you are just another person with an
opinion