Case: Targeting Teachers Pay Orazietti 1

Case Study: Targeting Teachers Pay

Compensation: ADMN2916
Submitted By: Mike Orazietti (129688420)
Submitted To: Dr. Gordon, A.
Submitted On: 7 February, 2014






Case: Targeting Teachers Pay Orazietti 2

Table of Contents

Introduction ................................................................................................................................................. 3
Knowledge-Based vs. Person-Based Systems ........................................................................................... 3
Knowledge-Based Explained .................................................................................................................... 3
Person-Based Explained ........................................................................................................................... 4
Explaining the Current System ................................................................................................................. 4
The Impact of Salary Differential on Motivation and Cost .................................................................... 5
Stagnation ................................................................................................................................................. 5
The Need for Benchmarking ..................................................................................................................... 5
Restrictions and Rewards .......................................................................................................................... 6
Seniority vs. Furthering Educations.......................................................................................................... 6
Pay Differentials ....................................................................................................................................... 6
Current System Presumptions ................................................................................................................... 7
Recommendations ....................................................................................................................................... 7
Conclusions ................................................................................................................................................ 10
Exhibits ...................................................................................................................................................... 12
Exhibit 1: Ontario Teachers Pay Scale ................................................................................................. 12
Exhibit 2: Average Canadian Wages by Industry ............................................................................ 13
References .................................................................................................................................................. 14












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Introduction
The Ontario Secondary School Teachers stepped pay schedule rewards teachers on the basis of
two ultimate requirements: experience solely in terms of the number of years of teaching, and for
furthering education by obtaining additional university credits beyond those required for a
teaching certificate. The system itself is often compared to a knowledge-based pay structure,
though that description is not always agreed upon, especially given that teachers are rewarded
whether they further their knowledge and education, or not. This case will analyze the
characteristics and possible improvement of the current pay structure, the implications and
attitudes teachers may have, or develop, as a result of the messages being sent by the current
structure of the pay scale and explore potential opportunities for improving the pay scale, and the
messages it sends, by applying concepts of person-based and performance-based pay structures.
Knowledge-Based vs. Person-Based Pay Systems
Knowledge-based pay structures are typically defined as a compensation system that controls the
salary of employees based on their current or recently obtained education; the salary of other
individuals, the performance of the individual, or salary trends in general, have no bearing on a
persons pay or the ability to move up the pay scale (Bov, 2003). Under a knowledge-based pay
structure, employees, or in this case teachers, are expected to be motivated to better their
performance and effectiveness in their role by receiving monetary compensation for increasing
their level of education by obtaining additional university credits beyond those required for a
teaching certificate (Cole, Gerhart, Milkovich, Newman, Yap, 131). While the current pay
system in use by the Ontario Teachers is based on the core fundamentals of the knowledge-
based pay system, teachers are also compensated for years served. By compensating teachers for
Case: Targeting Teachers Pay Orazietti 4

years of experience the motivation intended to be generated by compensating teachers for
furthering their education or improving their performance is likely diminished or inhibited.
Person-based pay structures are two fold; rewarding teachers for either, or both their individual
skills and core competencies. Skill-based pay structures, often applied to blue-collar workers,
link an employees level of pay to the depth or breadth of said individuals skills, abilities and
knowledge, relevant to the work they are performing (Cole, Gerhart, Milkovich, Newman, Yap,
108). Competency-based pay structures are tailored more towards white-collar workers;
linking an employees pay to underlying, broadly applicable knowledge, skills, and behaviors
that form the foundation for successful work performance, known as competencies (Cole,
Gerhart, Milkovich, Newman, Yap, 114). The goal of the competency-based pay model is to
motivate employees to become aspirational in the organization and build on their existing skillset
and apply them to their job.
The current pay system, while often considered a knowledge-based pay structure, is likely better
defined as an amalgamation of both a knowledge-based and person/competency-based pay
structure. With the rapid development of technology, the world is becoming a more knowledge-
based stage and while a knowledge-based pay structure rewards teachers for expanding their
knowledge, it does not necessarily take in to consideration whether or not they are applying that
knowledge to their day to day activities in the classroom. While an amalgamation of these two
pay structures has been generally accepted in the past, the professional environment has become
increasingly demanding and the need for accountability has become extremely important. While
the current system is appropriate to some degree, movement through furthering education should
be rewarded based on each individuals application of newly acquired education to the classroom
and individual performance, while still rewarding teachers for their dedication and commitment
Case: Targeting Teachers Pay Orazietti 5

through time / experience based pay increases. Doing so will motivate teachers further, to adapt
to the ever-changing external environment, realize the need for further education, and build on
both their core competencies and acquired knowledge to perform at a higher level both for the
sake of the quality of education their students are receiving from them, and to move, as an
individual, further in the pay scale.
The Impact of Salary Differential on Motivation and Cost
The current amalgamated pay structure of the Ontario teachers aims to motivate employees
by compensating them both for their years of experience and furthering of their education. The
salary differentials seen in the current system (see: Exhibit 1), while beneficial to teachers, is
counterintuitive. While the system expresses the commitment of the board to reward teachers
for furthering their knowledge, at also sends the message that teachers do not need to go all the
way, or do anything at all, and they will simply be rewarded over time. I know teachers well
beyond their tenth year in teaching who are only a level 3. With dual-income families and the big
jump from level 2 to level 3, a lot of teachers dont really see any reason to put the time and
effort into the coursework to become a level 4 (Young, 2014).
The current system uses general goals like tenure and acquisition of credits to reward teachers;
there is no benchmark for the application of new knowledge, or any increase in performance as
the teacher works in the position for x number of years; excellence simply goes unrewarded. I
think it comes down to the person. Personally, Im a level 2, in my third year of teaching and Ill
be taking my courses to become a level 3 this summer. Some teachers are motivated by the
opportunity to become a better teacher, some are motivated by pay, and some just dont see a
reason to take the classes because theyre going to be rewarded either way. When one
compensation system is linked to other means of determining rewards, mixed messages are sent
Case: Targeting Teachers Pay Orazietti 6

and the overall goal may be unclean, ultimately reducing the intended motivational impact of the
pay structure; there may be poor line of sight between appraisal and reward due to multiplicity
of assessment items(Neathey, Reilly, 2013).
By setting restrictions, and benchmarks for teachers on an individual basis, the school board will
be able to send a clear message to teachers. The board can assess the teachers performance
based on the performance of the class; students now receive regular assessments throughout the
school year in core skills like mathematics and literacy. Based on the classs performance and the
ability of the teacher to convey the required material to the class, teachers should be rewarded.
Levels of rewards can be determined by conducting a job analysis and weighting the importance
of the skill, effort, responsibility, and working conditions for teachers on an individual basis
(Cole, Gerhart, Milkovich, Newman, Yap, 611).
The system of rewarding teachers for their years of experience should also be modified to
included restrictions for movement through the tenure pay scale. Sending the clear message of
performance pays will allow the school board to reward teachers for exceptional work, and
justify these costs by receiving additional value from the teachers. The person-based
compensating wage differential theory rewards teachers with a pay increase as a means of
motivating them to not only accept their job relative to other jobs that they could be performing,
but excel in their current role.
Seniority vs. Furthering Education
As the current system for pay stands, some glaring issues are evident when comparing seniority
based pay differentials to education based pay differentials (see: Exhibit 1). The jumps from
group 1 to 2, and group 3 to 4 are relatively proportional, however, when a teacher moves from
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group 2 to group 3, the size of compensation rewarded is exponentially larger and increases,
relative to other levels, quite drastically. In terms of years of experience, however, the
differentials remain nearly constant regardless of level of education; group 4 teachers only see a
marginal gain compared to other levels. Considering the value a teacher places on their own
individual time and effort, many may be motivated to reach level 3 and become stagnant,
knowing they have reached their big payout and will still be rewarded, whether they reach a
level 4 or not, solely based on their years of experience.
The current system operates under the presumption that as teachers acquire more knowledge,
they will in turn become more effective in their teaching and more flexible in terms of the grades
they will be qualified and able to teach. Herein the issue lies; while this presumption may have
some merit, the duality of compensation for tenure and education results in teachers receiving
compensation whether they are more effective and flexible, or not. While the biggest payout for
a teacher is at the ten-year, group 4 pay grouping, a teacher in any education group with ten years
of experience is still going to making the same, or more money than anyone in any sector of the
Canadian middle, and upper middle class (Statistics Canada, 2014).
Recommendations
The current pay structure of the Ontario Secondary Teachers is built and operates using traits
from both person-based compensation and knowledge-based compensation. The system, as it
stands, sends mixed messages, offsetting the overall motivational effectiveness of the
compensation system. First and foremost, teachers should be restricted from moving up the
seniority pay scale, based on their level of acquired knowledge. The proposed system is as
follows:
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A group one teacher can move only up to the four year seniority pay level
Upon reaching group 2, a teacher may then move up to the six year pay level
Upon reaching group 3, a teacher may then move up to the eight year pay level
Upon reaching group 4, there is no restriction on the teachers movement through the
seniority pay scale
By making this change, the compensation system will send the clear message that furthering
education is still important, and remaining stagnant and not committing to continued personal
education will not be rewarded. The system will address costing issues for the board as well, by
ensuring that the teachers who are in the upper tiers of the pay scale have obtained all the
required knowledge are not remaining stagnant in any given pay grouping simply because their
seniority is paying off for them.
The pay system should not compensate stagnation, and reward excellence. By conducting a job
analysis, the board would have a better understanding of the core requirements of the job. As
such, regular assessments and feedback could be used as a means for compensating teachers.
Currently, Ontario teachers are only required to be evaluated once every five years, and the
system is general to the point where teachers are usually only rated satisfactory or unsatisfactory.
Quality between teachers varies considerably, and as such, teachers should be compensated
based on the quality of work they are performing; students taught by ineffective teachers were
found to have earning $50,000 less over their lifetime compared to students taught by average
teachers ultimately translating into an economic loss of $1.2 million per class (Chetty,
Friedman, Rockoff, 2011). As a means of addressing this inefficiency, the school board should
supplement the required university learning with additional training aimed at raising the quality
of teaching provided by teachers to improve individual student achievement and reduce
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achievement gaps. Teachers should be recognized and compensated accordingly based on
whether they are successful (or not) in meeting these objectives (Maharaj, 2014).
Due to the inefficiency of evaluation of teachers, before any reform to the compensation
structure can take place, issues within the evaluation method must first be corrected. Current job
and performance evaluations suffer from the following inefficiencies:
Evaluations are not representative of actual teaching performance
o Evaluations are often schedule well in advance, giving teachers the opportunity to
knowingly put on a show when their evaluation is taking place
The frequency of evaluation is minimal
o As previously mentioned, Ontario teachers are mandated to be evaluated only
once every five years. Teachers in Alberta are not required to be evaluated at all.
Regardless of acquired knowledge or tenure, teachers, like any other profession,
require frequent and ongoing feedback
Evaluated ratings do not differential performance
o The current two-tier rating system provides no valuable personal information,
and fails to motivate teachers to strive for excellence
The evaluation system lacks consequence
o Evaluations are typically only used to justify the removal of extremely poor
teachers; as such, the system is considered indifferent to the effectiveness of each
individual teacher. Given that the highest rating a teacher can earn is satisfactory,
the evaluations provide little motivation or incentive for teachers to strive for
excellence (Maharaj, 2014)
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In order to reform the Ontario Teachers compensation structure, job analysis and individual
analysis methods must be improved. Evaluations must become more frequent and should be
conducted both by a principal who has received additional training for effective evaluation, and
by a third-party. The scale at which teachers are graded must also be expanded on; the two tier
system is simply too general to motivate good teachers to become great teachers. The New
Teacher Project (2010) proposed a four tier system, rating teachers as highly effective, effective,
needs improvement, or ineffective; this four tier system would better convey a meaningful
assessment to the teacher in regards to the performance and provide a more clear distinction
between levels(Maharaj, 2014).
Conclusions
While considered to be effective years ago, the current grid system for teachers pay has simply
outlived its effectiveness. The current system fails to recognize, on an individual basis, the skills,
and responsibilities of the teacher, and the level of difficult of each of their unique environments.
While the system rewards teachers for acquiring additional knowledge, it provides no incentive
to teachers who subsequently increase their performance as a result of their furthered education;
pay is simply rewarded for obtained credentials and seniority, not how effective the teacher is
teaching. It must be realized that teachers are no different than anyone else, and that their
performance will be affected in the presence of some financial incentive. As an example, the
recent round of collective bargaining saw the removal of the teachers ability to bank sick
days; as a result, the number of taken sick days rose 20% from the previous year (Maharaj,
2014).
By improving on both job analysis and individual teacher evaluation, the school board will create
a strong foundation for reforming the structure of the current compensation system, to reward
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teachers for performance and excellence and reduce the level of stagnation created by the
guaranteed experience incentives. By establishing this foundation and implementing these
reforms, the school board will work towards ensuring that all students have access to the highest
levels of education, teachers will receive the quality of feedback they require to become better
teachers, and those teachers that strive for excellence will be recognized and rewarded
accordingly.













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Exhibit 1: Ontario Teachers Pay Scale









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Exhibit 2: Average Canadian Wages by Industry
PROFESSION AVERAGE ANNUAL WAGE
Wholesale Trade $57,200
Health Care and Social Assistance $44,600
Administrative and Support Services $39,000
Construction $58,300
Mining, Oil, and Gas $102,000
Utilities $90,000
Professional, Scientific, and Technical $68,000
(Source: Statistics Canada)










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References
Bov, R. (2003). Knowledge-based pay: Upside/downside. Training & Development
Journal, 41(4), 10. doi: 0041-0861
Chetty, R., Friedman, J.N., Rockoff, J.E. (2011). The long-term impacts of teachers: Teacher
value-added and student outcomes in adulthood. Working paper 17699. Cambridge, MA:
National Bureau of Economic Research.
Maharaj, S. (2014). Effective management of human capital in schools: Recommendations to
strengthen the teaching profession. Informally published manuscript, Taking Action for
Canada: Jobs and Skills for the 21st Century. Available from Canadian Council of Chief
Executives.
Milkovich, G. T., Newman, J. M., Gerhart, B., Cole, N., & Yap, M. (2013). Compensation. (4th
ed.). Whitby, Ontario: McGraw-Hill Ryerson Ltd.
Neathey, F., & Reilly, P. (2003). Competency-based pay. Unpublished raw data, Institute for
Employment Studies, , Available from HR Network Paper. (MP25).
Statistics Canada. (2012a). Graduation rate, by province and territory, 2000/2001 to 2009/2010.
Retrieved from http://www.statcan.gc.ca/pub/11-402-x/2012000/chap/edu/tbl/tbl04-
eng.htm
Statistics Canada. (2012b). Education indicators in Canada: An international perspective.
Ottawa, ON: Canadian Education Statistics Council.
Young, A. (2014, January 27). Interview by M Orazietti []. Personal interview: Teachers
compensation.