Andrea Gabor has followed our discussion of merit pay and sent the following post.

Gabor is the Bloomberg Professor of Business Journalism at Baruch College of the City University of New York. She has extensive experience as a journalist who has written about business.

I learned about her work when I stumbled upon one of her books The Man Who Discovered Quality: How W. Edwards Deming Brought the Quality Revolution to America. Chapter 9 of the book explains why Deming, a guru of business and corporate culture, was adamantly opposed to merit pay. Gabor explains there how merit pay discourages teamwork and collaboration and promotes short-term, me-first thinking. If you can find the book on amazon, buy it.

Deming was speaking about business, not education, but his words are applicable equally to education.

This is what Gabor sent me:

The question of scarce resources being used for merit pay, which one of your readers commented on, raises another important problem. Merit-pay skeptics among senior managers—and, yes, there are some—note that merit pay appears to work during flush times when there is lots of money to go around, i.e. when just about everyone gets some merit pay. The big problem occurs during down times when there is less money to go around. Suddenly, instead of “incentivizing” the majority of employees, smaller bonus pools actually serve to demoralize the majority who do not benefit from merit pay.

 Of course, the real problem with merit pay is that it assumes that good organizations, including schools, are those that hire a lot of “star” performers, and that the biggest stars will work harder when chasing the carrot of merit pay. This view completely ignores the importance of the overall system in which individuals work—and which management controls–and the fact that all organizations, good ones and bad ones, have some stars and some laggards. Well run organizations are likely to have more “stars” than laggards because the hiring and training is better. But the best organizations—check out Brockton High in Massachusetts, which achieved a turnaround with pretty much all the same teachers who worked there when it was a “failing” school—find ways to use training (i.e. professional development) and teamwork to improve everyone’s performance.

 As W. Edwards Deming, a leading management expert and critic of merit pay, once put: The only reason an organization has dead wood is that management either hired dead wood or it hired live wood and killed it. Merit pay, by dividing and demoralizing employees, is a good way to erode initiative and overall quality.