Human Resources |
Article by Donna Davis
This article originally appeared in the March/April 2015 Net Assets.
At University School in Shaker Heights, Ohio, graduating seniors participate in a tradition of sharing their “moments of truth.” Those moments may have occurred in the classroom, on the athletic field, or during an academic trip or community service project, but they all revealed to the students important insights into who they were and what they had accomplished during their years at the K–12, 880-student boys’ school.
About five years ago, that tradition prompted a teacher to ask Headmaster Stephen Murray, “When do we get our moment of truth?” Murray asked what the teacher meant. “Every year we get a contract in the mail, but there’s no context,” the teacher replied. He wanted to know the criteria used in deciding contract renewals and salary increases—in other words, what he meant to the school and what he had achieved.
That question forced administrators to face their own moment of truth. “We had a heart-to-heart discussion and decided we had to do a better job of letting our faculty know how well they are doing,” said David Wright, chief financial officer. In response, the school adopted a “broad-band” faculty compensation model that offers a career path from beginning teacher to master teacher, based not just on experience and academic degrees, but also on professional growth, extra-curricular activities and classroom achievements. Teachers joined with administrators in creating the new structure, and every current faculty member and new hire knows where they stand on the bands, how the required formal evaluation process works and what goals they must achieve to move forward.
This model is gaining interest among independent schools seeking to attract and retain the best teachers and reward them for their skill and effectiveness in the 21st-century classroom. Adopting it means moving away from the traditional, multi-step (often 40 or more) structure that rewards experience and degrees—a structure used in 90 percent of international and public schools, according to John Littleford, senior partner of Littleford & Associates. It also means replacing another compensation approach common in independent schools—one that relies on the head or division director’s subjective decision on how to compensate faculty members. In fact, half of schools lack a published compensation mode, Littleford noted.
Boards (and frankly most heads as well) have no idea of the philosophy conveyed by the salary system delivery model... This is all accidental. It needs to be purposeful.
John LittlefordLittleford & Associates
What has changed, say researchers, consultants, business officers and human resources directors, is the emergence of a mindset that is common in the for-profit world but sometimes resisted in the collegial culture of independent schools—one that adds the elements of performance and professional accomplishment to compensation. Hugh Mallon, president of Executive Compensation Concepts, believes that an effective compensation structure must be based on a school-wide policy statement that aligns compensation goals with evaluations of each teacher’s effectiveness. These evaluations, in turn, must be based on measurable and transparent criteria.
Part of the mindset change concerns financial accountability. Salaries and benefits can account for up to 85 percent of a school’s expenses, and a clearly outlined compensation policy and structure can help administrators and trustees manage those expenditures wisely. “Yet boards (and frankly most heads as well) have no idea of the philosophy conveyed by the salary system delivery model and what messages the benefits system sends as well,” Littleford said. “This is all accidental. It needs to be purposeful.”
Another attitude change comes with the new generation of teachers.
Terry Moore Independent School Management
Another factor involves the desire to create a compensation structure that supports two key sustainability issues: recruiting and retaining the best teachers and maintaining enrollment through measurable classroom results, Mallon said. According to a 2003 research report by the Center for the Study of Teaching and Policy, the teaching profession has become a “revolving door” in which many qualified teachers leave the field for reasons other than retirement, even while demand for their talents grows. Most former teachers surveyed said they left for careers with better salaries. Improving pay, enhancing teacher input into decision-making and offering mentoring programs for new teachers “would contribute to lower rates of turnover, in turn, diminish school staffing problems and, hence, ultimately, aid the performance of schools,” the report said.
Another attitude change comes with the new generation of teachers, said Terry Moore, executive consultant for Independent School Management (ISM). “Baby boomers were content with everyone being treated the same. New gen-ers want a defined way to grow their salaries, measure their impact at the institution and be rewarded and compensated for that. They are insisting on it.”
At his workshops on compensation models, Moore always starts by asking schools whether they utilize a defined compensation structure. “It used to be that two or three hands would go up out of 30 people in the room,” he said. Most schools seemed to rely on the head of school to decide each teacher’s pay. Today, more than half of the administrators he teaches say their schools have a structure—and a third have instituted one that includes pay for performance. The rest want to know more about that compensation model.
For years, a “gut feeling” compensation approach held at The Pine School, a K–12, 400-student day school in Hobe Sound and Stuart, Fla. Headmasters hired faculty members and negotiated their compensation packages individually, “so there really was no policy,” said Larry Pittman, director of finance and operations. “Individuals’ salaries were all over the place… It was affecting morale and the culture of the school.”
Under a new hybrid compensation structure—a combination of salary ranges and pay-for-performance—the school aims to provide competitive salaries and benefits, recognize faculty members’ experience and achievements, and allow opportunities for professional growth.
The process began last year, when school administrators examined their existing non-model and compared it to compensation structures at other schools, public as well as private. A six-person committee consisting of Pittman, plus representatives from faculty and administration, reviewed NAIS DASL data and information collected from area schools. Members—each assigned a separate research task—studied salaries and benefits and set strategic priorities and goals for compensation, professional development and work environment.
In addition, committee members graphed salary data based on educational degrees earned and years of experience, comparing The Pine School to DASL breakpoints, committee-gathered data and school data. Pittman and Phyllis Parker, head of school, summarized the data and reported next steps to the committee. “We saw areas where we exceeded our competitors and also where we didn’t exceed, so we set up goals to rectify those situations,” Pittman said. “Now we are implementing them.”
For example, The Pine School has a generous benefit program but had ceased matching contributions to employees’ 403(b) plans due to budget constraints. The committee set a goal of reinstating that match in the next three years.
Going forward, the new structure will allow The Pine School to fit faculty members into an appropriate range based on education and experience. At the beginning of the school year, each teacher will also work with division heads to set individual professional growth goals. How well they reach those goals, along with the results of peer and student evaluations, will help inform their annual reviews in the spring. Rather than giving across-the-board salary increases, the results will help decide how much of the raise pool each teacher receives.
During the year-long development process, committee members kept their colleagues informed and brought back their input, Pittman said. “Morale is better because we listened to the faculty about benefits and professional growth,” he noted. Central to the change was the creation of a compensation philosophy stating three main goals: market competitiveness, fairness and mission correctness. The philosophy, along with the school’s compensation policy, was communicated to all faculty members and will be reviewed with them each year. "We were as transparent as possible. We reassured our employees that their pay would not be cut with the implementation of the new salary and benefits policy.”
In the emerging broad-banding model, independent school models typically have four to five bands, starting with “beginning teacher” and ending with “master teacher” or “faculty leader.” Each band anticipates the number of years a teacher should need to advance to the next band, usually four to five years based on performance metrics and goal achievements. Within each band, the head, principal or division head evaluating a particular teacher has leeway in setting individual salaries; top-performing teachers receive bigger raises.
At University School, Wright helped design a six-band system of five years each up to 25 years, followed by bands for 26–35 years and 35-plus years.
University School teachers fill out self-evaluation forms in November/December that note their classroom, extracurricular activities and professional development goals. During December and January, academic administrators review the self evaluations and administer evaluations, along with information from Wright that includes the preliminary budget’s salary pool increase and a spreadsheet outlining each teacher’s salary, past performance data and suggested raises for teachers rated excellent, above average or average. The administrators use all that information to determine appropriate increases for each teacher within the appropriate bands. Wright then verifies that the increases are within the approved total salary pool. In February, the administrators and Murray schedule individual meetings with all 110 faculty members. The teacher gets a copy of the contract, their evaluation and the salary bands a few days before the meeting. “This is a very time-intensive process, but since salary and benefits represent 70 percent of our cost, it is time well spent,” Wright said.
This is a very time-intensive process, but since salary and benefits represent 70 percent of our cost, it is time well spent.
David WrightUniversity School
“The use of many ‘objective’ criteria to determine teachers’ merit, and thus some component of teachers’ pay, improves teacher performance,” according to a Center for American Progress report, Teacher and Principal Compensation: An International Review. Schools should define those criteria, such as student outcomes measured through test scores and surveys of parents, students and graduates.
The structure requires a group of administrators trained to conduct fair, thorough and well-documented evaluations of teacher performance. Evaluation processes vary, but consultants and administrators cite the importance of regular, unannounced visits to the classroom. For example, Moore suggests having administrators who are constantly in classrooms in five- to 15-minute increments “catching teachers doing what they do so well.” With every classroom visit, the administrator follows up with an email to the teacher. The emails should point out positive observations; conversations about areas for improvement or corrections should occur face to face in private. “At the end of year, the annual evaluation is nothing more than a summary of everything that has already happened,” Moore says.
When Janet Graham joined Vermont’s Lyndon Institute as its HR director two years ago, the salary scale at the 550-student, grades 9–12 boarding and day school was similar to the public school model. In addition, the scale had been frozen for six years. Teachers received incremental raises, but only within their frozen step. Yet new hires were brought on at the appropriate step based on their years of experience, creating morale issues. “People were aware of the situation, and last year, we identified correcting the system’s inequities as a priority, as well as the need to embark on a huge remaking of the compensation plan,” Graham said.
She expects the school will need at least two years to design and implement the new structure, which may ultimately include a career-ladder system similar to that at Westtown School (see below), with salary bands rather than steps to give the school more flexibility within those bands for achievements. “As we plan our salary structure, we want to have the latitude to take into account and offer initiative to teachers who are creating amazing programs that spiral kids into success.”
The first goal is to reach salary equity among the faculty. To achieve this, the number of steps will decrease from the current 28 to about 20. An important element will involve creating a portrait of professional excellence for every employee. Graham describes this as “a 360-degree look at how we compensate people, the expectations and the qualities professional personnel need. These profiles will be built into the job descriptions.”
The school is relying on a committee that includes Graham, the dean of faculty and six faculty representatives. Three board members also help collect data, especially information gathered by the Independent Schools Association of Northern New England (ISANNE).
Be transparent in the process and employee communications, Graham advises schools that embark on a new compensation model. “In a close-knit environment like an independent school, people know when something is not being done correctly,” she said. “We recognized a system that needed to be fixed, and we embraced the opportunity to fix it together.”
For schools that have no formal compensation structure, the first step should be gathering influential community members such as the head, division heads, trustees and key faculty and administrators to create a compensation philosophy that meshes with the school’s finances and mission. “Schools are required to create investment policy statements for their endowments and qualified retirement plans,” Mallon said. He recommends that they also consider establishing a “total compensation policy statement as part of the board’s governance role.”
As schools create a compensation structure, Mallon recommends that they consider the “all-in” cost of human capital. That figure includes benefits, workloads and extracurricular stipends as well as salaries. For example, a school may be paying teachers (an added) 80 to 100 percent of salary in tuition remission. “Most boards and heads who say they want to be at X percentile are talking only about cash salary,” he said. “Failing to include all-in costs means schools at the 75th percentile could end up having the head, senior leadership team and faculty in the 90th percentile.”
Schools also need to perform a relevant data scan, but it should include more than comparisons to competitor schools of similar size and type, Mallon said. He suggests adding comparisons based on operating budgets and expenses, size and draw on endowments, annual giving estimates and all-in costs.
Some of the data sources available to schools include Form 990s for an overview of executive compensation numbers and, for general faculty and staff, regional or local association data (regional independent school associations, NBOA’s annual Business Office Survey, regional independent school association databases and NAIS DASL). Compensation model consulting firms also have proprietary data and can customize market surveys for individual schools.
At University School, Wright researched compensation for every teacher. He gathered their resumes and other information about teaching, degrees and professional development experience. He plotted that data in comparison with several benchmark schools, with the emphasis on creating a compensation structure that put the school in the top quartile of competitor schools in Ohio—up from the medium or bottom quartile for many of the bands, especially for teachers with 15 years or less of experience. Every current teacher and new hire gets a copy of the band structure and an explanation of how the system works. The structure is now in its fourth year; the school reviews it every three to five years to maintain the target quartile position.
During the past four years, the salary band and evaluation system have improved teacher quality, Wright said. “This is a double-edged sword,” he adds. Attracting and keeping the best teachers in the country has put pressure on the limited total salary pool. Critically, Wright, the head, the evaluation team, teachers and the human resources director now have solid data on which to base compensation—and the means to identify and reward top teachers.
With the 2016–17 school year, Westtown School will roll out a compensation model that replaces 44 salary bands with four broad bands categorizing teachers as starting, experienced, master or faculty leader.
“The previous faculty scale was based primarily on years of service,” said Karen Illig, chief financial officer at the 619-student, preK–12 boarding and day school in West Chester, Pa. “We are approaching the change from the perspective that mastering the craft of teaching is an important goal for a faculty member. We want to reward those who share this view and strive to achieve this level of excellence every day.”
The structure provides for market-competitive salaries at each level but also requires professional development, engaging in the life of the school, partnering with parents and students and pursuing additional education. For example, the move from experienced teacher to master teacher requires a master’s degree. The bands also reflect years of experience. Illig estimates it would take a beginning teacher who meets all the professional growth and performance requirements one to three years to move up to experienced teacher, then spend years four to 11 as an experienced teacher, years 12 or more as a master teacher, and potentially years 15-plus as a faculty leader—a committed, passionate teacher who demonstrates strong mentoring and leadership skills. The decision to move a teacher through the bands is based on a detailed evaluation process that includes classroom observation, professional development, education benchmarks and student surveys, Illig notes.
In developing the model, Westtown hired consultant David Lacey of Philadelphia-based The Hirshorn Company to survey compensation models at five schools nationwide that resembled Westtown’s profile. Working with the school’s planning committee (Illig, the head of school, the director of teaching and learning, and master teachers from each division), Lacey devised the more “progressive” structure.
When fully in place, the system will add about 2 percent to the school’s current $30 million operating budget to provide nationally competitive salaries, Illig expects. The school has 84 full-time faculty members.
The change is part of the school’s strategic plan to create the best teaching staff possible. “We want to hire the best faculty nationally, not just locally, and we want to reward top performers and have a strong mentoring and support system” for teachers at the beginning levels, Illig said.
Lacey says the model works because it is clearly not just about compensation, but also about the professional expectations tied to compensation. “One of the advantages is that now teachers know what the school expects of them in terms of their roles as faculty members in the four bands,” he explained. “It also gives them a clear signal about what it takes to move up. There is no mystery.”
In another distinction from the old structure, the new model also gives the head of school freedom to set faculty compensation within their existing band, instead of having to move a teacher up a level in order to give them a raise. That freedom reflects a trend toward providing a pool of salary increase funds that the head or division heads can distribute based on individual performance.
Why have the initial break point at three years? Because that is an ideal time to evaluate whether a beginning teacher is a good fit for the school, Lacey said. “The first year you are getting used to the school and its culture, the second you are starting to hit your stride, and the third year is sufficient time to demonstrate your contributions to the life of the school and your passion for teaching.” If that passion hasn’t surfaced, the school and the teacher can part ways.
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