There is no merit in merit pay

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'fherimes in J,?spo~:¥,l' ~~(larU~f4i()l~··
:·F: >.First: De'laBa~j'~'~ ,..
S~sr~lary of Educati9q,l .
'paY:t~hem~~wh.iCh ,......._-t,; ___

'D\!ll!fBadia' can't
ways of ~o.ing sometnIn¥
sail! that '!.'.'; merit Pill" nllqllUql'


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t~I~Y ttn: .Ioqll~ waOle $~Ofywnen It.comes to h~ahhpefformanceIThe
.a~m~ l~ tru~ in etluc~Holl~ Teach~f$ a£\4 $~~OQI~ 11l~c:.Il,ditference, l>u~ lh~ »1~h11~te per.fOfm.~oce of lhe stud;;n~~ depen~s QJl ~aQY Qther fact"or~. l!1act~!!rsIlQ~ docto~~ !!hould be held,r~spoJl$1~1~.f9r·dQln8 w~at It ~s 'l.Q~Y caq ~~: :pu~ ~they f~~'~ ~h~l4 fj:~~I}S.l~le Jor,th1n.$s oulslde their ·fr~~wh!-c!.i.:'.. ,: . ::':..,.1:'; ':"1' ", ;. .~. j'.. \ . i..-;.:;tlJ'!U..il~ h it \!:y~J) (r~.tb.At.~tP!!{ ~r!>~~ssion,~ls "a8f~ to be .tpeasured :by P~ft~fhliUlc~"~~ a,rl1 pal.d acc.~f91P,~lf11\;l~twha..tcan Super.lQtt:n~ent. ,·pe!.'~\Jt!}.(n~n!1v~"ia;f,miq~1 0,0,.$ fnJqn~.how, wJt~rt~C? ~uccess/fad~re·'!!HI;iJ)tr,(lhtq\frM.5til)~r~~'p~ 'l.r ~d~ll,dst 16'1 1_... there:; ll~Y' way. of ~ndln8 .p14t;wlu\H?~l~~"'M ~f pflttenl$ Irj:llted. by~d~tOt'!was curf~? What pe.J~;'nl~g4 (1* \V9~~~ 41ft~r tflt~"c~n~"7 Is tha~ ~ow ·Dell~.Badla dec~de$ . hQW.JllUClF\f" .pay ,PJ~.P~C~f? l~ th~1!.!b.~ h~!J~ ~p.~ :~h~~ 9D¢ dOF~fJr
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WhereWe-Stand..
".~ ','
'byAlbertSha(l~r "'eS~1lI A(Wl"~OO f~~(OrIOOO~ ~~he';s '
Busines5'es Whic~ Hav{! Trie4lt Warn:

".,.¥o.·t
'There Is No Meritin Merit Pay!'~,;:.
, .
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T
here are ci7ar signs that education a~ a national issuy,'i~ on th~ f~op.t
. burner agam. In the last few months there have beeIl,'many meeUngli
of corporate executives. foundation heads, governorli, ~ducator~ and
memQers of Congress. All have emphasized the price we are paying as a
society for past educational neglect .. Th~re is more and 'rnore inv~lve•
ment in national and regiollal commissions and coalitiopsdesigned to
increase support for pUblic education. ' . , .' ' ," , : '

But the support will not be based on business as usual for the school~:
Business ,and political leaders are saying. in effect, we'n~ willing 10 go, tQ
bat for the schools (in the interests of our country as well as business)
but not f.or schools as ,they h,w~ been. The school~ pltisr shape up apd ~p


, a better Job. ' ' -, ' ..,'
Fair enough. But it's too bad that in'the rush to spell out how th~

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schools can do a better job, one pan~cea is almost' always proposed,:

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merit pay. Those who have rushed to embrace th~ merit pay idea for the
schools may be s!lrprised to find out ,th~t it is not. ~nivj:rsally accepted
in the business world, and that many husioe:>s and management experts
have rejecte<! the s,,\me idea that is now being pushed for the schoQls. :-',

There are a number of good surveys on the issue. One pf the best is
"There Is No Merit in Merit Payl," by A. Mikalachki. which appeared in
the Spring] 976 issue of BusillessQllarlerly, publi~hed by the School of
Business Administration at the University of Western Ontario in Lon·

don, Canada. , " , '. '" ,! ' " .
According to Dr. Mikalacl1ki. who is on, the BUSiness School faculty,
while merit rating is supposed to i~lpro\'e produclivity by rewilrding•
merit. it often leads to other results,: !', •• a large number of those eval4•

, ated find merit rating frustrating, demoralizing, and unfair. As a consi:•
quence, they reward their employers with resignations, bitterness. pr
poorer ,work performanc~," I , '

In som'e jobs it'~ easy to measure "merit," but the I1<llure of middle
management jobs (which would include teachers as classroom managers)
"make~ simple, objective evaluation difficult. The job is nOI independent
of others' efforts," Mikalachki says; "quite the contrary, much of the jot>
has to do with developing the efforts of olher!) into a uniled whole." The
middle manager's performance "certainly cannol be as objectively ul1d
precisely measured as that of an l.lulomobile salesman or widget maker.
who ani evaluated according to the ~umber of cars sold or widgets pro·
ducej:l." The subjective, imprecise measu~es of performance create stress,


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and, research shows, stre~s is further aggravated when rewards are con•nected 10 the evaluation. '
When people are paid for performance and the rewards are limited.


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there are olher negative effects 0ll productivity. Merit pay brings on
competition for rewards. and the competitors see each other as rivals
and enemies •.wh.ich reduces "the overall pertorrnarice of managers w.ho~e
job depends on the cooperative interaction of peers illld subordinates.
Given ,the above reactions," Mikalachki ,wrole. "it' would appear Ih~t
merit pay may reduce the productivity of middle managers."

New York Time~~ April 3? 1983
, .'
, Mik.alac\1kj f~und that those middl~ pla,llagers who already have

,merit pay don", lilc~ it becaus,,-' , ' "4!I meritpaypunishe~, mor~ than it rewar~s , .' , "t!' ,meeit pay genera~es competilion among colleagues and inhibj~s
cooperative endeavors .' .', ., ','
! ", mc,i;t pay ~ased 9... subjective. impre~js~ ,4(v~luaHons generates
str~s~ , ' .' . . " :
. ,,,~ ~erjt p.ay llt be:;l tlas'~ Ileutralimpact 00 productivity. at worst

a negauve tmpac~." ' -. ' ", 'But why, .hepl!i0so Jllany who dq Il~t have merit pay say that they wall~ it? This is the paradox Mikalachkl deals ~ith. He finds that middle
managers want r~pgnitioJl; and they know that "not all men are equal in performance." S~u~ies sho,,¥ that m~nagers would favor merit pay even if they knew that it would be given only to the top 30% . The reason tor this is that "70% or more of the managers 'feel that Ihey would be the ones selicted in the abov~-average l}-nd excellent catego'ries.!· One' r~searcher found that "86% of engineer~ working in research laboratories in a num•ber of ditIerent companies r~led themselves as in the top 25% of excel· lence in performance. The oth«;r 14% saw themselves in the tOp 50% of pc{fopnance excell~!lcl!. Thus," says Mikalac~ki. "one ot t~e major (easons ~hy. ~i~dle mana&~rslwant merit pay systelfl~ is .because they bssum~ It Will give them high Ireward~, They 'Yant a ment pay system lhat Will reward Jhein tor their efforts as they s~e them." "
,Since h's logically imposJible for 80% of middle managers to be placed in the top 30%, the merit pay system is bound to bring about disappointmentllnd, bitterness. According to Mikalachki, a frequent reaction "is to attack thy merit'pay system and its designers and imple•mentof&, thus diverting' energy from the job, It is this cycle," he says, "that connects mcCit pay to reduced performance for the period shortly
after the negative feedback is rec~ived."I ' , The merit pay idea being grasped at by those: who want the schools to improve ought to be dropped like a hot potat~. As Mikalachki points out, "Il does not Ollike a poor performer excellent. It does not make a hay man industrious, And in :the minds of o1any, it does not reward meritorious performance accuCiuely," His advice to those thinkiJlg about instituting merit pay; "Don',!"i ' . ' , This doesn't mean that the cOl!lition supporting public educatiQll shmMo't be pressing for school improvement. It should, And here, again, it could heed Mikalachki, who warns that "no formal reward sys· tem can adequately replace i~teliigent d<ly-to-<,\ay management." That means performance appraisal ~eparated fforrl rewards and punshment, a system which seeks to devel9P people rather than merely to evaluat~ them, and one which gives frequent individual feedback in a way that doesn't make colleag\les comPftitors aild ~nemies.
MI. 1lunkcr'l UlalllUU appu{ " .....uli•• '''''W had.,. itd., £ou'I~.ndI8U is I.,ild. Ad.,,,, WIlU' IcUtfi ,. Mr, Sh.ker &I U.iUd "1"0110,. ~I h"~.II, 260 ,U~ A..."~ ,".Ib, Htw Y..~. II,., \0011, <1>191) kJ Alb".l ~""'.r,
1'1*,""1'''8 '7 ,em c1
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