Business Law & Compliance

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Is performance related pay back in favour?

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Instead of automatic annual increments progressing through the grade, teachers will be expected to demonstrate good performance before receiving a pay increase. Schools should be working on how they will put a procedure into place. This is not a new phenomenon. When I was working for the Probation Service over 15 years ago, it was introduced for the senior management team. So, is performance related pay back in favour?

The idea is that performance related pay (or merit pay) will reward excellent teachers more money and hopefully incentivise poor performers to increase the quality of their teaching. Teachers’ performance will have to be closely appraised so that the link between performance and pay is very clear. Whilst there are good and bad teachers in the education system, there are advantages and disadvantages with this idea.

The plan is for performance related pay to increase flexibility in schools, to attract and retain quality teachers, to attract more graduates into the profession and create a culture of professional development.

A report produced by the Policy Exchange about performance related pay and teachers stated that a well designed system should include:

  • An evaluation based on several measures, not just test or exam scores;
  • A prolonged evaluation over more than one year to reduce volatility in results and to allow staff to adjust to the new assessments;
  • Financial rewards based on increases in base salary, rather than through bonuses;
  • The use of performance pay to recruit and retain effective teachers, including the use of Pupil Premium funds to pay for this; and
  • The use of performance pay not as a way of holding down pay, but as a reward for real excellence. This may require the redesign of teacher pay bands within a school.

Teachers’ performance may be assessed on a range of areas according to government guidelines:

  • Impact on pupil progress;
  • Impact on wider outcomes for pupils;
  • Contribution to improvements in other areas (eg pupils’ behaviour or lesson planning);
  • Professional and career development; and
  • Wider contribution to the work of the school, for instance their involvement in school business outside the classroom

In the past it has been difficult to introduce performance related pay into the public sector due to the difficulty of measuring performance in certain roles.

The rationale of linking high performance to pay attempts to develop a high performance culture and should provide equity and fairness. It is widely used in the private sector with many managers receiving it rather than low grade workers.

For performance related pay to be valued by employees there needs to be a clear link between good performance and pay. One barrier to its effective use is subjectivity of the line manager. They should receive thorough training in the operation of the appraisal system with lots of openness and transparency. The variances between hard and soft managers needs to be managed and favouritism dispensed with. The issue of possible discrimination needs to be addressed when training and educating the managerial workforce.

The element of performance related pay needs to be worthwhile, as with any employee reward. Too little and it will not be sufficiently motivating. The pay budget will have its limits and must be distributed appropriately across those who are performing well.

Sandra Beale is an FCIPD qualified HR consultant providing HR and employment law support to SME businesses with issues such as grievance, disciplinary, dismissal, TUPE, redundancy, poor performance, etc.

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