Performance Contracts for Administrators. ERIC
by Hertling, Elizabeth
In the business world, CEOs are often paid on the basis of their performance--a
bonus if profits increase, a decrease for flagging financial results. Increasingly,
school districts are adopting or contemplating the use of performance contracts
(also known as pay-for-performance) as a way of holding administrators
accountable. While school administrators have always been held accountable
for their performance, the practice of linking pay to indicators such as
student achievement has been rare. However, pay-for-performance is now
in place in many districts nationwide.
The increased interest in performance contracts coincides with demands
for greater accountability. This pressure is coupled with an increased
emphasis in state and national school reform on concrete results of progress
such as student achievement (Graves 1995). For some superintendents, putting
their salary on the line is one way to demonstrate that they are taking
their job seriously. Tying pay to performance makes the issue of accountability
more palpable, some suggest.
WHAT ARE PERFORMANCE CONTRACTS?
Performance contracts are agreements between an administrator (predominantly
superintendents) and the school board that link the administrator's pay
to indicators of job performance. Most commonly, performance contracts
include bonuses for a job well done, and, less often, salary decreases
for poor performance. The American School Board Journal and George Mason
University conducted a nationwide survey of superintendents and school
board members on the issue of performance contracts. Survey results revealed
that while the majority of respondents (67 percent of board members and
63p ercent of superintendents) believed superintendents' salaries should
increase with improved district performance, only 44 percent of board members
and 34 percent of superintendents believed there should be a decrease in
salary for poor performance (Bushweller 1997).
Philadelphia Superintendent David W. Hornbeck is one administrator who
requested that his pay be linked to his performance, as well as to the
performance of the district's 217,000 students. Half of Hornbeck's evaluation
is based on student test scores and the other half is based on an examination
of factors such as improving school attendance and graduation rates and
increasing the number of students who have health insurance. If Hornbeck
meets his goals, he earns a bonus of up to 10 percent of his base pay.
However, if the district's performance is unimpressive, then Hornbeck could
face a reduction in salary of up to 5 percent (Bushweller). Hornbeck's
performance contract is just one example out of many diverse and highly
WHAT INDICATORS SHOULD BE USED TO EVALUATE ADMINISTRATORS' PERFORMANCE?
Even among supporters of performance contracts, there is little consensus
regarding what indicators should be used in administrator evaluations.
While student test scores are the most commonly used indicator, they are
also the most controversial.
Those that support the inclusion of student achievement in performance
contracts argue that improved student performance is the goal of every
superintendent, as well as a high priority among parents and the public.
Using test scores as an indicator of performance, supporters contend, will
result in increased attention to student achievement and will organize
schools around helping students achieve standards (Graves).
Others disagree, characterizing test scores as biased. "Test scores
can be manipulated in lots of ways," according to Bill Graham, Palm Beach
County school board member. "It's an oversimplified measure" (Bushweller).
Some argue that when student performance is linked to pay, superintendents
will place undue pressure on teachers to "teach to the test" and ignore
or give cursory attention to material not covered on the exam (Bushweller).
Similarly, other critics contend that use of student test scores as an
indicator creates the danger that administrators will be less attentive
to other issues affecting the school district (Graves).
Many believe that if student test scores are included as a measure of
superintendent performance, they should not be the sole indicator. Other
performance indicators may include demonstrating budgetary acuity, improving
school safety, offering staff development opportunities, designing a challenging
curriculum, maximizing parent and community involvement in schools, and
improving student attendance and graduation rates.
WHY ARE ADMINISTRATORS OFFERED PERFORMANCE CONTRACTS?
Should a superintendent's salary be tied to the district's performance?
This question fuels considerable controversy. Many believe superintendents
should not take the credit-or the blame-for work that is the result of
the efforts of many people. Others assert that administrators strongly
influence the performance of the district as a whole (Bushweller).
Some ask, Why are administrators typically offered performance contracts
even though teachers and other staff members are not? The demanding nature
of the superintendent's role-long hours, ever-changing demands, endless
challenges and problems-is cited as part of the rationale (Lafee 1999).
In addition, pay-for-performance contracts help in the recruitment and
retention of talented professionals at a time when the pool of qualified
candidates is small, and effective leaders are aggressively recruited to
work in the private sector as CEOs of educational organizations (Freeston
1999, Johnson 1998). Some perceive establishing performance contracts for
administrators as the first step toward creating a performance-based pay
system for all employees. Superintendents are just setting the example,
and paving the way for principals and teachers (Graves).
However, many are concerned that performance contracts could unfairly
hold administrators accountable for factors beyond their control. "Administrators
cannot fully control the complex web of factors-such as teacher quality,
home support, parental involvement, class size-that affects learning,"
Graves points out. Murray and Murray (1999) argue that superintendents
are not granted tenure, and should be given more job security, not added
pressures. They state, "Our future educational systems cannot afford to
be led by administrators who are afraid for their jobs."
WHAT ARE THE POTENTIAL BENEFITS OF PERFORMANCE CONTRACTS?
Supporters believe that pay-for-performance contracts create a set of
clearly defined goals for the district to focus on. Instead of blindly
embracing one reform after another, districts can concentrate their efforts
on improving specific issues. Performance incentives set the destination
and provide educators with a road map to get there," state Murphy and Pimentel
An additional potential benefit of performance contracts is a detailed,
feedback-oriented evaluation system. The standard checklist evaluation
is unsatisfactory and the system of pay unfair, Murphy and Pimentel argue.
"Staff members... get raises for the passage of time, for acquiring extra
degrees.... Job performance is irrelevant." In contrast, performance contracts
provide a detailed system of evaluation that rewards administrators for
accomplishing goals (Murphy and Pimentel).
Paige, Sclafani, and Jimenez (1998) address another dimension that is
sometimes integrated into performance contracts. Performance contracts
in the Houston Independent School District allow the school board to buy
out the remainder of a superintendent's contract if his or her job performance
is unsatisfactory. This can save the district considerable time and money
that would be involved in traditional dismissal.
Other supporters contend that performance contracts are not really about
money, but are instead a symbolic demonstration of accountability. Most
superintendents and board members agree that performance bonuses should
be capped below 10 percent of the base salary. According to Philadelphia
Superintendent Hornbeck, "It's not the money for me....[Pay-for-performance]
is a symbol that we're deeply committed to a hard-edged accountability
system that will hold my feet up to the fire" (Bushweller). Performance
contracts are viewed by some as a way to establish a new performance-based
culture in education that rewards improvement and innovation (Lafee).
WHAT DO THE CRITICS SAY ABOUT PERFORMANCE CONTRACTS?
Along with the potential benefits of pay-for-performance contracts come
potential problems. Some worry that administrators will not be given the
resources necessary to achieve their goals (Richardson 1994). Murphy and
Pimentel caution that performance contracts should provide administrators
with a support system that gives them a chance to improve before their
salary is reduced. They argue that a performance ccntract should provide
resources and support as well as assessments and standards. Failing to
do so, they contend, is "like taking the temperature of a sick patient
on a regular basis and never providing treatment. It becomes all diagnosis
and no cure" (Murphy and Pimentel).
Other critics argue that if it takes the lure of a larger paycheck to
motivate a superintendent to improve job performance, then perhaps the
real problem cannot be solved by a contract. Ken Baird, a trustee with
the Hanford (California) Elementary School District, argues that if performance
contracts are necessary to improve district and student performance, then
the superintendent either has misplaced values and is not focused on student
welfare, or is not being paid enough in the first place (Lafee).
The American School Board Journal and George Mason University survey
found that 62 percent of superintendents do not believe that pay-for-performance
contracts will help improve student achievement-the main indicator that
many contracts focus on (Bushweller). After all, opponents argue, superintendents
are not directly involved with teaching.
There are potential morale problems involved with performance contracts.
Some believe rewarding superintendents for better test scores sends the
wrong message to teachers and principals who are involved in the "front-line
work" (Lafee). In addition, some fear that superintendents, to enhance
their own performance, could place "unreasonable" pressure on teachers
Clearly, the issue of performance contracts for administrators is controversial.
Gray and Brown (1989) argue that "in many ways, the education system is
most appropriate as an institutional measure of how effective pay for performance
can be." However, no one model of performance contracts can guarantee that
districts will produce results. Instead, school boards and superintendents
must work together to produce a contract that not only defines the district's
priorities, but offers the necessary support to complete the job.
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