Tuesday, October 4, 2011

Pay for Performance, Unions and Taxpayers

What if the NFL Played by Teachers' Rules? presents a point of view worth considering by Hall of Fame football player, Fran Tarkenton.

Here's the gist of the story told by Tarkenton:

"Imagine the National Football League in an alternate reality. Each player's salary is based on how long he's been in the league. It's about tenure, not talent. The same scale is used for every player, no matter whether he's an All-Pro quarterback or the last man on the roster. For every year a player's been in this NFL, he gets a bump in pay. The only difference between Tom Brady and the worst player in the league is a few years of step increases. And if a player makes it through his third season, he can never be cut from the roster until he chooses to retire, except in the most extreme cases of misconduct.

Let's face the truth about this alternate reality: The on-field product would steadily decline. Why bother playing harder or better and risk getting hurt?

No matter how much money was poured into the league, it wouldn't get better. In fact, in many ways the disincentive to play harder or to try to stand out would be even stronger with more money.

Of course, a few wild-eyed reformers might suggest the whole system was broken and needed revamping to reward better results, but the players union would refuse to budge and then demonize the reform advocates: "They hate football. They hate the players. They hate the fans." The only thing that might get done would be building bigger, more expensive stadiums and installing more state-of-the-art technology. But that just wouldn't help.

If you haven't figured it out yet, the NFL in this alternate reality is the real -life American public education system. Teachers' salaries have no relation to whether teachers are actually good at their job—excellence isn't rewarded, and neither is extra effort. Pay is almost solely determined by how many years they've been teaching. That's it. After a teacher earns tenure, which is often essentially automatic, firing him or her becomes almost impossible, no matter how bad the performance might be. And if you criticize the system, you're demonized for hating teachers and not believing in our nation's children."

The former quarterback turned entrepreneur next links his argument to President Obama's current proposal to spend more for modernizing schools and rehiring teachers as contained in the $447 billion American Jobs Act proposal. Tarkenton believes that spending money we don't have on things that have been proven not to work is just plain wrong:

"These same misguided beliefs are front and center in President Obama's jobs plan, which includes billions for "public school modernization." The popular definition of insanity is doing the same thing over and over, expecting different results. We've been spending billions of dollars on school modernization for decades, and I suspect we could keep on doing it until the end of the world, without much in the way of academic results. The only beneficiaries are the teachers unions.

Some reformers, including Bill Gates, are finally catching on that our federally centralized, union-created system provides no incentive for better performance. If anything, it penalizes those who work hard because they spend time, energy and their own money to help students, only to get the same check each month as the worst teacher in the district (or an even smaller one, if that teacher has been there longer). Is it any surprise, then, that so many good teachers burn out or become disenchanted?

Perhaps no other sector of American society so demonstrates the failure of government spending and interference. We've destroyed individual initiative, individual innovation and personal achievement, and marginalized anyone willing to point it out. As one of my coaches used to say, "You don't get vast results with half-vast efforts!"

The results we're looking for are students learning, so we need to reward great teachers who show they can make that happen—and get rid of bad teachers who don't get the job done. It's what we do in every other profession: If you're good, you get rewarded, and if you're not, then you look for other work. It's fine to look for ways to improve the measuring tools, but don't let the perfect be the enemy of the good.

Our rigid, top-down, union-dictated system isn't working. If results are the objective, then we need to loosen the reins, giving teachers the ability to fulfill their responsibilities to students to the best of their abilities, not to the letter of the union contract and federal standards."

Now let's discuss the bigger picture. What is the lesson to be learned? I believe it's simply that what is said about teachers' unions and our politics can also be said about public employee unions generally.

Without a focus on results, or a pay-for-performance approach, we will always get less than what we pay for regardless of how much taxpayer money we throw at the situation.

The solution to poor public sector performance won't come from spending more money on the system in place. We're not getting value for the money being spent when poor performers are paid at the same rate as high performers. We've disincentivized performance, so we've dumbed down the system.

In simple terms, value is improved as additional output results from a given level of input. This merely means that we receive greater value (output) when we get the same result for a lower cost (input) or, in the alternative, when we realize an improved result (output) for the same cost (input).

The quality formula is the habit of improvement or productivity gains at work. More output for the same input or less input for the same output is the formula for productivity gains.

And better performance is the result of gains in productivity. Linking pay to performance creates the conditions for that improved productivity.

Thus, value for money expended, or a pay for performance system, must become part of the public employees compensation system if we are to achieve better results for taxpayer money expended.

Stated another way, incentives matter. But in the public sector today, there are no incentives to improve performance outcomes. Unfortunately, that's what unions often bring about--poor performance, or reduced outputs in relation to inputs.

But it's even worse than that. Bluntly put, in many cases we simply can't afford to continue to pay for the current public sector salaries, staffing, benefits and retirement obligations that have been promised to our teachers, postal workers, municipal, county, state and federal employees in cities, counties and states across America.

So while Americans won't want to pay more taxes, neither will we easily decide to reduce the pay levels and retirement benefits of public employees. It's an untenable situation.

Therefore, something definitely has to give in this battle with respect to public spending by taxpayers, the pay and benefits received by public employees and the positions taken by their union representatives.

As a society, we must choose between dramatically lower pay and benefits and dramatically higher taxes. Or something in-between those extremes.

What we choose to do to resolve the issues raised by this currently unaffordable public employee pay versus taxpayer obligations will be playing out in a very public fashion in the months and years ahead.

Sadly, there will be much name calling and attempted blame spreading as well. And the politicians will try to slant the real story in an attempt to get the necessary votes for their election or re-election, as the case may be.

More government or less government? Collectivism or individualism? Lower or higher standards of living?

Those are our choices to make, but they represent choices that have to be made--and soon.

One choice we for sure won't have much longer is the choice to live beyond our means. And that's a good thing.

Thanks. Bob.

No comments:

Post a Comment