The President’s signature program for education has the same motivational underpinnings as executive stock options, the better the performance, the better the pay. No Child Left Behind rewards schools that set high standards and holds educators accountable for meeting them. Those that perform receive bonuses, while the laggards lose resources.
Corporate America’s version of pay for performance is often accomplished through stock options, their use widespread since the mid 1990’s. With a dozen years of use, how have stock options performed as a motivational tool?
Studies show that almost 30% of publicly held companies cheated or manipulated their stock option grants. CEO’s are stepping down left and right, my guess is in an effort to avoid criminal prosecution. Today, a biggie joined the list, none other than William McGuire, the Chairman and CEO of UnitedHealth whose options were worth $1.6 billion at the end of 2005.
An investigation showed most of the 29 option grants between 1994 and 2006 “were likely backdated”. They also found 8 instances where the option grant happened to be the lowest stock price of the quarter prior to 2002 when Sarbanes Oxley went into effect.
If an extrinsic motivation program in business caused such widespread cheating over its twelve year life, what can we expect from education? Texas already is holding up bonus money for 700 schools as it investigates suspected malfeasance.
As No Child Left Behind comes up for renewal, will our elected leaders notice the glaring problems with extrinsic motivation systems? Of course not, the election money trough ensures they remain the fish unaware of the water. Time to vote some new fishies in, we just need some not Republican or Republican Lite (used to be known as Democrats).