Tuesday, December 16, 2008

Obama's Pay for Performance in Education Already Tested on Wall Street

America suffers from "pay for performance." Executives optimized their pay, while risking our economic foundation. It began with stock options.

Nearly 30% of CEO's backdated their options. This decade long cheating maxed out the "purest" form of incentive pay. A college professor found the widespread malfeasance, not the Securities and Exchange Commission. Only a handful of egregious offenders were hand slapped for stealing millions from shareholders. The rest, like Apple's Steven Jobs, got off Scott free.

Extrinsic motivators, like money, are well studied. The damage they do is profound. Wall Street's recent implosion is a large fish bowl. Incentive pay caused investment professionals to act selfishly, risking the company and its customers. Their behavior took the oxygen out of customer's portfolios.

Yet, President elect Barack Obama wants P4P to save education and health care. Obama appointed Arnie Duncan, the "chief executive officer" of Chicago Public Schools, as his Secretary of Education. Note the CEO title.

Barack Obama said in his press conference, "If pay for performance works..." The highly educated President elect need only read "Punished by Rewards" by Alfie Kohn . Extrinsic motivators harm. As Dr. Deming said, "Will they ever learn?"

America's intrinsic motivation withers under the oppressive thumb of incentives. P4P will do for education and health care, what it did for Wall Street. Let's hope leaders somewhere "give people a good job to do." Pay them fairly. Quit bribing them. That includes employees, students, and doctors.

Update 3-29-14:  Evaluating teachers using student test scores has been a disaster, driving many experienced teachers into retirement or other fields.  Nevertheless the corporatization of public education charges onward.

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