NextierCan a pay-for-performance contract improve the productivity of primary and secondary school teachers in Nigeria?
EXECUTIVE SUMMARY
Research literature provides evidence, albeit inconclusive, that tying teachers’ remuneration to performance should lead to improved productivity. Efficiency Wage Theory posits that such a structure should align the goals of the school owners and the teachers (principal-agent theory). However, research literature is also replete with various disadvantages of performance-pay including leniency bias, centrality bias, and outright cheating in examinations. There are also challenges emanating from poor design of the performance-pay structures such as lack of transparency on the performance metrics.
Guided by this context, this essay proposes a pragmatic performance-pay structure based on “Tournament Theory” that has teachers (across all subjects in all grades in primary and secondary schools owned by the government) competing for individual and school-level prices. The plan highlights the potential risks and their mitigation strategies including (but not limited to) legislation to ring-fence the funding, independent private company to administer the tests, and avoidance of direct conflict with the labour unions, while designing a programme to selectively transform the quality of the teachers. While the proposed intervention should deliver the desired productivity, it raises other opportunities for further study.
This essay, therefore, focuses on how a pay-for-performance programme can be used to address teacher productivity. The following sections provide a discussion on the place of teachers in our society, a review of performance-pay theories, teachers’ remuneration in Nigeria, and the proposed intervention. This initiative could help deliver some of the rewards of the teachers here on earth while the balance can be cashed in heaven.
SOUL OF THE PEOPLE
Teachers are major influences in most people’s lives. Scroll through your mind and many teachers will pop up as your major influencers. Fr. Charles Ikeme (aka Samankwe Odobro), one of my principals, was such an influence. Mr. Azih (my agriculture teacher), Mr. Ekuma (my Economics teacher) and many others. But for Odobro, who as a priest must be getting some retirement support from the Catholic Church, I am not sure how the old teachers are faring.
Maybe the answer is obvious. Teachers in Nigeria have not been doing well for a very long time. As early as 1948, Eyo Ita, a pre-independence educationist and Nigerian politician, described the teacher as “the soul of the people, the conscience of the race, and the shaper of destiny” but cautioned that his reward “is so poor and his position in life so lacking in dignity and power”.
Teachers’ welfare has not changed much in the intervening years. A 2005 research paper discussed the myriad factors that impact teachers’ motivation, job satisfaction, and productivity. It aggregated the factors into three broad categories: job context, job content, and the reward system. Job context describes the impact of dilapidated buildings, poor educational tools, poorly qualified and frustrated teachers, and poorly feed and disenchanted pupils. Job content, on the other hand, encompasses all the factors related to teachers who are overworked both with teaching and administrative tasks. The reward system refers to pay packages and promotion processes that do not motivate performance. A reform of the education system must comprehensively address all three categories; however, this essay will focus on just pay, as part of the rewards package.
INCONCLUSIVE POSITIONS
Governments around the world have wrestled with how to improve teacher performance while mindful of the aphorism on their purported celestial rewards. Headline commentaries advocate an increase in teachers’ salaries as the panacea. To an extent, this proposal is based on the Efficiency Wage Theory proposed by the Nobel Laureate, George Akerloff, which posits that paying workers above the equilibrium market rate should increase alignment between the goals of the principal and the agent.
However, a 2016 paper argued that there is limited empirical evidence on the impact of pay on teacher productivity. A 2012 paper suggests that the structure of performance-based contracts can lead to dysfunctional behaviour For instance, explicit contracts that reward individual performance may lead teachers to “game” the system by teaching “for the test”; that is coaching the students on how to pass the exams, such as rote memorisation, without sufficient focus on actually learning the fundamental concepts . In extreme (but increasingly rampant) cases, teachers help the students cheat in exams. This phenomenon has been found to be as true in Nigeria as it has been in other more developed countries like the United States. Furthermore, performance-pay contracts can trigger non-collaboration among the staff because it makes it difficult to attribute outcomes to the efforts of a particular teacher or to properly remunerate the contributions of the non-academic staff. Obviously, without the support of the administration officers, the teachers can’t work their magic.
Subjective contracts, where a supervisor evaluates the performance of the teacher, can be used to address the challenges inherent in explicit contracts. However, the subjective nature of these contracts could lead to many other inefficiencies. For instance, supervisors can engage in rent-seeking behaviours where they request favours in return for favourable scores. There is also the risk of leniency bias where the supervisor may be less stringent than his or her peers with their ratings or with the rating of a particular employee vis-à-vis the other employees. It may also lead to centrality bias where the supervisor fails to adequately rate the employees based on their respective performance but gives scores that pull everyone close to the middle.
Teaching is not bricklaying. This is not a values judgment rather an acknowledgement that performance-pay contracts work best with “simple” jobs where actions are easily observable and attributable to results. “Team production” or collaboration of many persons is required to develop a well-rounded student. Attribution of actions to results can be a challenge in teaching.
Assuming that a remuneration package is so well-designed to deliver improved performance, there is still the risk of the “free-rider” problem where some of the teachers may work harder than the others. This challenge could be resolved with a remuneration package that is based on relative performance such that those who work more earn more. However, this package could also lead to a situation where teachers become unwilling to collaborate so as not to share the remuneration.
As if the challenges are not enough, there are some popular arguments that a focus on the effort towards measuring performance may impact the altruistic desire that drives teachers’ commitment to their profession. Nevertheless, there is no conclusive empirical evidence to validate this position. While altruism may be the reason why many take to the teaching profession, Prof. M. A. Adelabu, argued in her 2005 paper that most teachers in Nigeria are in the profession because they couldn’t secure any other jobs.
Regardless of the inconclusive evidence on the link between performance-based pay and teacher productivity, there is consensus that the former can lead to labour market selection effect. This means that top-quality employees prefer remuneration structures that reward individual performance while medium-ability employees prefer team-based remuneration, and low-ability employees prefer neither of the options. In essence, you get what you pay for. It is, therefore, no surprise that the education sector in Nigeria is not able to attract the top of the crop.
YOU GET WHAT YOU PAY FOR
Teachers in Nigeria are some of the worst paid employees in a country that is notorious for poorly-paid public servants. To make matters worse, the government uses a salary schedule that appears to dissuade top talent from joining the teaching corps. For instance, a university graduate who decides to teach in a primary school would join the civil service at Grade Level 7 instead of Grade Level 8, which is the starting point for graduates in other parts of the service. This is because a National Certificate of Education is the highest qualification recognised for a primary school teaching position in Nigeria. It wouldn’t matter that this teach has a higher degree.
There is a need to improve teachers’ pay. Fact. But there is also a need to improve the productivity of the teachers to justify the salary increase. This effort may mean retrenching teachers who are not qualified to be in the classroom. But this is very difficult to achieve as the labour unions would resist such reform efforts, choosing instead to protecting their least-able member.
The situation is further worsened by the fact that most Nigerians do not trust that public service performance evaluations are fair and just; without extraneous considerations. Traditionally, career progression in Nigeria has not always been based on performance. While there is an Annual Performance Evaluation System, it is famously plagued by various biases: nepotism, favouritism, internal politics, and bribery for promotion. In 2012, the government abolished the Civil Service promotion examination.
What is a pragmatic way forward to address the above challenges? Is there a performance-pay structure that can improve teaching outcomes? How would such a programme work? How would decisions be made on performance? How would performance evaluations translate to monetary reward?
Nigeria needs an intervention that seeks to achieve, among many others, two fundamental objectives: improvements in academic achievements (measured by average test scores), and achievement of continuous improvement in the standard of education across the State (measured as the percentage yearly improvement in test scores). The proposed structure is guided by a framework that suggests that an effective performance-pay programme must achieve the following points: measure true performance and minimise unintended consequences, align performance with desired outcomes, be monitored to discourage “gaming” or fraud in measured output, be attainable, balance the incentives between individual and school rewards, foster collaboration but eliminate “free-riding”, and be open to all teachers but only a subset of them will receive the reward.
LET THE “TOURNAMENT” BEGIN
The proposed intervention seeks to remunerate output, such as test scores, and not inputs, such as teacher attendance or teacher certification. Remuneration for output always yields better results than those for inputs especially in terms of raising overall productivity, except in the case of externalities or information asymmetry problems.
Tournament theory, in personnel economics, may hold some answers for intervention design. This theory, which was introduced by Edward Lazear and Sherwin Rosen, suggests that employees can be remunerated based on their relative ranking and that the difference in the remuneration scale would inspire their colleagues to work harder to close the gap. In their influential 1979 paper, they argued that promotion is not often about being good at a job; rather, it is about being “better” than their peers. Take tennis, for instance. Rafa Nadal is not paid millions of dollars just to play brilliant tennis; rather, because he is number one, at least for now in February 2018. Tim Harford, in his book, “The Logic of Life: Uncovering the New Economics of Everything”, showed that the winner in most matches is guaranteed to make at least twice what the loser makes with prospects of more from endorsements. This difference in pay is meant to encourage the other peers to a greater level of performance to close the gap. The fundamental core of this “tournament theory” can be applied to create an incentive scheme for teachers in Nigeria.
A proposed performance-pay structure could be a monetary award to the top-performing teachers and schools based on their students’ performance in standardised tests. The standardised tests would be conducted for each subject in each of the six grades in a primary school for all the primary schools in the State. The performance-pay programme would have three categories of awards. The Top Teacher Award would be given to the highest-ranked teacher in each subject in each grade across the entire state. Assuming 12 subjects, there would be 72 state-wide awards across the 6 grade levels. There would be three (3) Top School Awards for the top three highest-ranked primary schools in the state. There would also be another three (3) Most Improved School Awards for the top three primary schools that have registered the best improvement in the academic year.
KEEPING SCORES
The programme would emphasize on performance metrics. Most teachers’ performance-pay schemes fail when there is no transparency on what the performance metrics are, how they are measured, and what the students, teachers, and schools are supposed to do to achieve the established benchmarks. In this case, the performance metrics would be the result of standardised tests based on government-approved curriculum and developed from government-approved textbooks for each subject and for each grade level. Schools that effectively cover the approved curriculum are expected to do well in the tests.
The design of the intervention would be such that all teachers in the state are entitled to participate in the programme. Teachers would be evaluated based on the Average Test Score for each subject they teach. A teacher’s score would be calculated as the Total Test Score for all of his or her students who sat for the examination divided by the Total Number of Students who registered for the subject in that particular grade at the beginning of the school year. The choice of the formula is deliberate. The use of registered students in the formula is to ensure that teachers do not “game” the system by dropping poor-performing students before computing the score. Likewise, the use of students who “sat” for the exams is to encourage the teachers to ensure that all their students are learning the concepts and that they do not pay attention to only the top performing students.
The average test scores for each of the schools would be adjusted to account for socioeconomic disparities across the state. This is to ensure that all schools, irrespective of whether they are located in the richer or poorer parts of the state, have an equal opportunity to win the awards. The socio-economic variables for calculating the adjustment factor and the approved data sources would be visible and available to all parties. Therefore, a school’s total score would be calculated as the Aggregate Adjusted Test Score for all the students in the school across all the subjects and across all the Grades divided by the Total Number of Students who registered at the start of the school year.
There is a risk that only top-quality teachers, who feel they have a chance to win the award, would bother preparing for the “tournament”. This challenge will be addressed by instituting a programme that incentivises all teachers to participate. For instance, a Continuing Education Programme (CEP) could be instituted as a place where teachers would be taught how to teach the concepts to their students. Participation in the CEP would equip the teachers with what they need to compete fairly for the performance awards. As a further incentive, only teachers who record up to 90 percent participation in the CEP would be entitled to a share of any monetary awards received by their school. Furthermore, a CET Certificate of Completion would become an endorsement of a teacher’s productivity and would be relevant for seeking new job opportunities in the state.
Finally, peer pressure from participating teachers should minimise the potential free-rider problem. This condition also aims to engender a sense of camaraderie and collaboration among the teachers. This collaboration is essential for “team production” of well-rounded students.
STRUCTURE THE TEXT
The structure of the tests is an important consideration. The evaluation tests would be a combination of multiple-choice and short essay questions that test the understanding of the core concepts. This structure is to minimise opportunities for teaching “for the test” and other dysfunctional behaviours like rote memorisation.
The tests would be conducted twice a year: at the end of the first and third terms. The average of both test scores would constitute the final score. This examination structure should help check opportunities for fraud. More importantly, the first test results provide the teachers and schools with the opportunity to rework their strategies to improve performance, if need be.
The programme would have a significant risk management component. An independent private sector firm (preferably a company with a global franchise that is more valuable than the contract value) should be selected to conduct and monitor the evaluation tests. This is to ensure the process is not compromised and also to instil trust in all the participants that the system is transparent and not subject to the prevailing corruption in Nigeria. Furthermore, a reputable audit firm should be engaged to audit the processes of the firm administering the tests.
WHO PAYS?
Performance-pay schemes are expensive to implement in terms of the monetary awards and also the time spent on administering the programme. It is important, therefore, that this programme is not funded via the government budget because of its susceptibility to the vagaries of international crude oil prices especially as most of the state governments in Nigeria are still heavily dependent on Federal Government subventions. Rather, the state government should facilitate the establishment of a Teachers Performance Incentives (TPI) Fund similar to Nigeria’s Tertiary Education Trust Fund (TetFund). The TPI Fund could be funded with a tax (of say 0.1 percent) of assessable profit of all registered companies in Nigeria. The Fund should be established as an Act of the National Assembly to ensure its sustainability across successive governments.
Why access the tax on all companies in Nigeria and not only in the states in the programme? The programme has spill-over effects that cannot be contained within the geography of states in the programme. Similarly, this is what true federalism dictates.
There is the risk that companies may push back on this additional tax especially by proponents of the conservative principles of small government. It is, therefore, important that the government provides evidence on how human capital is important to grow the economy of Nigeria which, in turn, will benefit all businesses. Furthermore, the government should show how quality human capital is one of the most fundamental challenges faced by businesses and because of the “neighbourhood” effect. In such instances, the government has to step in and play a coordinating role.
WHO GAINS?
How would the performance awards be utilised to ensure equity, fairness, and encourage camaraderie and collaboration among the teachers? While the Top Teacher Award remunerate individual performance and the prize money is for the private use of the winner, the Top School Awards and the Most Improved School Awards will remunerate aggregate or school-wide performance. The prize money for the school awards would be shared between the school, teachers, and non-academic staff to encourage the collaboration needed to develop well-rounded students.
The prize money could be shared using a formula. Forty (40) percent of the prize for the school awards could be spent at the discretion of the school administration in improving school facilities. Another forty (40) percent could be spent as bonuses for the academic staff (teachers) on a pro-rated basis guided by teacher’s contribution to school’s overall test scores and at least 90 percent attendance in the Continuous Education Programme. The balance of the twenty (20) percent of the monetary awards could be spent as bonuses for the non-academic staff. This reward should be pro-rated based on their annual performance evaluation.
The size of the awards is critical to the success of the programme. The awards must be “life-transforming” at both the individual and school levels for it to be impactful. Evidence from lottery sales in Ohio, United States, indicate that sales increase with increases in the size of the jackpot. The size of the prizes is critical to the success of the programme given the “tournament theory” underlying the programme design.
It is imperative to note that this teacher-performance incentive scheme has not proposed any changes to teacher certification as a way to improve productivity. This is because numerous teacher-effect studies have shown that teachers’ certification is irrelevant in predicting their productivity. Rather, the rigours of a performance-pay structure would frustrate out low productivity teachers without necessitating a fight with the labour unions. In fact, a 1990 study of teacher attrition found that top-quality teachers are more likely to leave the profession than poor performers because of structures that do not remunerate performance.
CONCLUSION
Do teachers have to wait until heaven to enjoy an exalted position in society or to be properly remunerated? No. While there are challenges with incentive pay schemes, careful design can guarantee better results than the current structure. A scheme based on a “tournament theory” is pragmatic and encourages both individual performance and team collaboration within the socio-economic constraints in Nigeria. The structure should minimise “gaming” of the system because of the design of the performance metrics and also the administrative processes for the performance evaluations. The proposed structure should eliminate bias (nepotism, favouritism, rent-seeking behaviour, etc.) and other inefficiencies. Furthermore, the proposal would be difficult for the labour unions to resist as it does not propose direct retrenchment of low productivity staff; rather, it proposes a programme to improve the performance of all teachers. However, the labour market selection effect that is inherent in the design would “weed” out poor performers without necessarily engaging in a fight with the Unions.
The available research on performance-based pay is not robust enough to categorically propose how such systems should be designed in terms of individual vs. group incentives, performance metrics, the optimal size of bonuses, etc. This leaves room for further interrogation. Indeed, Nigeria’s Federal Ministry of Education should commence collating longitudinal student data at the grade-level, school-level, and local government level to provide the data required for more rigorous assessment of the various incentive pay options and how best to improve teacher productivity in Nigeria.
Teachers rewards can be here on earth and, those who have done exceedingly well can hope for additional benefits in the hereafter. Nigeria’s current crop of leaders should make a pledge that by the time our children begin to reflect on those who have been most impactful on their lives, what they see in their mind’s eyes, should give them cause for joy. This is a goal that is realisable in this lifetime.
