Principal Compensation: More Research Needed on a Promising Reform
This report examines research on principal compensation and suggests a strategy for compensation reform.
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School reforms and improvements depend crucially on the implementation of strategies at the school level—from human resources to curriculum to parent involvement. And the successful implementation of these strategies in turn depends largely on principal leadership.
This report includes new empirical research using national data on principals and their salaries to determine whether there appear to be significant shifts in the way principals are paid over a 10-year period from the 1993–94 school year to the 2003–04 school year. The findings from this work show that principals are rewarded for: having more experience, leading a secondary school, leading an urban or suburban school, leading a larger school, and being in a larger school district. Interestingly, there is relatively little change over time in the factors that explain principal salaries, which provides suggestive evidence that there haven’t been major shifts over time in the structure of principal compensation. This is interesting since there is a great deal of discussion of pay for performance for principals so one might assume that there would have been a notable shift toward that pay structure during the 10-year period.
Not surprisingly, numerous difficulties arise when it comes to linking principals’ pay to their performance. For example, principals’ jobs are multi-dimensional and the linkage of pay to specific performance objectives may cause them to overly focus their time and energy on achieving those objectives. But it is possible to mitigate these and other concerns, and in general there appear to be fewer obstacles to overcome in comparison with those encountered when implementing pay for performance for teachers.
Linking principal pay to performance may even be an almost necessary precursor to implementing performance pay for teachers. It is not a great leap to suggest that principals can make a better case for performance pay for teachers when they themselves are being judged based on performance, and that teachers are more likely to accept this type of pay reform when they see themselves as being part of a broader system that has these incentive built into it from top to bottom. In other words, teachers may view it as a matter of basic fairness that principals be subject to a pay-for-performance system before they subject themselves to such a system. For these reasons, advocates of teacher pay reforms may wish to also focus on principal compensation reform.
Before principal pay for performance can move forward, we need to better understand how principal compensation affects the quality and performance of the nation’s principals. This report recommends four key steps to further our understanding of principal compensation and how it should be reformed:
schools is to study the consequences of variation in the way that principals are paid. We need principal pay experiments in order to figure out what works.
the federal government, and private foundations. This would enable districts and principals opting to try a reform to see an immediate tangible benefit from trying something new.
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