I never gave it much thought until today (I'm not very good with money things), but recently there was a discussion about the tradeoffs between various systems of salaries and raises in private schools. It occurs to me as a very real, and fairly tricky, math problem.
First off, some brief description for you non-teachers: "salary step" is basically a grid of salaries, where for every year of experience you accumulate, you move along vertically to another area of the grid, and therefore get assigned a higher salary. Alternately, you can also move to a higher-pay area of the grid by accumulating additional training (and thereby moving horizontally along the grid). Teachers' unions typically negotiate salary increases across the entire grid, for example, to request increased benefits for every teacher in the system, and I am pretty sure they use a similar system for all public employees in general.
Obvious advantages of this salary-step system:
* It makes sure people are paid based on experience and training. (Loosely speaking, it's a logical idea that more senior teachers and better trained teachers will translate to better productivity.)
* It ensures equity among staffers hired earlier and later. ie. If you started at the school 10 years ago when you were a 3rd year teacher, you are now paid a higher salary than someone hired this year, with 6 years of previous experience elsewhere.
* It encourages retention of existing staffers, as they will continuously be rewarded for additional years accumulated on the job. Staffers who do leave, then, tend to leave for personal reasons as opposed to leaving for reasons of financial stagnation.
* The biggest disadvantage is that the overall school staffing budget will grow linearly every year, assuming that there is little attrition. At the same time, most schools will not be able to increase their tuition linearly every year, or increase their student enrollment linearly to compensate for the constantly growing staffing budget. As I see it, a private school nearing its max enrollment simply cannot afford to use salary steps (and one wonders how our government can afford to do so either).
* Some may argue that the salary-step system does not take into account teacher's actual productivity/merit. That's not a discussion I'd like to go into at this point, given all the controversy surrounding merit pay in general.
* Because staffers are continuously being rewarded for staying, it provides little incentive within the international school environment for healthy mobility and change/influx of new ideas.
Alternative systems and their tradeoffs:
* No salary step system. What salary you enter at is what you stay at, no matter how long you stay at the school. It creates weird situations like if you entered the school 10 years ago, with 5 years of previous experience, you could now (and forever) be paid significantly less than another person who now freshly enters the system with a prior experience of, say, 8 years. Even though overall you are way more senior than that person (15 years of work experience, versus their 8 years), and you have also shown that you are committed to this school, you end up forever being paid less. Needless to say, this affects morale negatively.
* Fixed annual percent increase of pay. This solves the problem of inequity due to time of hire, since by the time other new staffers have been hired, you would have already experienced various raises that put you ahead of them permanently. I think this is probably a strategy that non-mathy people would naturally come to, except that it creates the problem of an exponentially growing school budget over time, so it isn't really feasible. --Plus, in order to avoid any such "weird situations" of inequity, you actually would need to pick an annual percentage that grows FASTER than the linear increases in the salary step! No good!!
* Cost-of-living adjustments and project-based stipends. I think most schools do this, but it's still not addressing the issue of the inequities due to time of hire.
* Merit-based increases. I hate to say it, but this seems like an obvious option despite research that says otherwise. But, what do you judge merit based on? Hopefully not test scores or student opinions. Is it too much to move towards a business model of stacking employees based on peer and supervisor evaluations?
...I think this is sensitive to people because every time we talk about pay, it always gets sensitive. But truly, I see it as a mathematical/business dilemma that is objectively interesting. What do you think is a viable solution? Does one exist?
Other issues to consider:
* Your school's entry salary has to be internationally competitive for a person of that level of experience/training.
* Salary steps are not truly linear (I don't think), nor should they be. The productivity difference between a teacher in their 18th and 20th years is not at all comparable to the productivity difference between their first and third years.
* Every time natural attrition happens, depending on how you replace the lost staffer, your overall staffing budget will either shrink or expand. Therefore, the school admin still has significant control over their staffing budget regardless of the salary system in place.
Anyway, I'm throwing it out there because I have not made up my mind about it, but I am curious if there are clear-cut solutions that I am just not seeing. Y'all able to help me think this one through?