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Part 2 Rethinking Compensation: A Tactical Guide

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By Allison Wyatt, Founding Partner, Edgility Consulting

September 10, 2018

In our last blog post, we noted that compensation ought to address the needs of teachers and staff, as well as to the organization’s own objectives. We recommend that you start with establishing a sense of just how competitive you want your compensation to be, and in what specific roles and markets.

Ask your team and board:

  • What is our total value proposition?
  • How competitive do we want/need to be?
  • Where are we in our growth cycle?
  • What is it that we want to reward in this organization?
  • Who are our staff?
  • How do we balance paying competitive market rates with maintaining internal equity?

Doing the Research: How to Study Market Rates

To create a market-based compensation structure, you’ll need to understand where you stand relative to the market, which depending on your organization may include the local school district, similar organizations, as well as other nonprofits, public agencies, and even companies who might be competing with your organization for talent in key roles. Wherever possible, stick to comparisons with your own organization’s industry, mission, geography, and budget/staff size.

To find comparable compensation data, consider searching:

  • Job postings
  • Industry-specific surveys
  • Publicly available data, such as district pay scales, nonprofits’ IRS form 990s (which report pay for the mostly highly compensated employees in each organization) through Guidestar or the Foundation Center, and databases like Transparent California, which logs compensation information for public employees in California

Try to use at least three sources to ensure that the data is sound. At Edgility, we are wary of sites like Glassdoor and Payscale, who sometimes report salaries for jobs based on a very small sample size. We prefer specialized databases like CompAnalyst, which is updated monthly to keep up with fluctuations in the market and covers more than 4,000 benchmark jobs gathered from comprehensive employer surveys.

Creating a Compensation Structure

With data about your organization’s compensation philosophy and comparable market salaries in hand, you can then consider building a pay structure, including:

  • Pay grades or levels, in which similar jobs are grouped together. For example, an entry-level data associate, a reception clerk, and a paraprofessional might all be included in the same grade, with the averages of their market salaries used as the midpoint for that grade, or you might group all principals or program managers in the same grade.
  • Pay ranges or salary spans within those grades or for each role — according to ZipRecruiter, the range typically extends 30% range of the midpoint or average market salary for a junior or support role, 40% for mid-level management, and 50% for executives. New hires tend to earn around the middle of that range, and experienced top performers earn 80-100%.

For particularly large or complex organizations, pay schedules may be created, which vary by business line (in the case of a school organization, this may vary between school sites and the central office) or by location based on the cost of living and competitor salaries in that market.

For example, the National Center for Montessori in the Public Sector suggests this starting point salary schedule for teachers in public Montessori charter schools, along with benefits, 2% yearly step increases, periodic retention bonuses, and stipends for taking on additional responsibilities.

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Finally, map current jobs and salaries against the new structure to determine whether your new compensation structure matches existing pay, including whether there is equity across levels, roles, and other characteristics. You’ll get an immediate sense of whether there is equity across the organization, and whether there are adjustments that need to be made.

What Matters Most: What Happens When You Address Compensation

Organizations that take a strategic, research-based approach to compensation find that new employee salaries are easier to set, and that existing employees feel more properly valued and compensated.

“Compensation analysis helped us determine highly beneficial changes that are attracting and retaining top talent,” agrees Margaret Winnen, Director of HR & Talent Development for College Track.

At Compass Charter Schools, Superintendent & CEO J.J. Lewis says his team recently shared a new compensation structure and benefits package with staff, who were pleased that salaries will now account for past teaching experience. Teachers and non-instructional staff will also receive bonuses tied to criteria like workload, enrollment, and student performance.

Over time, happy and appropriately compensated employees translate into less turnover, more stability, and greater productivity — an effort we think is well worth the cost.

About the Author

Allison Wyatt is a founding partner at Edgility Consulting, which finds the leaders that education organizations need to make a difference. Prior to launching Edgility, Allison built and scaled a human capital consulting practice at a national retained executive search firm. In addition, she has served as the vice president of human capital for Education Pioneers.

Part 1 Rethinking Compensation: A Matter of Value

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By Allison Wyatt, Founding Partner, Edgility Consulting

August 31, 2018

Staffing is a critical ingredient for any education organization — and finding the right people has never been tougher. For decades, the supply of new teachers has been slowing down, particularly in critical subject areas such as math, science, and English language learning, as well as in high-need low-income schools. Enrollment has dropped in both traditional teacher preparation programs as well as alternative certification routes like Teach for America.

Meanwhile, the rising Millennial generation tends to avoid teaching, wary of what they perceive as a difficult profession with few upsides. “Our generation is impatient and eager to take on greater responsibility and assume leadership roles. Most school districts just aren’t structured to do that,” laments former teacher Jonathan Cetel.

Indeed, across the teaching profession, satisfaction has been decreasing — particularly among teachers of color and those most needed in high-need subjects and schools. “The teaching workforce continues to be a leaky bucket, losing hundreds of thousands of teachers each year—the majority of them before retirement age,” note analysts at the Learning Policy Institute.

While teachers leave for a whole host of reasons, including poor school cultures and lackluster working conditions, compensation is a very real part of the problem — but also a promising part of the solution.

Balancing the Pay Scale

Many education organizations, particularly startup schools trying to make the most of every grant and per-pupil dollar, worry primarily about paying too much for the talent they recruit. In a previous post on this blog, EdTec found that charter schools spend 59% of their budget on salaries and benefits, with brand new schools spending a bit less (53%) and established schools spending more (64%). Many schools choose to hire brand-new teachers and Teach for America corps members in order to stretch their funding, while others pinch pennies on principal and central office salaries so as not to raise board member eyebrows or public scrutiny.

But the cost of paying too little can also add up fast. For every employee who leaves, a district or school spends thousands more on recruiting and training their replacement — as much as $20,000 per employee, finds the Learning Policy Institute. That adds up to a teacher turnover tab of somewhere between $2.2 billion and $7.3 billion nationally each year — not to mention the time and energy required by existing staff to do the recruiting and training, let alone the effect of these frequent changes to colleagues’ working dynamics and to schools’ relationships with students and their families.

Of course, compensation is not a silver bullet for all staffing needs, nor should it stand alone. Compensation should be tied to overall organizational objectives, and to the needs of teachers. Teachers believe in fairness, equity and transparency, and are interested in being compensated for years of experience and degrees (even though research shows that neither of these measures are tied to student learning). Generally, research has found that teachers are not interested in pay-for-performance but somewhat more interested in incentive pay for teaching in hard-to-staff subjects and schools, as well as differentiated pay based on responsibilities and on value-add or growth in student learning.

For example, my organization Edgility Consulting worked with Compass Charter Schools, an online school with 100 staff members serving 17 counties throughout California. Compass recognized that they were competing with more online and brick-and-mortar schools throughout the state for talent, but had no formal compensation structure in place. “2017-18 was a year of both change and growth for Compass. As part of this change and growth, we sought to better understand our competitiveness in the marketplace and if we were being fair and equitable with our total compensation with our staff, as compared to our peer charter schools,” says J.J. Lewis, Superintendent & CEO of Compass.

By conducting focus groups, we learned that teachers and other staff were generally satisfied with their current salaries (although some felt their prior teaching experience was undervalued), but wanted greater equity across the team and more transparency into their earning potential. We helped Compass create a compensation structure with clear guidelines, that recognizes prior teaching experience, and with bonuses tied to student load, student success, and program quality.

Considering Central Office Compensation

Of course, compensation considerations must also extend beyond teachers to include principals, administrators, and other staff, who may be even more likely than teachers to be considering non-education jobs as alternatives to their school-based roles.

For example, we conducted a study of central office compensation for ACE Charter Schools, a nonprofit charter school operator in San Jose, California that now runs four schools serving about 2000 students but is considering national expansion. ACE had recently completed a salary study for teaching staff and wanted to ensure its central office staff were being paid market competitive rates. Upon comparison with districts and charters of similar scale in the San Francisco Bay Area, we found that ACE was generally paying competitively, and provided them with market data to communicate that to staff. In addition, we offered ideas on other types of rewards and recognition to help these employees feel valued.

We also studied the central office compensation of Mastery Charter Schools, a charter school turnaround operator with 24 schools in two states that serve 14,000 students. Mastery was hoping to be more transparent, consistent, and competitive as it grew. Using external market research, we developed market-based salary ranges, mapped internal positions to the structure, and identified staff who fell outside the structure as well as scenarios for reconciling that discrepancy.

Likewise, education nonprofit College Track is a national college completion program that empowers more than 3,000 students annually to earn a college degree and achieve upward social mobility, with more than 100 staff in California, Colorado, Louisiana, and the D.C. Metro Area. They “re-benchmark” their compensation every few years against a set of larger and more complex organizations in order to stay competitive.

“We now understand how our compensation and benefits compare to similar organizations in our industry and geographic markets and we were able to get clear on role descriptions and the markets in which they compete, as well as assess our benefits package overall,” says Margaret Winnen, Director of HR & Talent Development for College Track. For example, the compensation analysis highlighted distinctions between different program roles that in turn yielded better comparable salaries to use as benchmarks, and indicated that a more competitive family leave plan would be more valued by their employees.

The Comp Curve: Watch the Road Ahead

Typically, teachers’ dissatisfaction with their salary — as with their working conditions and opportunities for growth — tends to grow as they gain experience. As such, you should be sure to take into account increases over time, and consider developing not only fair compensation frameworks but rather full career pathways that address professional growth and fulfillment as well as pay.

For example, we studied the compensation at Benjamin Banneker Charter School, a single site charter school in Cambridge, Massachusetts with high satisfaction and low turnover. This is despite the fact that Banneker pays their teachers below the market median. The school invests that saved money in robust professional development and significant flexible funds for student projects and field trips. Teachers feel supported, but are also groomed for and promoted into leadership roles. We worked with the organization to establish clear guidelines for salaries and raises based on experience, but teachers were adamant — they would not trade higher salaries for those other more important benefits.

For more guidance on how to go about studying your organization’s compensation against the market and setting up a clear, equitable, and transparent framework — as well as more details on the results these organizations have achieved by clarifying their own compensation strategies — check back next week for our follow-up blog post.

About the Author

Allison Wyatt is a founding partner at Edgility Consulting, which finds the leaders that education organizations need to make a difference. Prior to launching Edgility, Allison built and scaled a human capital consulting practice at a national retained executive search firm. In addition, she has served as the vice president of human capital for Education Pioneers.

EdTec’s Going to CSDC 2017!

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October 13, 2017

EdTec will be attending the 2017 Charter Schools Development Center Conference as a sponsor, exhibitor, and presenter! The conference takes place November 16-17 in San Diego at the Manchester Grand Hyatt. We’ll be at Booth #54 at the Exhibitor Fair, so be sure to stop by and say hello to our staff!

We’re also excited to share that EdTec staff will present two sessions at the conference. The first session is designed for school leaders thinking about expansion or replication. We invite you to attend “Successful Charter School Expansion and Growth” on Friday, November 17 from 1:30pm – 2:45pm in room Gaslamp A, with Chang Patel, Senior Client Manager at EdTec, and Alison Suffet-Diaz, Founder and Executive Director of Environmental Charter Schools. Attendees will learn best practices from charter schools that have achieved successful expansion and growth, and will walk away with an understanding of important issues to consider in the decision making process, such as funding, facilities, talent recruitment, the pros and cons of various charter management organization (CMO) models, replication vs. expansion, and more.

Later on Friday, school leaders will have an opportunity to learn how to best prepare for their upcoming audits at our second session, “Prepare For Your Audit”, presented by Amita Parikh, Client Manager at EdTec, along with James Rotherham of Squar Milner, at 3:00pm – 4:15pm in room Gaslamp B. The presenters will offer expert advice on implementing fiscal policies, understanding various requests, and interacting with auditors.

We look forward to a productive two days of learning with California’s talented charter school leaders. Remember to stop by Booth #54 and say hello!

School Leader Summer Reading: Cleaning Up Your School’s Payment Processes

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by Dena Koren, Senior Client Manager

July 3, 2017

The (slightly) less hectic summer months are a good time to review the school’s financial policies and procedures to make sure everything is in place. With that in mind, here are a few thoughts about one very important topic in this area: payment methods!

For many of our clients across the country, we see the same problems around navigating how to pay for supplies and services: school leaders want to be nimble and responsive to their team, but they also worry about managing the budget and following policies and procedures for the audit. Not an easy task!

As a school, you have several different payment methods at your disposal:

  • requesting a vendor invoice – perhaps matched with an internal purchase order (PO) – and paying that vendor by check
  • reimbursing employees or volunteers
  • maintaining petty cash at your school or central office
  • using a debit card associated with your bank account, or
  • paying by credit card

While there are reasons and occasions to use each of these, I strongly recommend using the invoice (and PO, if you have a PO process) and paying by check as often as possible!

The benefits of an invoice and check are:

  • Visibility into what you’re buying
  • Documentation and authorization that clearly follow your financial policies
  • Savings driven by consolidating orders and purchasing through contracted vendors
  • Cash management because you can readily control when checks are written

Because a well-run invoice and check process is centralized through your business staff, the ostensible drawback is that you are strictly controlling and slowing down the purchasing of materials and services. This may feel limiting to people! One way you can address this is to keep a regular weekly schedule of ordering and negotiate fast shipment times with your vendors. Another method can be purchasing portals like Staples.com or ClassWallet.com or purchasing systems like Procurify, which can allow individuals to order through a single source and follow the approval process.

For other payment methods, limit usage to the needs that they address best. Here are a few examples:

  • Employee reimbursements: mileage and meals when traveling, fingerprinting fees, limited emergency supply purchases
  • Petty cash: making change in the front office for school purposes (e.g., break a $20 or give change for the purchase of a school t-shirt), pay an emergency plumber who only accepts cash
  • Debit card: if you have a school credit card, almost nothing. The reason is that debit cards take money directly out of your account, potentially bypassing internal authorization and increasing the risk of missing documentation. If you don’t have a school credit card, then see the “credit card” section below for some reasons you might need your debit card.
  • Credit card: ah, a necessary evil! Let’s talk about this in greater length . . .

With so many digital purchases done online via credit card now, it is nearly impossible to avoid getting a school credit card. But be sure to create a robust credit card policy to go along with it! Think about both the card uses and the mechanics for your policy:

  1. Who will have a school credit card? Keep this limited, perhaps only the office manager, executive director, and/or principals. Note that it’s likely that either the cardholder or someone else at the school will need to personally guarantee the card. It’s difficult for charters to get small business cards that do not require a guarantee.
  2. What can be purchased on the credit card? Keep this limited as well, for example: travel expenses, team appreciation dinners, conference fees, specialty supplies (can be a slippery slope, so be careful!).
  3. What cannot be purchased on the credit card? Make this list robust to show you’re serious, for example: curriculum, books, school supplies, computer equipment or technology, field trip entry fees, yearbook vendor fees, refills on postage meter.
  4. How will credit card owners document purchases? Several best practices are: require all receipts to be submitted within one week of the close of the CC statement; outline consequences if documentation isn’t provided (e.g., CC usage suspended until receipts submitted); ensure that purchases of a certain level are pre-authorized; and ensure CC statements are reviewed by a supervisor (note: make sure your most senior school leader has a member of the board reviewing and signing off on his or her CC statements monthly).

One final take-away for your financial operations – It’s ok to make purchasing and payment a little inconvenient! The slight inconvenience will help ensure that you are conscious of your spending, you are staying in line with your budget, and you have everything you need when it comes time for your annual audit.

Landing Your 2017–18 Charter School Budget: Finalizing your budget for the next school year

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by Dena Koren, Senior Client Manager

June 6, 2017

It’s June, and many charter schools are scrambling to put the finishing touches on their charter school budgets for the 2017–18 school year. This can be frustrating and overwhelming given all the moving parts —finalizing staff compensation, collecting final proposals for next year’s contracts, deciding which software and curriculum to use, tracking down charter school budget plans from all the department leads, and of course, the state budget revisions… all while trying to finish out the school year!

Here’s my advice: Don’t sweat it! There is no way you are going to have all of these items finalized by the time you need to send your budget to the board for approval (likely this week or next week!). Plus, there are many aspects of the budget that are completely out of your control. Instead of worrying, try this approach:

1. Pick two or three areas of the charter school budget you’re going to focus on in the 11th hour. These should be areas of the charter school budget that are either your most significant sources of revenue or expense, or have caused problems in the past. And don’t pick “staff”! (See my next suggestion below for wrapping up your compensation budget.) Once you have picked your areas of focus, set aside a designated time (~30 minutes for each area) to dig in and try to firm up the assumptions — then put a bow on it! Once the year starts, and you have more information, you can work with your Finance Director or adviser to adjust the annual forecast to include all your latest knowledge and assumptions.

2. For staffing, again — do your best! Finalize the charter school budget with the information you know now, and include reasonable and conservative assumptions for the things you don’t know. At some point, you have to stop trying to get everything locked up and just go with what you have. But being conservative will help you avoid the frustration of going over budget down the road.

3. Make a list of the areas where you feel assumptions aren’t solid, and over the summer, push to solidify them. Also, be upfront with your board about the areas of uncertainty (note: no need to share every uncertainty, just the ones you feel are the biggest opportunities/risks). I find that outlining the missing information at a high level actually strengthens the board’s comfort with the financial plan. The board members will appreciate the transparency and feel reassured knowing you are aware of the uncertainties and on top of all the moving parts.

For most charter schools, budgeting is an art, not a science. There are countless details, many of them unknown or unknowable, so we just do our best with what we have and keep pushing for improved clarity as the year goes on!