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Providing Background for A 60 Minute Smear Job on Public Schools

Publication Date: 2011-03-14

Anthony Cody has written a provocative piece in response to a "60 Minutes" TV program. Jim Horn at School Matters draws on the New York Times as well as Malcolm Gladwell in The New Yorker to provide background.

from The Equity Project and $125,000 Salaries: the Talent Myth of McKinsey & Co, Schools Matter, June 6, 2009.

What do you do after getting your Yale degree, spending a few years in
TFA, and starting your own MBA test-prep company?

If you're Zeke M. Vanderhoek, you start up a new charter, The Equity Project, with "all-star" teachers making $125,000 a year (with additional bonuses possible: call it merit-pay on steroids). Send out lots of publicity to attract future students, secure a school building, and capitalize on the idea that all we need is better

The PE teacher, this theory goes, will be wildly successful because he trained Kobe Bryant ("Developed Kobe from 185 lbs. to 225 lbs. of pure
muscle over eight years," reads the PE teacher's resume). Billed as the American Idol for teaching , The Equity Project believes that a "dream team" of teachers is all that is
required for a better education.

This project reeks of the McKinsey & Co philosophy outlined by Malcolm Gladwell in The Talent Myth, in The New Yorker, July 22, 2002.


Are smart people overrated?


Five years ago, several executives at McKinsey & Company, America's largest and most prestigious management-consulting firm, launched what they called the War for Talent. Thousands of questionnaires were sent to managers across the country. Eighteen companies were singled out for special attention, and the consultants spent up to three days at each firm, interviewing everyone from the C.E.O. down to the human-resources staff. McKinsey wanted to document how the top-performing companies in America differed from other firms in the way they handle matters like hiring and promotion. But, as the consultants sifted through the piles of reports and questionnaires and interview transcripts, they grew convinced that the difference between winners and losers was more profound than they had realized. "We looked at one another and suddenly the light bulb blinked on," the three consultants who headed the project--Ed Michaels, Helen Handfield-Jones, and Beth Axelrod--write in their new book, also called "The War for Talent." The very best companies, they concluded, had leaders who were obsessed with the talent issue. They recruited ceaselessly, finding and hiring as many top performers as possible. They singled out and segregated their stars, rewarding them disproportionately, and pushing them into ever more senior positions. "Bet on the natural athletes, the ones with the strongest intrinsic skills," the authors approvingly quote one senior General Electric executive as saying. "Don't be afraid to promote stars without specifically relevant experience, seemingly over their heads." Success in the modern economy, according to Michaels, Handfield-Jones, and Axelrod, requires "the talent mind-set": the "deep-seated belief that having better talent at all levels is how you outperform your competitors."

This "talent mind-set" is the new orthodoxy of American management. It is the intellectual justification for why such a high premium is placed on degrees from first-tier business schools, and why the compensation packages for top executives have become so lavish. In the modern corporation, the system is considered only as strong as its stars, and, in the past few years, this message has been preached by consultants and management gurus all over the world. None, however, have spread the word quite so ardently as McKinsey, and, of all its clients, one firm took the talent mind-set closest to heart. It was a company where McKinsey conducted twenty separate projects, where McKinsey's billings topped ten million dollars a year, where a McKinsey director regularly attended board meetings, and where the C.E.O. himself was a former McKinsey partner. The company, of course, was Enron.

The Enron scandal is now almost a year old. The reputations of Jeffrey Skilling and Kenneth Lay, the company's two top executives, have been destroyed. Arthur Andersen, Enron's auditor, has been driven out of business, and now investigators have turned their attention to Enron's investment bankers. The one Enron partner that has escaped largely unscathed is McKinsey, which is odd, given that it essentially created the blueprint for the Enron culture. Enron was the ultimate "talent" company. When Skilling started the corporate division known as Enron Capital and Trade, in 1990, he "decided to bring in a steady stream of the very best college and M.B.A. graduates he could find to stock the company with talent," Michaels, Handfield-Jones, and Axelrod tell us. During the nineties, Enron was bringing in two hundred and fifty newly minted M.B.A.s a year. "We had these things called Super Saturdays," one former Enron manager recalls. "I'd interview some of these guys who were fresh out of Harvard, and these kids could blow me out of the water. They knew things I'd never heard of." Once at Enron, the top performers were rewarded inordinately, and promoted without regard for seniority or experience. Enron was a star system. "The only thing that differentiates Enron from our competitors is our people, our talent," Lay, Enron's former chairman and C.E.O., told the McKinsey consultants when they came to the company's headquarters, in Houston. Or, as another senior Enron executive put it to Richard Foster, a McKinsey partner who celebrated Enron in his 2001 book, "Creative Destruction," "We hire very smart people and we pay them more than they think they are worth."

The management of Enron, in other words, did exactly what the consultants at McKinsey said that companies ought to do in order to succeed in the modern economy. It hired and rewarded the very best and the very brightest--and it is now in bankruptcy. The reasons for its collapse are complex, needless to say. But what if Enron failed not in spite of its talent mind-set but because of it? What if smart people are overrated?


At the heart of the McKinsey vision is a process that the War for Talent advocates refer to as "differentiation and affirmation." Employers, they argue, need to sit down once or twice a year and hold a "candid, probing, no-holds-barred debate about each individual," sorting employees into A, B, and C groups. The A's must be challenged and disproportionately rewarded. The B's need to be encouraged and affirmed. The C's need to shape up or be shipped out. Enron followed this advice almost to the letter, setting up internal Performance Review Committees. The members got together twice a year, and graded each person in their section on ten separate criteria, using a scale of one to five. The process was called "rank and yank." Those graded at the top of their unit received bonuses two-thirds higher than those in the next thirty per cent; those who ranked at the bottom received no bonuses and no extra stock options--and in some cases were pushed out.

How should that ranking be done? Unfortunately, the McKinsey consultants spend very little time discussing the matter. One possibility is simply to hire and reward the smartest people. But the link between, say, I.Q. and job performance is distinctly underwhelming. On a scale where 0.1 or below means virtually no correlation and 0.7 or above implies a strong correlation (your height, for example, has a 0.7 correlation with your parents' height), the correlation between I.Q. and occupational success is between 0.2 and 0.3. "What I.Q. doesn't pick up is effectiveness at common-sense sorts of things, especially working with people," Richard Wagner, a psychologist at Florida State University, says. "In terms of how we evaluate schooling, everything is about working by yourself. If you work with someone else, it's called cheating. Once you get out in the real world, everything you do involves working with other people."

Wagner and Robert Sternberg, a psychologist at Yale University, have developed tests of this practical component, which they call "tacit knowledge." Tacit knowledge involves things like knowing how to manage yourself and others, and how to navigate complicated social situations. Here is a question from one of their tests:

You have just been promoted to head of an important department in your organization. The previous head has been transferred to an equivalent position in a less important department. Your understanding of the reason for the move is that the performance of the department as a whole has been mediocre. There have not been any glaring deficiencies, just a perception of the department as so-so rather than very good. Your charge is to shape up the department. Results are expected quickly. Rate the quality of the following strategies for succeeding at your new position.

a) Always delegate to the most junior person who can be trusted with the task.
b) Give your superiors frequent progress reports.
c) Announce a major reorganization of the department that includes getting rid of whomever you believe to be "dead wood."
d) Concentrate more on your people than on the tasks to be done.
e) Make people feel completely responsible for their work.

Wagner finds that how well people do on a test like this predicts how well they will do in the workplace: good managers pick (b) and (e); bad managers tend to pick (c). Yet there's no clear connection between such tacit knowledge and other forms of knowledge and experience. The process of assessing ability in the workplace is a lot messier than it appears.

An employer really wants to assess not potential but performance. Yet that's just as tricky. In "The War for Talent," the authors talk about how the Royal Air Force used the A, B, and C ranking system for its pilots during the Battle of Britain. But ranking fighter pilots--for whom there are a limited and relatively objective set of performance criteria (enemy kills, for example, and the ability to get their formations safely home)--is a lot easier than assessing how the manager of a new unit is doing at, say, marketing or business development. And whom do you ask to rate the manager's performance? Studies show that there is very little correlation between how someone's peers rate him and how his boss rates him. The only rigorous way to assess performance, according to human-resources specialists, is to use criteria that are as specific as possible. Managers are supposed to take detailed notes on their employees throughout the year, in order to remove subjective personal reactions from the process of assessment. You can grade someone's performance only if you know their performance. And, in the freewheeling culture of Enron, this was all but impossible. People deemed "talented" were constantly being pushed into new jobs and given new challenges. Annual turnover from promotions was close to twenty per cent. Lynda Clemmons, the so-called "weather babe" who started Enron's weather derivatives business, jumped, in seven quick years, from trader to associate to manager to director and, finally, to head of her own business unit. How do you evaluate someone's performance in a system where no one is in a job long enough to allow such evaluation?

The answer is that you end up doing performance evaluations that aren't based on performance. Among the many glowing books about Enron written before its fall was the best-seller "Leading the Revolution," by the management consultant Gary Hamel, which tells the story of Lou Pai, who launched Enron's power-trading business. Pai's group began with a disaster: it lost tens of millions of dollars trying to sell electricity to residential consumers in newly deregulated markets. The problem, Hamel explains, is that the markets weren't truly deregulated: "The states that were opening their markets to competition were still setting rules designed to give their traditional utilities big advantages." It doesn't seem to have occurred to anyone that Pai ought to have looked into those rules more carefully before risking millions of dollars. He was promptly given the chance to build the commercial electricity-outsourcing business, where he ran up several more years of heavy losses before cashing out of Enron last year with two hundred and seventy million dollars. Because Pai had "talent," he was given new opportunities, and when he failed at those new opportunities he was given still more opportunities . . . because he had "talent." "At Enron, failure--even of the type that ends up on the front page of the Wall Street Journal--doesn't necessarily sink a career," Hamel writes, as if that were a good thing. Presumably, companies that want to encourage risk-taking must be willing to tolerate mistakes. Yet if talent is defined as something separate from an employee's actual performance, what use is it, exactly?


What the War for Talent amounts to is an argument for indulging A employees, for fawning over them. "You need to do everything you can to keep them engaged and satisfied--even delighted," Michaels, Handfield-Jones, and Axelrod write. "Find out what they would most like to be doing, and shape their career and responsibilities in that direction. Solve any issues that might be pushing them out the door, such as a boss that frustrates them or travel demands that burden them." No company was better at this than Enron. In one oft-told story, Louise Kitchin, a twenty-nine-year-old gas trader in Europe, became convinced that the company ought to develop an online-trading business. She told her boss, and she began working in her spare time on the project, until she had two hundred and fifty people throughout Enron helping her. After six months, Skilling was finally informed. "I was never asked for any capital," Skilling said later. "I was never asked for any people. They had already purchased the servers. They had already started ripping apart the building. They had started legal reviews in twenty-two countries by the time I heard about it." It was, Skilling went on approvingly, "exactly the kind of behavior that will continue to drive this company forward."

Kitchin's qualification for running EnronOnline, it should be pointed out, was not that she was good at it. It was that she wanted to do it, and Enron was a place where stars did whatever they wanted. "Fluid movement is absolutely necessary in our company. And the type of people we hire enforces that," Skilling told the team from McKinsey. "Not only does this system help the excitement level for each manager, it shapes Enron's business in the direction that its managers find most exciting." Here is Skilling again: "If lots of [employees] are flocking to a new business unit, that's a good sign that the opportunity is a good one. . . . If a business unit can't attract people very easily, that's a good sign that it's a business Enron shouldn't be in." You might expect a C.E.O. to say that if a business unit can't attract customers very easily that's a good sign it's a business the company shouldn't be in. A company's business is supposed to be shaped in the direction that its managers find most profitable. But at Enron the needs of the customers and the shareholders were secondary to the needs of its stars.

A dozen years ago, the psychologists Robert Hogan, Robert Raskin, and Dan Fazzini wrote a brilliant essay called "The Dark Side of Charisma." It argued that flawed managers fall into three types. One is the High Likability Floater, who rises effortlessly in an organization because he never takes any difficult decisions or makes any enemies. Another is the Homme de Ressentiment, who seethes below the surface and plots against his enemies. The most interesting of the three is the Narcissist, whose energy and self-confidence and charm lead him inexorably up the corporate ladder. Narcissists are terrible managers. They resist accepting suggestions, thinking it will make them appear weak, and they don't believe that others have anything useful to tell them. "Narcissists are biased to take more credit for success than is legitimate," Hogan and his co-authors write, and "biased to avoid acknowledging responsibility for their failures and shortcomings for the same reasons that they claim more success than is their due." Moreover:

Narcissists typically make judgments with greater confidence than other people . . . and, because their judgments are rendered with such conviction, other people tend to believe them and the narcissists become disproportionately more influential in group situations. Finally, because of their self-confidence and strong need for recognition, narcissists tend to "self-nominate"; consequently, when a leadership gap appears in a group or organization, the narcissists rush to fill it.

Tyco Corporation and WorldCom were the Greedy Corporations: they were purely interested in short-term financial gain. Enron was the Narcissistic Corporation--a company that took more credit for success than was legitimate, that did not acknowledge responsibility for its failures, that shrewdly sold the rest of us on its genius, and that substituted self-nomination for disciplined management. At one point in "Leading the Revolution," Hamel tracks down a senior Enron executive, and what he breathlessly recounts--the braggadocio, the self-satisfaction--could be an epitaph for the talent mind-set:

"You cannot control the atoms within a nuclear fusion reaction," said Ken Rice when he was head of Enron Capital and Trade Resources (ECT), America's largest marketer of natural gas and largest buyer and seller of electricity. Adorned in a black T-shirt, blue jeans, and cowboy boots, Rice drew a box on an office whiteboard that pictured his business unit as a nuclear reactor. Little circles in the box represented its "contract originators," the gunslingers charged with doing deals and creating new businesses. Attached to each circle was an arrow. In Rice's diagram the arrows were pointing in all different directions. "We allow people to go in whichever direction that they want to go."

The distinction between the Greedy Corporation and the Narcissistic Corporation matters, because the way we conceive our attainments helps determine how we behave. Carol Dweck, a psychologist at Columbia University, has found that people generally hold one of two fairly firm beliefs about their intelligence: they consider it either a fixed trait or something that is malleable and can be developed over time. Five years ago, Dweck did a study at the University of Hong Kong, where all classes are conducted in English. She and her colleagues approached a large group of social-sciences students, told them their English-proficiency scores, and asked them if they wanted to take a course to improve their language skills. One would expect all those who scored poorly to sign up for the remedial course. The University of Hong Kong is a demanding institution, and it is hard to do well in the social sciences without strong English skills. Curiously, however, only the ones who believed in malleable intelligence expressed interest in the class. The students who believed that their intelligence was a fixed trait were so concerned about appearing to be deficient that they preferred to stay home. "Students who hold a fixed view of their intelligence care so much about looking smart that they act dumb," Dweck writes, "for what could be dumber than giving up a chance to learn something that is essential for your own success?"

In a similar experiment, Dweck gave a class of preadolescent students a test filled with challenging problems. After they were finished, one group was praised for its effort and another group was praised for its intelligence. Those praised for their intelligence were reluctant to tackle difficult tasks, and their performance on subsequent tests soon began to suffer. Then Dweck asked the children to write a letter to students at another school, describing their experience in the study. She discovered something remarkable: forty per cent of those students who were praised for their intelligence lied about how they had scored on the test, adjusting their grade upward. They weren't naturally deceptive people, and they weren't any less intelligent or self-confident than anyone else. They simply did what people do when they are immersed in an environment that celebrates them solely for their innate "talent." They begin to define themselves by that description, and when times get tough and that self-image is threatened they have difficulty with the consequences. They will not take the remedial course. They will not stand up to investors and the public and admit that they were wrong. They'd sooner lie.


The broader failing of McKinsey and its acolytes at Enron is their assumption that an organization's intelligence is simply a function of the intelligence of its employees. They believe in stars, because they don't believe in systems. In a way, that's understandable, because our lives are so obviously enriched by individual brilliance. Groups don't write great novels, and a committee didn't come up with the theory of relativity. But companies work by different rules. They don't just create; they execute and compete and coördinate the efforts of many different people, and the organizations that are most successful at that task are the ones where the system is the star.

There is a wonderful example of this in the story of the so-called Eastern Pearl Harbor, of the Second World War. During the first nine months of 1942, the United States Navy suffered a catastrophe. German U-boats, operating just off the Atlantic coast and in the Caribbean, were sinking our merchant ships almost at will. U-boat captains marvelled at their good fortune. "Before this sea of light, against this footlight glare of a carefree new world were passing the silhouettes of ships recognizable in every detail and sharp as the outlines in a sales catalogue," one U-boat commander wrote. "All we had to do was press the button."

What made this such a puzzle is that, on the other side of the Atlantic, the British had much less trouble defending their ships against U-boat attacks. The British, furthermore, eagerly passed on to the Americans everything they knew about sonar and depth-charge throwers and the construction of destroyers. And still the Germans managed to paralyze America's coastal zones.

You can imagine what the consultants at McKinsey would have concluded: they would have said that the Navy did not have a talent mind-set, that President Roosevelt needed to recruit and promote top performers into key positions in the Atlantic command. In fact, he had already done that. At the beginning of the war, he had pushed out the solid and unspectacular Admiral Harold R. Stark as Chief of Naval Operations and replaced him with the legendary Ernest Joseph King. "He was a supreme realist with the arrogance of genius," Ladislas Farago writes in "The Tenth Fleet," a history of the Navy's U-boat battles in the Second World War. "He had unbounded faith in himself, in his vast knowledge of naval matters and in the soundness of his ideas. Unlike Stark, who tolerated incompetence all around him, King had no patience with fools."

The Navy had plenty of talent at the top, in other words. What it didn't have was the right kind of organization. As Eliot A. Cohen, a scholar of military strategy at Johns Hopkins, writes in his brilliant book "Military Misfortunes in the Atlantic":

To wage the antisubmarine war well, analysts had to bring together fragments of information, direction-finding fixes, visual sightings, decrypts, and the "flaming datum" of a U-boat attack--for use by a commander to coordinate the efforts of warships, aircraft, and convoy commanders. Such synthesis had to occur in near "real time"--within hours, even minutes in some cases.

The British excelled at the task because they had a centralized operational system. The controllers moved the British ships around the Atlantic like chess pieces, in order to outsmart U-boat "wolf packs." By contrast, Admiral King believed strongly in a decentralized management structure: he held that managers should never tell their subordinates " 'how' as well as what to 'do.' " In today's jargon, we would say he was a believer in "loose-tight" management, of the kind celebrated by the McKinsey consultants Thomas J. Peters and Robert H. Waterman in their 1982 best-seller, "In Search of Excellence." But "loose-tight" doesn't help you find U-boats. Throughout most of 1942, the Navy kept trying to act smart by relying on technical know-how, and stubbornly refused to take operational lessons from the British. The Navy also lacked the organizational structure necessary to apply the technical knowledge it did have to the field. Only when the Navy set up the Tenth Fleet--a single unit to coördinate all anti-submarine warfare in the Atlantic--did the situation change. In the year and a half before the Tenth Fleet was formed, in May of 1943, the Navy sank thirty-six U-boats. In the six months afterward, it sank seventy-five. "The creation of the Tenth Fleet did not bring more talented individuals into the field of ASW"--anti-submarine warfare--"than had previous organizations," Cohen writes. "What Tenth Fleet did allow, by virtue of its organization and mandate, was for these individuals to become far more effective than previously." The talent myth assumes that people make organizations smart. More often than not, it's the other way around.


There is ample evidence of this principle among America's most successful companies. Southwest Airlines hires very few M.B.A.s, pays its managers modestly, and gives raises according to seniority, not "rank and yank." Yet it is by far the most successful of all United States airlines, because it has created a vastly more efficient organization than its competitors have. At Southwest, the time it takes to get a plane that has just landed ready for takeoff--a key index of productivity--is, on average, twenty minutes, and requires a ground crew of four, and two people at the gate. (At United Airlines, by contrast, turnaround time is closer to thirty-five minutes, and requires a ground crew of twelve and three agents at the gate.)

In the case of the giant retailer Wal-Mart, one of the most critical periods in its history came in 1976, when Sam Walton "unretired," pushing out his handpicked successor, Ron Mayer. Mayer was just over forty. He was ambitious. He was charismatic. He was, in the words of one Walton biographer, "the boy-genius financial officer." But Walton was convinced that Mayer was, as people at McKinsey would say, "differentiating and affirming" in the corporate suite, in defiance of Wal-Mart's inclusive culture. Mayer left, and Wal-Mart survived. After all, Wal-Mart is an organization, not an all-star team. Walton brought in David Glass, late of the Army and Southern Missouri State University, as C.E.O.; the company is now ranked No. 1 on the Fortune 500 list.

Procter & Gamble doesn't have a star system, either. How could it? Would the top M.B.A. graduates of Harvard and Stanford move to Cincinnati to work on detergent when they could make three times as much reinventing the world in Houston? Procter & Gamble isn't glamorous. Its C.E.O. is a lifer--a former Navy officer who began his corporate career as an assistant brand manager for Joy dishwashing liquid--and, if Procter & Gamble's best played Enron's best at Trivial Pursuit, no doubt the team from Houston would win handily. But Procter & Gamble has dominated the consumer-products field for close to a century, because it has a carefully conceived managerial system, and a rigorous marketing methodology that has allowed it to win battles for brands like Crest and Tide decade after decade. In Procter & Gamble's Navy, Admiral Stark would have stayed. But a cross-divisional management committee would have set the Tenth Fleet in place before the war ever started.


Among the most damning facts about Enron, in the end, was something its managers were proudest of. They had what, in McKinsey terminology, is called an "open market" for hiring. In the open-market system--McKinsey's assault on the very idea of a fixed organization--anyone could apply for any job that he or she wanted, and no manager was allowed to hold anyone back. Poaching was encouraged. When an Enron executive named Kevin Hannon started the company's global broadband unit, he launched what he called Project Quick Hire. A hundred top performers from around the company were invited to the Houston Hyatt to hear Hannon give his pitch. Recruiting booths were set up outside the meeting room. "Hannon had his fifty top performers for the broadband unit by the end of the week," Michaels, Handfield-Jones, and Axelrod write, "and his peers had fifty holes to fill." Nobody, not even the consultants who were paid to think about the Enron culture, seemed worried that those fifty holes might disrupt the functioning of the affected departments, that stability in a firm's existing businesses might be a good thing, that the self-fulfillment of Enron's star employees might possibly be in conflict with the best interests of the firm as a whole.

These are the sort of concerns that management consultants ought to raise. But Enron's management consultant was McKinsey, and McKinsey was as much a prisoner of the talent myth as its clients were. In 1998, Enron hired ten Wharton M.B.A.s; that same year, McKinsey hired forty. In 1999, Enron hired twelve from Wharton; McKinsey hired sixty-one. The consultants at McKinsey were preaching at Enron what they believed about themselves. "When we would hire them, it wouldn't just be for a week," one former Enron manager recalls, of the brilliant young men and women from McKinsey who wandered the hallways at the company's headquarters. "It would be for two to four months. They were always around." They were there looking for people who had the talent to think outside the box. It never occurred to them that, if everyone had to think outside the box, maybe it was the box that needed fixing.

The Equity Project's board of trustees includes another Yale graduate by the name of David Coleman, a former
McKinsey & Co. employee who worked in the company's education pro bono sector before going on to start the Grow Network (purchased by McGraw-Hill in 2005).

Teachers at the school are required to work longer hours, can be fired immediately, and take on the roles of support staff -- a twist on the KIPP model that chews up and spits out "educators" on their quest for wealth (so THAT'S what we're in teaching for!).

Forgive me for mistrusting -- and seriously doubting -- the reform efforts paraded by former TFAers and corporate hacks. This school will certainly be followed closely by the education world -- particularly those arguing for a principal's ability to hire and fire at will; short-term teaching assignments with absurdly high salaries; and those arguing that all public education needs is "better" teachers (and more testing).

Next Test: Value of $125,000-a-Year Teachers

By Elissa Gootman, New York Times, June 5, 2009

So what kind of teachers could a school get if it paid them $125,000 a year?

An accomplished violist who infuses her music lessons with the neuroscience of why one needs to practice, and creatively worded instructions like, "Pass the melody gently, as if it were a bowl of Jell-O!"

A self-described "explorer" from Arizona who spent three decades honing her craft at public, private, urban and rural schools.

Two with Ivy League degrees. And Joe Carbone, a phys ed teacher, who has the most unusual résumé of the bunch, having worked as Kobe Bryant's personal trainer.

"Developed Kobe from 185 lbs. to 225 lbs. of pure muscle over eight years," it reads.

They are members of an eight-teacher dream team, lured to an innovative charter school that will open in Washington Heights in September with salaries that would make most teachers drop their chalk and swoon; $125,000 is nearly twice as much as the average New York City public school teacher earns, and about two and a half times as much as the national average for teacher salaries. They also will be eligible for bonuses, based on schoolwide performance, of up to $25,000 in the second year.

The school, called the Equity Project, is premised on the theory that excellent teachers â" and not revolutionary technology, talented principals or small class size â" are the critical ingredient for success. Experts hope it could offer a window into some of the most pressing and elusive questions in education: Is a collection of superb teachers enough to make a great school? Are six-figure salaries the way to get them? And just what makes a teacher great?

The school's founder, Zeke M. Vanderhoek, 32, a Yale graduate who founded a test prep company, has been grappling with just these issues. Over the past 15 months he conducted a nationwide search that was almost the American Idol of education -- minus the popular vote, but complete with hometown visits (Mr. Vanderhoek crisscrossed the country to observe the top 35 applicants in their natural habitats) and misty-eyed fans (like the principal who got so emotional recommending Casey Ash that, Mr. Vanderhoek recalled, she was "basically crying on the phone with me, saying what a treasure he was.")

Mr. Ash, 33, who teaches at an elementary school on the outskirts of Raleigh, N.C., will take the social studies slot.

The Equity Project will open with 120 fifth graders chosen this spring in a lottery that gave preference to children from the neighborhood and to low academic performers; most students are from low-income Hispanic families. It will grow to 480 children in Grades 5 to 8, with 28 teachers.

The school received 600 applications. Mr. Vanderhoek interviewed 100 in person.

Along the way, Mr. Vanderhoek, who taught at a middle school in Washington Heights before founding Manhattan GMAT, learned a few lessons.

One was that a golden résumé and a well-run classroom are two different things. "There are people who it's like, wow, they look great on paper, but the kids donât respect them," Mr. Vanderhoek said.

The eight winning candidates, he said, have some common traits, like a high "engagement factor," as measured by the portion of a given time frame during which students seem so focused that they almost forget they are in class. They were expert at redirecting potential troublemakers, a crucial skill for middle school teachers. And they possessed a contagious enthusiasm -- which Rhena Jasey, 30, Harvard Class of 2001, who has been teaching at a school in Maplewood, N.J., conveyed by introducing a math lesson with, "Oh, this is the fun part because I looooooove math!" Says Mr. Vanderhoek: "You couldn't help but get excited." Hired.

Teachers said the rigorous selection process was more gratifying than grueling.

"It's so refreshing that somebody comes to a teacher and says, 'Show me what you know,'" said Oscar Quintero, who goes by Pepe and will teach special education. "This is the first time in 30 years of teaching that anybody has been really interested in what I do."

The school will use only public money for everything but its building. It is close to signing a lease for private space on 181st Street, to be covered by a combination of public school financing, a charter school grant and what Mr. Vanderhoek described as a "small amount" of private donations (he ultimately hopes to raise enough private money to build a permanent space).

To make ends meet, teachers will hold responsibilities usually shouldered by other staff members, like assistant principals (there will be none). There will be no deans, substitute teachers (except for extended leaves) or teacher coaches. Teachers will work longer hours and more days, and have 30 pupils, about 6 more than the typical New York City fifth-grade class.

The principal, Mr. Vanderhoek, will earn just $90,000. Teachers will not have the same retirement benefits as members of the city's teachers' union. And they can be fired at will.

That did not scare Mr. Quintero, who is in his 60s and is moving from Florida; Heather Wardwell, 37, who is leaving East Greenwich High School, in Rhode Island, after a decade, to teach Latin; or Judith LeFevre, 54, the Arizona teacher who earned about $40,000 as recently as two years ago.

Ms. LeFevre, who will teach science, wrote via e-mail that the school was "an experiment of sorts, in which Iâm one of the subjects." She added, "This could be unsettling were it not for the excitement of working with a team of master teachers, all of whom are motivated to help every student succeed, with no excuses and no blame."

Her other teammates: Damion Frye, 32, who teaches English at Montclair High School in New Jersey, has a masterâs degree from Brown University and is pursuing his doctorate at Columbia's Teachers College, and Gina M. Galassi, 40, who teaches music at Kingston High School in Ulster County, N.Y.

Mr. Carbone, 44, spent four years as head strength and conditioning coach for the Los Angeles Lakers. He left for a quieter life in Spring Valley, N.Y., last year, after overhearing one of his three sons say, "I want to play basketball, but my dad hasnât taught me yet."

Whatever the magic formula for a great school or teacher may be, Mr. Vanderhoek has come to believe that there is an essential ingredient to the search for such teachers: Time spent in that teacher's classroom, watching students learn. Then again, his team has yet to hit the court.

"I have tremendous confidence that the staff is going to be excellent," he said. "But we will see."

A Tough Week for Magic Wands: 60 Minutes goes in Search of the Superteacher

By Anthony Cody, Living in Dialogue, March 14, 2011

When I first heard about a school in Manhattan that was preparing to pay teachers up to $125,000 a year, I thought that was great. Finally, we are getting the respect we deserve. But after seeing the deal close up last night, I am not sure it is much of a bargain after all.

Last night the CBS 60 minutes team took us to a working class neighborhood in Washington Heights, Manhattan, to witness the latest incarnation of that elusive savior of children in poverty, the superteacher. Katie Couric visited a school there called TEP -- The Equity Project, whose claim to fame is their decision to pay their teaching staff $125,000 a year.

The school's principal, Zeke Vanderhoek, has taken the myth of the superteacher and built a school around it.

Here is how he explains his theory of action.

If you want to attract and retain talent, you have to pay for it. And that is ultimately how student achievement will be impacted.

There are great teachers in almost every public school in the city. The difference is that they're often the exception not the rule. So what we're trying to do is build a school where every teacher is a great teacher.

The difference between a great teacher and a mediocre or poor teacher is several grade levels of achievement in a given year. A school that focuses all of its energy and resources on great teaching can bridge the achievement gap.

Two thirds of the kids arrive at TEP reading below grade level, we were told.

Couric reports that "Money that would go to pay for an assistant principal, reading specialist and other staff, goes into teacher salaries, but that means the teacher has to do those jobs as well." One teacher, who was putting in 80 to 90 hours a week, was fired because she was not giving enough to the school. She had children of her own whom she found herself neglecting because of the demands of the school.

The staff is doing some excellent things. They are observing one another teach, and giving one another feedback. The students seem engaged, and report on camera that their teachers really care about their success.

But then we get to the tough part. The actual outcomes after their first year in operation. "The results were disappointing. On average, other schools in the District scored better than TEP."

Principal Vanderhoek responds, "We don't have a magic wand. We are not going to take kids who are scoring below grade level and bring them up in a year."

Come again? What happened to "The difference between a great teacher and a mediocre or poor teacher is several grade levels of achievement in a given year"?

The whole theory behind this school is that teachers ARE the magic wand. Get them to work hard enough, motivate them with a big enough basket of carrots, and add in the ability to fire at will, and you have the cure to poverty right there. It just has not worked so far.

But that does not keep Katie Couric from putting a pretty ribbon on the story. She ends the story by saying: There are signs things are moving in the right direction. Remember Christian Peña who couldn't read when he got to TEP? He jumped two grade levels in reading in just one year.

So the fact that the performance of the entire school of 247 students was lower than the average school in the city, all these other schools stuck with mediocre teachers protected by tenure, is just wiped from our memory with the closing image of Christian Peña, who did not learn to read in the regular schools, but has learned here.

The real subtext of the story is the issue of tenure. We hear from Joel Klein, who was in charge of the New York city schools for 8 years, that "anyone with a pulse gets tenure." Who the heck is to blame for that?? If, in fact, tenure offers this ironclad protection, should not the school system be careful who receives it? Is this not an indictment of his management, if his schools are granting tenure to anyone?

I do not have direct experience with schools in New York. I worked in a program called Peer Assistance and Review in Oakland for several years, as a coach for teachers who had received poor evaluations. The majority of these teachers were, in fact, terminated or counseled out of the profession. Furthermore, in Oakland most principals DO exercise their right to "non-re-elect" some probationary teachers before they get tenure.

We are in a political process here, where the rights of teachers to due process protections are under attack, from Wisconsin to New Jersey to Florida. This school is being offered up as an object lesson in why tenure is not needed. We have a principal who appears to be reasonable and ethical, and his teachers have faith in him. But we all know, or ought to know, that not all principals are so virtuous.

Katie Couric seems to think that the idea of a vindictive principal is some sort phantom invented by unions to scare members into paying dues. Unfortunately, principals are not all paragons of virtue, and they are under tremendous pressure to balance their budgets and raise test scores. Teachers who cost too much, or resist test preparation, or are otherwise outspoken, may well find themselves in danger of losing their jobs. The contract between the union and administration sets out a process for this.

Union leaders can be faulted for neglecting this issue, and simply saying "it's the job of the administration to hire, supervise and fire employees." This is technically true, but if we want to stand tall as a profession, we need to take some responsibility for having a workable evaluation process in place. The evaluation system needs improvement - and teachers need to be a part of making this happen. Here is a report I helped write that offers concrete suggestions along these lines.

But the idea that we can hire superteachers to eliminate the achievement gap so far is not working out. Principal Vanderhoek says he needs more time - four more years he wants, to run his experiment. But if other schools, with all the limitations of tenure that supposedly doom them to mediocrity, continue to outperform his, we may have to reexamine this model.

What do you think? Would you accept a higher salary in exchange for giving up your due process rights? Can we expect great teachers to close the achievement gap?

60 Minutes

NYC charter school's $125,000 experiment
Does a non-unionized school that pays teachers a higher salary get better results?

With state after state confronting massive budget problems, several governors have been looking to extract whatever they can from public employees like teachers, going after benefits packages and guaranteed job security that unions have won for them. But would teachers be willing to give up those protections for a chance to earn a lot more money?

Katie Couric on paying teachers $125K a year
With a national debate raging over teacher pay, pension, and tenure, Katie Couric explores one New York City public school where change is already underway.

Segment: Charter school's $125K experiment

There's a school in New York City that's trying to prove just that. It's a bold new experiment in public education called "TEP," which stands for The Equity Project, a charter school that is publicly funded but privately run. It's offering its teachers $125,000 a year - more than double the national average.

TEP aims to prove that attracting the best and brightest teachers and holding them accountable for results is the essential ingredient to a school's success. Could this school become a national model for the future of public education? That's the $125,000 question.

"You pay your teachers $125,000 a year, which is a lot of money for a teacher in this country. Why?" Katie Couric asked Zeke Vanderhoek, the school's founder and principal.

"Because they're worth it, because teachers are the key, and if we can pay them this with the existing dollars, why aren't we doing it?" he replied.

They're doing it at TEP because Vanderhoek, 34, a former teacher, gets to decide who he hires and how much he pays them.

Asked how he thinks these high salaries will impact student achievement, Vanderhoek told Couric, "I don't think paying people more makes them a better teacher. You take a mediocre teacher, you double their salary, nothing's gonna change. So, if you wanna attract and retain talent, you have to pay for it. "

"And that is ultimately how student achievement will be impacted," he added.

"60 Minutes" has been following the school since it opened its doors a year and a half ago in Washington Heights, a poor, mostly Hispanic neighborhood in upper Manhattan.

There are currently 247 fifth and sixth graders and 15 teachers; classes will eventually run through the eighth grade.

Asked how TEP teachers differ from teachers in other public schools, Vanderhoek said, "They're not. There are great teachers in almost every public school in the city. The difference is that they are often the exception, not the rule. So what we're trying to do is build a school where every teacher is a great teacher."

To find those teachers, Vanderhoek launched a nationwide talent search that's been called the "American Idol" of education. Thousands of applicants have sent in resumes and those who make it to the final round have to spend a day trying out in front of a very tough crowd.

"The first class of teachers, what qualities were you looking for?" Couric asked.

"Their ability to produce some evidence that the students in their classrooms move from point A to point B," Vanderhoek explained. "In order for students to demonstrate that growth, they have to be into it. And so the teacher has to be able to engage students."

The chosen include Joe Carbone, a former NBA trainer, Rhena Jasey, a Harvard grad who's been teaching for eight years, and Gina Galassi, an accomplished violist who teaches music.

"When you first saw the ad that said the starting salary would be $125,000, what did you think?" Couric asked Galassi.

"I thought too good to be true. I said 'This is like some wacko cult' or something. It didn't make sense, you know. What was the catch?" she replied.

The catch is that with those higher salaries come higher expectations, and unlike most schools, those who don't meet Vanderhoek's standards will be shown the door.

"There's no contract. We're at-will," special education teacher Judy LeFevre told Couric.

LeFevre is a 30-year classroom veteran who was making $40,000 a year when she moved from Tucson to take a job at the school. "I think we all have a lot of trust in terms of how we feel about Zeke and if he really felt he needed to make a change, it would be in the best interest of the students here," she said.

The students are mostly African American and Hispanic, and almost all of them come from poor families.

More than two thirds of the kids are reading below grade level when they get to TEP, like Christian Pena. He had been in the New York City school system for four years but still couldn't read or write when he began fifth grade at TEP.

The school's challenge is one that has bedeviled American educators for decades: how to get poor, minority, inner city kids to achieve at the same levels as kids from more affluent neighborhoods.

"What makes you think you can narrow the achievement gap with this school?" Couric asked Vanderhoek.

"The difference between a great teacher and a mediocre or poor teacher is several grade levels of achievement in a given year," he replied. "A school that focuses all of its energy and its resources on fantastic teaching can bridge the achievement gap."

Asked if he can implement a school like TEP on a larger scale, Vanderhoek said, "Absolutely. We do not take any outside money to support our teachers' salaries."

The school survives on public funding alone, and Vanderhoek is able to pay his teachers well by reallocating resources. There are no state-of-the-art facilities - classes take place in trailers. And the money that would go to pay for an assistant principal, reading specialist and other staff goes into teachers' salaries. But that means the teachers have to do those jobs as well.

"You're doing a lot more than teaching here. So do you ever feel like, 'Well, gosh, I'm making a lot of money, but jeez, I'm doing a lot of jobs here'?" Couric asked Casey Ash, who teaches social studies.

"That's what we signed up for," Ash replied.

They also signed up to be continuously evaluated by Vanderhoek and each other. Even after the last bell, they're still at it, analyzing teaching videos like coaches reviewing game tapes.

Skills like classroom management, getting kids settled in and ready to learn are key.

"The greatest benefit of working here is that it's not okay to just be okay. And every lesson does need to be laser focused and super sharp so that you can get the best outcomes from it," Ash explained.

"It's been very humbling for me. Because it's highlighted certain gaps that I had in my teaching along the way," LeFevre said.

Gaps like developing more effective lesson plans and better ways to track her students' progress.

"So, I had to go through a period of mourning over the teacher that I would have been if I'd gotten this kind of feedback, you know, 25 years ago," she explained.

Turns out she wasn't alone: "At the beginning of the year I felt like I was the worst teacher," Heather Wardwell told Couric.

Before she came to TEP, Wardwell spent most of the last 16 years teaching high school Latin. "I wasn't prepared for the fifth grade behavior and the fifth grade mentality. I didn't feel like I was getting through to the kids and that they were learning," she said.

But when we sat down with a group of students, they gave us their own take on TEP.

The kids told Couric they like school but that this hadn't always been the case.

"How are the teachers different here from your old school?" Couric asked.

"They actually care if we succeed and pass college," a student replied.

"In my old school, I didn't really get that much attention and help with my class work, so I didn't do as well. Here, I'm getting As and Bs because the teachers stay on top of you and they actually help you when you need help," another said.

"What do you think makes a good teacher, Gina?" Couric asked Galassi.

"You just have to believe in the kids. And I know that they can learn. And if there's a roadblock, if they're not getting it you know, look at me first," she replied.

"You never give up," Couric remarked.

"No. On a kid, never," she replied.

Most charter schools like TEP are not unionized and don't offer teachers tenure.

"The idea that somebody could have a job for life no matter how they perform is not good for people in that job, much less for the students who have to suffer if that individual has gone downhill," Vanderhook said.

Asked if he thinks tenure should be abolished in general, Vanderhoek said, "Yes."

"How difficult is it for a teacher to get tenure?" Couric asked Joel Klein, who stepped down in January after eight years as the New York City schools chancellor.

"If you have a pulse, you get tenure," Klein said.

"You just have to show up?" Couric asked.

"Tenure's something you get for showing up," Klein said.

He says that traditional public schools can't follow the TEP model. Vanderhoek is able to make personnel decisions based on performance, but most schools can't because of tenure.

"It's virtually impossible to terminate an incompetent teacher. The process is so cumbersome that very few people will try. And so, as a result, we virtually get rid of no one for poor performance in the city," Klein said.

And the unions have fought tooth and nail to keep teachers from losing their jobs, even when they have unsatisfactory ratings. They believe that tenure protects the rights of teachers and prevents them from being unjustly fired by vindictive principals.

But in New York City more teachers have died while on the payroll than have been removed for cause. Over the past three years, out of 55,000 tenured teachers, only seven have been removed for poor performance.

At TEP, Vanderhoek fired two teachers at the end of the first year.

"What criteria do you use when you are deciding whether or not to retain a teacher?" Couric asked.

"Is the classroom managed in a way that supports instruction? Second, are the kids engaged? Are they on task? And third, is there evidence that students started at point A and grew to point B?" he explained.

After a rigorous evaluation process, both Judy LeFevre, the 30-year veteran from Arizona, and Heather Wardwell were let go.

Wardell told Couric she felt "relieved" when she got that news. "Because I had been telling him for a while that I was struggling with balancing my life."

Wardwell said she was putting in 80 to 90 hours a week at TEP, twice as much as her old job.

"I had to say no to my children often, 'No, I can't play.' I'd stopped making dinner," she explained.

"This sounds all-consuming," Couric remarked.

"It was for me," Wardwell said. "But if you love teaching and you want to be in the Olympics of teaching, this would be the place to do it."

"These people at The Equity Project are demanding on the front end as to whom they hire, and even after all of that, they're still prepared after the first year to say to two teachers, 'This is not the right place for you.' That's a very different model from the public school system," Joel Klein said.

But is the model working? When the fifth graders took the New York State math and reading exams, the results were disappointing. On average, other schools in the district scored better than TEP.

"Some people watching this might be thinking, 'Hey, they're paying teachers $125,000 a year. They've attracted the best and the brightest. These results don't really add up,'" Couric pointed out.

"We don't have a magic wand. We're not gonna take kids who are scoring below grade level and bring them up in a year," Vanderhoek said.

"You're the head of the school, the principal. Why do you get to keep your job?" Couric asked.

"Ultimately to build an excellent organization is going to take time. And if that doesn't happen let's say four years from now, then I shouldn't keep my job," Vanderhoek said.

But there are signs that things are moving in the right direction.

Remember Christian Pena who couldn't read when he got to TEP? He jumped two grade levels in reading in just one year.

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