Note: This is the final installment in a five-part series on W. Edwards Deming’s System of Profound Knowledge, which covers its fourth component- Psychology. It may be helpful to read Part II: What is systems thinking?, Part III: Variation is the enemy, and Part IV: Knowledge has temporal spread prior to this post.

The System of Profound Knowledge (SoPK) is, well, a system. Deming described the four components of his theory this way in The New Economics:

The various segments of the system of profound knowledge proposed here cannot be separated. They interact with each other. Thus, knowledge of psychology is incomplete without knowledge of variation.

Likewise, the theory of knowledge component relies on one’s ability to separate statistical variation into common and special causes in order to learn about and improve a system. Each part of the SoPK is interdependent and equal in importance. Nonetheless, if there is one of the four components that seems to flow through each of the others, it is psychology. A leader of organizational transformation must understand the psychology of individuals, the psychology of groups, the psychology of society, and the psychology of change.

What is your job?

If you asked the typical American manager, be it a principal of a school or the CEO of a large corporation, “what is your job?” it is very likely that they will say something to the effect of “to motivate the employees in my organization to work hard and do their best work.” This approach lacks an understanding of the basic psychological principles of motivation. Following these principles, the manager would be much more effective if they saw their role not as chief motivator, but rather to remove the obstacles to joy in work of the employees within the organization.

Unfortunately, many school and work systems in the United States have inadvertently eliminated joy in work and learning, intrinsic motivation, and people’s willingness to cooperate with each other. Deming put it this way:

One is born with intrinsic motivation, self-esteem, dignity, cooperation, curiosity, joy in learning. These attributes are high at the beginning of life, but are gradually crushed by the forces of destruction.

It is important here to clearly list those destructive forces. Those forces are working directly against the optimization of the system which is the ultimate goal of employing the System of Profound Knowledge in our organizations. Optimization simply means orchestrating efforts of all components in the system to achieve the purpose of the organization. As Kelly Allan says in the chapter he wrote for the updated edition of The New Economics: 

He (Deming) wanted us to combine the tools and techniques of improving the quality of products and services with a management approach that created even greater quality, greater effectiveness, greater efficiency, greater productivity, and greater joy in work, with greater profits as the result of these coordinated efforts.

Destructive Practices

The problem is that many of the management and leadership practices we employ in our schools and organizations are not only ineffective they run directly counter to greater quality, greater effectiveness, greater productivity, and greater joy in work (and greater profits for businesses). Many of these practices are so ingrained in the way we run our organizations that we don’t even question them. Even when we recognize their destructive nature, we often don’t know what would be more effective. At United Schools Network, we are in the very beginning stages of calling into question many of our practices and thinking about how to employ Deming’s theory in designing replacements. Figure 1 below outlines a number of practices that schools and other organizations regularly use that sub-optimize the system.

The unifying theme of all of the practices is that extrinsic motivators do not work or improve performance in the vast majority of situations we are most concerned with in schools. I'll tackle the topic of merit pay to illustrate one of the destructive practices in more depth.

Merit Pay

Merit pay has been proposed as a reform idea in education going back to at least the Reagan administration. Since the 1980s, the idea has been taken up by governors and presidents, most recently during the Obama administration through the Race to the Top legislation. The theory behind these proposals is that merit pay is a motivator; basically, that the chance to make more money will drive improvements in our schools. It is worth noting here that the discussion that follows is solely focused on merit pay in education and not on whether teacher base salary levels are adequate; that is a separate discussion topic altogether.

There are a number of problems with this theory. There is the problem of defining a meaningful measure of performance by which to judge individual educators. There have no doubt been advancements in statistical measures of academic growth since the Reagan administration, but Deming’s assessment of the idea is by and large still valid today. Upon learning of the merit pay idea proposed by President Reagan, Deming had this to say:

The problem lies in the difficulty to define a meaningful measure of performance. The only verifiable measure is a short-term count of some kind...Where were the President’s economic advisors? He was only doing his best.

During his four-day seminars, when participants would ask him how much data they would need on a worker before an accurate evaluation could occur, Deming would say 15-16 years. His primary point in answering this way was that it is nearly impossible to accurately disentangle the contributions of the worker, the contributions of the system, and the contributions of the interactions between the worker and the system. Even now, with many states having teacher level value-added data in some grade levels and subject areas, there are significant problems with the disentanglement problem. These Value-Added Models (VAMs) are statistical models that attempt to distinguish a teacher’s causal impact on her students’ learning from other factors. For example, in a 2016 working paper by University of California Berkeley economics professor Jesse Rothstein, he found the following:

Teachers’ VAM scores are evidently inflated or depressed in part due to the students who they teach, who differ in unobserved ways that are stable over time. This bias accounts for as much as one-third of the variation in teachers’ value-added scores, enough to create a great deal of misclassification in VAM-based evaluations of teacher effectiveness.

There are other issues with merit pay beyond the measurement problem. The theory suggests that the additional money will incentivize improved teaching and in turn improved student outcomes. But, in order for that to be true that means that teachers were previously withholding their best efforts. I’ve not encountered a single educator in my 20-year career for whom this would be true. More likely is that the environment created by merit pay systems disincentive behaviors such as cooperation and teamwork that are important to improving any complex system. The competition within the merit pay system, especially where the calculation is viewed as opaque and unfair, could easily lead to undesired behaviors such as the unwillingness to share ideas or to take on certain assignments. Returning to Rothstein’s research he in fact finds that:

Insofar as such biases are important, they create obvious problems for VAM-based teacher evaluations. A teacher whose VAM score is biased upward due to her student assignments might thereby qualify for bonuses that she has not earned, while one who specializes in tougher students risks being undeservedly dismissed for poor performance. This creates obvious incentives for teachers to avoid the latter assignments in favor of the former, potentially making it harder to staff certain courses and reducing the overall efficacy of the school.

Unintended Consequences & Suboptimization

This is exactly the type of unintended consequence that is likely to flow from the merit pay idea or from any of the practices in Figure 1. This problem is not unique to schools; similar issues occur in any work system that employs these practices. As Donald Wheeler astutely notes in Understanding Variation:

When people are pressured to meet a target value there are three ways they can proceed: (1) they can work to improve the system; (2) they can distort the system; or (3) they can distort the data.

Deming identified each of these practices as those that would lead to suboptimization of the system, but without profound knowledge, the ideas are continually recycled by education, policy, and political leaders. The main idea here is that joy in work, intrinsic motivation, and cooperation are key to a healthy organizational culture within schools. Practices like merit pay that rely on extrinsic motivation and competition are more likely to lead to distortions of the system or the data within the system than they are to lead to an improvement of the system. Here, we would be wise to use Deming’s theory to optimize the system rather than attempting to incentivize individual workers within those systems. 

It seems fitting here to give Deming the last word on the importance of understanding psychology, which he wrote in a letter to Peter Senge in 1990:

Our prevailing system of management has destroyed our people. People are born with intrinsic motivation, self-respect, dignity, curiosity to learn, joy in learning. The forces of destruction begin with toddlers-a prize for the best Halloween costume, grades in school, gold stars-and on up through the university. On the job, people, teams, and divisions are ranked, reward for the top, punishment for the bottom. Management by Objectives, quotas, incentive pay, business plans, put together separately, division by division, cause further loss, unknown and unknowable.

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John A. Dues is the Chief Learning Officer for United Schools Network, a nonprofit charter-management organization that supports four public charter schools in Columbus. Send feedback to jdues@unitedschoolsnetwork.org.