CEOs split on paying for good grades

CEOs use raises, bonuses and stock options as carrots to get workers to excel. Do they apply similar pay-for-performance strategies to their children's education?

In many cases, yes.

"We don't want our kids to be average," says David Perdue, CEO of Iviation, an aviation networking site in Cordova, Tenn., who pays his second- and fourth-grade children for A's and B's and gives them bonuses for making the honor roll.

When John Pugh's children, now 30 and 28, were in high school, he wouldn't allow them to drive without a B average. He paid his daughter for good grades in chemistry and geometry, the classes he says she found to be the most challenging. "I kidded them that they were on commission," says Pugh, president of Cortech Engineering in Anaheim, Calif.

"Incentives are the tools we use to generate self-motivation," says Graham Barnes, CEO of Concerro, a San Diego company that helps manage shift work for nurses. He pays his children, ages 15, 11 and 8, to complete homework and rewards them with trips and computers for report cards with straight A's.

Are CEOs onto something? Is paying kids for good grades a secret of success? That's debatable, but it's no secret among educators and real estate agents that neighborhood schools with children who have the highest college-entrance test scores are those where the parents are well-educated and successful. And the most successful parents may be more likely to pay for grades.

More than half of the 74 CEOs, chairmen and presidents surveyed last month by USA TODAY said they think paying for grades is a good idea. When asked if they pay, or have paid, their own kids for grades, 33 of 66 said yes.

Contrast that with a Union Pacific Foundation survey this year of 450 high school principals in communities in 21 states that border the tracks of the nation's largest railroad. Asked if they thought students should be paid cash for earning good grades or scoring higher on tests, 15% said yes. And they were in poor communities where almost any experiment is worth a try, said Jim Hoffmann, executive director of The Principals' Partnership, a program the foundation funds.

Deeply felt opposition

The 45% of CEOs who are opposed to pay for grades are often adamant in their opposition. Paying for grades is a "train wreck waiting to happen," says Jeff Snipes, CEO of San Francisco leadership development firm Ninth House, and father of children ages 9, 6 and 2.

Despite the split in CEO opinion, as children settle in for the 2008-09 school year, business interests are lining up behind pay-for-grades initiatives at schools in Atlanta, Baltimore, New York and elsewhere. The most ambitious project, funded by the foundations of ExxonMobil, Bill Gates and Michael Dell, will pay students at 67 high schools in seven states $100 to $200 for scores on advanced-placement (AP) college-prep exams that are high enough to earn college credit. It also awards teachers for getting the right training to teach AP classes and pays them bonuses for each successful student.

It's an expansion of an experiment in Dallas, and program director Tom Luce of the National Math and Science Initiative says enrollment this fall in AP courses is up 80% from last year at those 67 schools. When Luce was told that many CEOs said children should not be paid to learn, he said it was the same as awarding merit scholarships, something CEOs would unanimously support, he says.

Pay for grades is but the latest point of friction between educators and business leaders, who often think schools can be fixed by introducing proven business strategies. Teachers have long argued that it's not so simple. For one thing, schools aren't at liberty to fire underachievers, whereas CEOs have little choice but to enforce meritocracy or risk going out of business. There aren't any corporate no-slacker-left-behind programs, and non-performers at some companies are culled so vigorously that students may be getting their best lessons about commerce by studying Darwin.

More art than science

Even so, most CEOs agree that employee motivation remains more of an art than science. They often don't know what stirs their employees to peak performance. An army of experts is trying to figure that out, and another army is considering how to compensate CEOs so that their actions align with what's best for the company.

Incentives influence and shape behavior, no doubt about that, says Barry Gerhart, management professor at the University of Wisconsin-Madison and author of Compensation.

Nina DiSesa, chairman of McCann Erickson in New York, agrees, and says she would be a concert pianist had her parents paid her to take lessons. "All the mushy e-mails and letters of praise aren't worth anything," DiSesa says. "Believe me, I have tried to keep people happy with love, but it only goes so far."

It's a complex recipe that also includes elements such as recognition and instilling a passion for the company's mission. Many CEOs wince at the idea of inducing a Pavlovian response for grades when education is not a job but its own reward.

Paul Domorski, CEO of Atlanta defense company EMS Technologies, recalls a study where lumberjacks were offered three times the going rate to chop down trees with the blunt end of the ax. "They all quit because they could not see the chips fly," said Domorski, who never needed an incentive to get to college by 16 and earn a master's degree by 21.

"Cash gets people to the office. Then it's up to management to structure tasks that are challenging, meaningful and rewarding on their own merits. The same could work in schools," says Jeff Ganek, father of children ages 26 and 20 and CEO of NeuStar in Sterling, Va.

Gerhart says there haven't been any good studies on pay for grades. But there are countless ones on employee motivation, and he has no doubt that cash would produce results in schools. The question, Gerhart says, is whether the extrinsic motivation would erode the intrinsic motivation: the joy of learning.

Ditch diggers in the hot sun would work harder for more money, says Frank Hanna, CEO of Hanna Capital in Atlanta. "Conversely, paying me to eat and breathe makes little difference, for I already believe that eating and breathing are in my best interest."

"Some students will be delighted that they get to do something they like and get paid for it," Gerhart says.

Infants don't need to be paid to smile, grasp and crawl, says Petlane CEO Lane Nemeth, who never paid her now-32-year-old daughter to learn, and she overcame dyslexia to graduate magna cum laude from Brandeis University. "Any school district that is actually contemplating paying for grades should be destroyed," she says.

Education should not have a "coin-operated" incentive plan, says Steve Blank, the retired founder of E.piphany and father of children ages 16 and 17. Teaching kids to say, "What are you going to pay me to learn?" doesn't have the ring of good strategy, he says.

Tell that to Scott Shute, CEO of Autonomy Etalk in Irving, Texas, and father of sons ages 16 and 18. He pays $50 for an A and $25 for a B and doubles the reward if it is put into savings. "It works wonderfully," he says.

'I was a lackluster student'

Luis Rivera, CEO of Wilmington, Del., software company Lyris, has children ages 3 and 6 months. They're too young for such incentives, but Rivera says his mother successfully employed pay for performance on him.

"I was a lackluster student," Rivera said in an e-mail that included an attached photo of a red Jeep Wrangler that he received after completing his last two years of high school. His grades jumped enough that he earned admission to the prestigious Claremont McKenna College.

Not only are CEOs evenly split on the subject, several say they find their opinions changing as they experiment with their own children. Eight CEOs in USA TODAY's survey who did not pay their now-grown children for grades, say they now think the idea has merit. Six who did pay in the past say they found it so ineffective that they now think it's a bad idea.

Larry Gaynor, CEO of The Nailco Group, a supplier of beauty salons in Farmington Hills, Mich., has three children, ages 27, 25 and 21. He offered each a car after their freshman year in college. Straight A's earned a car worth up to $25,000. A 3.0 GPA netted a $20,000 car. The kids had their own aspirations. At the end of the experiment, Gaynor says, his children have performed differently, and his offers of cars had nothing to do with the outcomes.

Swayne Hill, CEO of Cloud9 Analytics in San Mateo, Calif., forbade his children, now 17 and 19, from getting a job or a driver's license before high school graduation. But he offered "generous" payment for A's, B's and teacher comments such as "strong effort" that could make a report card worth $500. His children now tell him the cash had no influence, although he remembers them being eager to collect when they brought home their report cards.

NeuStar CEO Ganek and his wife, Lynne, an adjunct education professor at American University, recently awarded a grant of less than $1,000 to Tom Bishop, an American University student teacher at Ballou High School in Washington, D.C. Bishop used the money to give coupons to students that could be exchanged for snacks and prizes.

Bishop reported that the students paid more attention initially and remained respectful after a teacher-student relationship was forged. Most of his students were not intrinsically motivated, and the rewards helped at least minimize chaotic behavior, Bishop said.

Merits of experimentation

Some CEOs are on the fence. Michael Berman of Stuart Rental in Milpitas, Calif., and father of children ages 7, 5 and 3, says, "Education and achievement of our youth is so important that nothing should be taken off the table."

More experimentation is good, Berman says, because students will respond differently and to different kinds of motivation, just as employees do.

Take Catherine Cook, CEO of MyYearbook in New Hope, Pa., a social-networking site for teens named in July by Hitwise as the third-fastest-growing social-network site in the country. Cook is 18 and a freshman at Georgetown University. She says her parents never paid her for grades, but if she scored high on a test, her teachers would often excuse her from doing homework.

"At the end of the year, they'd give us fruit snacks, Fruit Roll-Ups and Fruit by the Foot," Cook said.

TELL US: Do you pay your children for good grades? Why or why not?