Does running schools like a business actually argue for keeping LIFO? -- part I, the nature of layoffs

Last In First Out (LIFO) has become one of the causes célèbres of the educational reform movement, a handy, easy to enunciate little acronym that beautifully captures what's wrong with our current system.

But if we really wanted to run schools like a business, just how wrong would LIFO be? This may seem like a strange question. After all, the reform movement is often portrayed as the domain of show-me-the-data empiricists and clear-headed economists. Surely anything they suggest is going to be based on sound business principals.

Here's how one of those economists puts it:

An economist myself, let me try to explain. Economists tend to think like well-meaning business people. They focus more on bottom-line results than processes and pedagogy, care more about preparing students for the workplace than the ballot box or art museum, and worry more about U.S. economic competitiveness. Economists also focus on the role financial incentives play in organizations, more so than the other myriad factors affecting human behavior. From this perspective, if we can get rid of ineffective teachers and provide financial incentives for the remainder to improve, then students will have higher test scores, yielding more productive workers and a more competitive U.S. economy.

The trouble is, having been a well-meaning business person myself (more recently than I was a teacher), and having built hiring and retention models for a couple of big companies (let's just say you've heard of them and leave it at that), most of the reformers don't seem to approaching this the way a business would, at least not a well-run business.

LIFO is a compromise, but not always an unhappy one. Unions would prefer no lay-offs at all. Companies would prefer no restrictions at all on who they let go. As a solution to this conflict, LIFO isn't perfect but it does offer some positives for both parties.

Though employers complain loudly about LIFO, they often end up resorting to something close to a de facto form of the practice when left to their own devices. Established employees have more experience, training and institutional knowledge. They tend to be more stable and reliable, more invested in the job and in the community, much less likely to make a dash for the door when the economy turns around and you find yourself understaffed. Removing them can disruptive and can lower morale.

(It's important not to confuse headcount reduction, which we're talking about here, with cleaning out the deadwood, where how long a person has been with the company should not be a factor. Even there, though, companies will often go to alarming lengths to avoid dismissing an established employee, even one who has cost the company massive amounts of money -- buy me a beer sometime and I'll tell you the examples that don't make it to the blog.)

If you don't have a transparent and reliable performance metric like sales, the consequences of deviating from LIFO can be even worse. Your best qualified and most ambitious employees tend to jump ship (Dilbert's 'brightsizing' writ large). Between the people who are definitely leaving and the uncertainty over who will be let go, a kind of mass learned helplessness can take take hold. As a manager this is not something you want to deal with.

For employees, the advantages are more obvious. LIFO offers a deferred compensation package where the compensation is security. For most of us, the demand for security increases as we age. We start families, sign mortgages, start getting serious about saving for retirement. Viewed in this light, LIFO starts to look like a case of markets doing a remarkably good job of allocation. Employees get security when they value it most and in exchange are willing to work for lower wages. (looks kind of like a win for Adam Smith)

There is, of course, a more immediate need for LIFO in many cases. It is the most effective means of preventing employers from using lay-offs as cover for improper dismissal. The classic example here is punishing employees for their role in a union. This was the issue that so offended Jonathan Chait when the victims were journalists.

Chait's position on teachers was notably different, which is interesting because not only is the potential for the abuse that Chait was implying also a concern for teachers; it is accompanied by other, even greater concerns caused by the nature of teaching and the org charts of schools.

Teachers have three primary roles: instruction; counselling; and evaluation. Because we have a complex, multidimensional, badly defined target variable and some of the nastiest confounded data you'll ever see, every method suggested for measure teacher effectiveness has been either overly-complicated, opaque, unreliable or some combination of the above and all seem to have the potential for gaming by unscrupulous administrators.

An experienced and highly respected superintendent I knew used to tell new teachers, "never trust a superintendent," and while all but one or two of the administrators I have dealt with have been dedicated professionals, I understand where he was coming from. The nastiest politics I have ever seen have been at school board meetings. That's the world administrators have to survive in. If they're successful they can be looking at a plum job in a large (but not huge) district making 170K. If they're inept they can find themselves stuck as assistant principals making little more than they made as teachers.

Put another way, it is entirely possible for a few angry parents and a couple of political missteps to cost a principal fifty thousand or more (possibly quite a bit more). As mentioned before, evaluation is part of a teacher's job and a tough grader will generate more than a few angry parents. This is one of the reasons we have tenure.

Though it's rare, I have seen principals pressure teachers to change the grades of students with influential parents. It is also rare but not unheard of for principals to shift difficult students and unpleasant classes away from allies on the faculty.

Now imagine a system where the principal can arrange, with relatively little effort and no fear of reprisals, for certain teachers to be safe from lay-offs and other teachers to be first in line. I'm sure most principals wouldn't use this unchecked power to put tough graders, independent voices, and strong union supporters in the expendable pile. There would, however, be abuses and the administrators who commit these abuses will have a tremendous advantage in the competitive landscape.

Worse yet, every decision that administrators make will be met with suspicion. Every time a teacher gets a larger than average class with more than the average number of kids with behavior problems, colleagues will wonder if the assignment had something to do with flunking students who blow off their term papers, or pushing for a tough stance in contract negotiation, or just voicing too many concerns in faculty meetings.

Businesses go to great lengths to avoid the atmosphere of distrust and labor/management tension I've just described. For all their talk of looking to business for ideas, advocates of the reform movement don't seem to give these issues much thought.

Next, the different kinds of lay-offs and their implications