The impact of pay satisfaction and school achievement on high school principals’ turnover intentions

Abstract

In recent years, a principal supply shortage crisis has emerged in the USA. This problem has been exacerbated by an increase in principal departures, which has been found to be negatively related to school outcomes. While research exists on several determinants of principal turnover, any examination of the relationship between principals’ affective reaction to pay relative to their intent to leave their position at a particular school is missing from the literature. This research seeks to fill this void by examining the association between California (USA) high school principals’ pay satisfaction and turnover intentions (n=156). The importance of potential referent sources (i.e., teachers within the school districts, other high school principals within the school district, and other high school principals in different school districts) for pay satisfaction and the relationship between achievement and turnover intentions were also examined. This study uses a two-stage structural equation modelling approach and finds evidence to suggest that high school principals’ pay satisfaction is influenced by the salaries of comparative peers and is negatively associated with principals’ intention to turnover. Achievement was not found to be related to turnover intentions. Policy implications and future research recommendations are discussed.

Keywords

Pay satisfaction turnover intentions principals turnover pay referent sources

Introduction

In recent years, a principal supply shortage crisis has emerged in the USA and numerous European countries due to the increasing complexity of the job and unattractiveness of the position to potential candidates (Gilman and Lanman, 2001; Krüger et al., 2005). This problem has been exacerbated by an increase in the frequency of principal departures from their positions (Beteille et al., 2012; Papa, 2007). Frequent principal turnover is troubling because the estimated time for substantive school reform requires about five to seven years (Fullan, 2001; Muscall and Leithwood, 2010) and repeated leadership turnover has been found to be negatively associated with student performance (Beteille et al., 2012). Consequently, principal turnover is gradually becoming a more important topic for scholarly research (Fink and Brayman, 2006).

While research exists on several determinants of principal turnover, including organizational factors such as school culture and personal trait factors such as leadership style misalignment with staff expectations (Krüger et al., 2005), missing from the literature is any examination of the relationship between how principals feel about their pay relative to their desire to leave their school position. This type of research has been conducted on teachers (Currall et al., 2005) and employees in other fields (DeConink and Bachmann, 2007; Vandenberghe and Tremblay, 2008), but has been noticeably absent for school leaders. By focusing on principals’ feelings about their pay and turnover intentions, instead of solely on principal salaries and turnover, more information can be gained to help address the morale concerns of principals before they leave the institution.

Purpose of the study

The purpose of this study is to help fill the void in the literature by examining whether a relationship exists between principals’ pay satisfaction and their turnover intentions; pay satisfaction is not established in a vacuum but rather is theorized to be influenced by comparative peers (Young et al., 2009). In addition, it has been argued that lower school achievement creates an unpleasant working condition for principals, which has also been found to be associated with their increased turnover (Partlow, 2007). As a result, this study also examines the influence of comparative peers on principals’ pay satisfaction and school achievement on their turnover intentions. Before delving into the specifics of the study, past literature is reviewed to provide context, beginning with a discussion on the importance of principals for school outcomes.

Principals matter

There exists a consensus regarding the significant impacts school principals have on student development and outcomes (Loeb et al., 2010). Research on the topic suggests that principals do matter for student performance, but that their effects are indirect because they are “mostly mediated through other aspects of school life that influence what and how teachers teach in classrooms” (Supovitz et al., 2010: 32). Empirical studies of principal influence on student performance across numerous studies bolster support for the theory that principals do matter for student learning.

For instance, Waters et al. (2003) reviewed 70 empirical studies on the relationship of principal leadership on student achievement and found an average correlation of 0.25. In their review of a series of studies that have been conducted over a 30-year period, they identified 21 leadership responsibilities related to student achievement. Some of the activities that they identified included recognizing and rewarding individual accomplishments, serving as an advocate and spokesperson for the school to all stakeholders, involving teachers in the design and implementation of important decisions and policies, and willingness to actively challenge the status quo.

Bryk and colleagues while exploring the effects of the decentralization of the Chicago public school system compared 100 schools that improved academically over a period of seven years to 100 that did not. They found five essential elements that supported improvement and identified “school leadership as the catalyst” (Bryk et al., 2010: 126) in developing the other four essential supports. Overall, they emphasized the “centrality of principal leadership in initiating and maintaining the organisational changes necessary to improve student learning” by suggesting that effective leadership rests on “the principal’s strategic focus on improving the technical core of teaching and learning” and that this rests on the continued efforts to “build trusting relationships across the school community” (Bryk et al., 2010: 204).

However, maintaining organizational change and continued efforts to build trust can suffer tremendous setbacks if principals leave before any improvements can be self-sustaining. Some scholars have noted that it takes approximately five to seven years for principals to build a culture of trust (Mascall and Leithwood, 2010). In addition, principal departures may result in an abrupt break in continuity of school-enhancing initiatives and potentially result in the inability of the school to sustain any meaningful changes initiated by the departed principal (Fink and Brayman, 2006). New replacement principals may have a different focus than their predecessors and may shift the school’s priorities (Corbett et al., 1984) before old initiatives have had the necessary amount of time to cultivate the fruits of past labour (Fullan, 2001). Consequently, principal turnover is an area that warrants further attention.

Principal turnover

One of the ways in which principals can indirectly impact school outcomes is via their turnover. For instance, Beteille et al. (2012) found that increasing frequencies of principal turnover seems to have a negative impact on school achievement gains and is associated with increasing frequencies of teacher turnover, and those impacts are more pronounced for low achieving and high poverty schools. The authors also argue that frequent principal turnover may create inconsistency in schools, thereby negatively affecting any school improvement efforts.

Similarly, Mascall and Leithwood (2010) conducted a mixed method analysis to examine the impact of principal turnover on schools and ways to mitigate any potential negative effects. Like Beteille et al. (2012), they also found that frequent principal turnover negatively impacts schools, particularly their culture. This is especially critical because school culture (i.e., shared norms and values) has been described as a vehicle by which principal’s impact student achievement (Macneil et al., 2007) and thus an “unhealthy” school culture can produce an environment that cultivates lower student success.

Achievement on turnover

Mascall and Leithwood (2010) remind us that while there is much research to support the argument that repeated principal turnover negatively impacts student achievement, low student achievement may also lead to principal turnover. One reason for this may be because principals from low performing schools are involuntarily replaced by the school district in order to employ principals who can help improve school performance. Although this would likely represent a positive occurrence, involuntary terminations usually do not account for most principal departures (Beteille et al., 2012). Alternatively, another reason for low student achievement leading to increased principal turnover may be due to principals voluntarily leaving low performing schools because these schools represent a negative working condition for them.

Beteille et al. (2012) and Partlow’s (2007) finding of the increased frequency of principal turnover at failing schools are examples of the aforementioned phenomenon. In their study, they found that principals preferred to work in higher achieving schools and most of those who transferred to another school chose to transfer to schools with less low achieving students. The preference of principals to work at higher performing schools than their own has been found in other work as well (Loeb et al., 2010). These findings align with past research that shows that a school’s achievement status influences whether individuals wished to be employed as principals for the school. For instance, results from Pounder and Merill (2001) demonstrated strong evidence that potential principal candidates are not interested in employment at low-achieving schools. Jointly, these findings represent a severe principal attraction and employment problem at low achieving schools, which seems to result in higher turnover rates and consequently even further lower school achievement.

Turnover intentions

While past studies have examined the topic of principal turnover (Beteille et al., 2012; Miller, 2013), these analyses have occurred after the principal has already left the school; it seems important to also discover what may impact principals’ intention to leave, before departure occurs. Because of the documented harmful effects of frequent principal turnover, efforts should be made to gather information that predicts principals’ turnover intention in order to assist with the prevention of undesired exits from schools by principals.

Examining turnover intentions is important also because research focused purely on turnover data, as commonly defined by whether the principal is still present at a school the following year, provides no information as to the reasons for principal turnover. Principals may leave for reasons such as promotions to higher levels of leadership, or they may have been removed due to substandard performance (Partlow, 2007). Indeed, one limitation noted by past analyses on the impacts of principal turnover (Beteille et al., 2012; Partlow, 2007) is that they were unable to determine if the turnovers were voluntary or involuntary. Turnover intention, on the other hand, provides a bit more information because at the very least, the degree of the principals’ desire to voluntarily leave is known. Furthermore, past findings have suggested that turnover intentions are a good predictor of actual turnover (Lee and Mowday, 1978). Because of the importance of examining the potential determinants of principal turnover intentions, this study seeks evidence to examine that relationship.

Of the potential factors that influence a principal’s decision to leave a school, past research has suggested that pay is a promising topic that deserves further attention. For instance, Baker et al.(2010) sought to evaluate the school and principal factors that impacted Missouri principals’ exit behaviours. They found that relative salary (i.e., principal’s pay relative to peers in the same labour market) was found to be associated with principal retention. The choice to examine relative salary as opposed to just salary amounts is crucial because this takes into consideration the fact that it is unlikely the exact dollar amount that matters to principals and influences their exiting decisions, but rather how their pay compares to relevant others (e.g., their peers). Relative pay may also serve as a good predictor for principals’ affective reactions to pay, because presumably principals who discover that they are earning substantially less than their peers may feel less satisfied with their pay, regardless of the absolute pay amount. This concept of feelings towards pay has been studied under the construct of pay satisfaction.

Pay satisfaction

Due to the cost outlay for compensation by an organization “and its ability to influence individual behaviour in organizations…employee compensation satisfaction is an important area of study” (Judge, 1992). Its importance has further resulted in increased attention on the construct of pay satisfaction as an “intensive area of inquiry” (Currall et al., 2005: 614). Research on pay satisfaction has evolved from “development of measures of overall pay satisfaction to a more comprehensive measure based on the assumption that it is a multi-dimensional construct” (Judge, 1993: 3) where workers have specific attitudes about different dimensions of their pay (Heneman, 1985). These dimensions include satisfaction with: (a) pay level; (b) pay raises; (c) pay benefits; and (d) pay structure/administration of the entire pay system.

Referent sources: Determinants of pay satisfaction

Young et al. (2009) shed more light on the construct of pay satisfaction when they noted the important role that comparative peers (i.e., referent sources) hold in its determination. For instance, in their study of the pay satisfaction of elementary school principals in California, the authors examined “teachers within [the principal’s] school district, elementary principals within [the principal’s] school district, and elementary principals in other school districts” (Young et al., 2009: 266) as potential referent sources that elementary school principals might use for the purpose of pay comparisons. These positions were selected as referent peers because of the likelihood that the elementary school principals would have information regarding their pay. In their study, Young and his colleagues found that the pay satisfaction of elementary school principals were more related to referent sources within rather than external to their districts. The authors suggested that their findings support the argument that relative pay is more important than actual pay amount when it comes to determining pay satisfaction, because they did not find a relationship between actual pay amount and pay satisfaction.

Turnover intentions and pay satisfaction

To better understand the relationship between pay satisfaction and turnover the business literature has relied on Adams’ (1965) equity theory; the theory suggests that employees perceive fairness based on what they and referent others (e.g., another employee with a similar job) put into their work and what is received as a result (e.g., pay). Workers perceive unfairness (i.e., distributive injustice) when they put in the same level of input as referent others but receive less pay (DeConink and Bachmann, 2007), and this can result in lower levels of pay satisfaction, which in turn may lead to employee turnover or influence their intentions to do so. Hoppock (1935) found evidence of this when he reported that dissatisfaction with wages was the most important reason for voluntarily resignation from a broad range of occupations. Pay satisfaction was also found to be related to turnover intentions (Motowidlow, 1983).

More recent studies have continued to find this relationship. For instance, Tellaeb et al. (2005) examined the impact of pay satisfaction on turnover for managers and part-time MBA students and found support that pay satisfaction predicted turnover. DeConink and Bachmann (2007) used structural equation modelling and found that marketing managers who have more positive perceptions of the fairness of their pay allocations demonstrated more commitment to their company and this mitigated their willingness to leave. Similarly, Vandenberghe and Tremblay (2008) also utilized structural equation modelling and found that pay satisfaction was predictive of turnover intentions for a sample of medical representatives from pharmaceutical companies and another sample of respondents from multiple organizations.

While these findings appear to be consistent across a variety of sectors, they may differ within the unique context of education. For instance, Scafidi et al. (2006) find that teachers do not leave the profession for higher paying jobs in alternative occupations. They interpret this as teachers being less sensitive to salary relative to those in other professions when it comes to entering or leaving their line of work. One reason for this is because the benefits associated with education employment (e.g., “family friendly” hours and vacation time and intrinsic awards such as preparing students of the future) often are unavailable elsewhere. In addition, many other factors unique to education, such as its resource-constrained environment relative to for-profit organizations and the use of salary schedules that limit pay variation between employees within a classification in an organization, may result in differing relationships between pay and turnover intentions for educators.

In the field of higher education, Johnsrud and Rosser (1997) found that administrators’ perceptions influenced their intention to turnover. Likewise, in the K–12 sector, Currall et al. (2005) found that teacher pay satisfaction was negatively related to teacher turnover intentions. Building on the literature, this study seeks to examine whether the relationship between pay satisfaction and turnover intentions holds for principals, especially because “[t]he question of how to predict turnover of the principal remains an unknown” (Partlow, 2007: 60) and “little is known about factors or conditions present within schools and districts which may contribute to high or low principal turnover” (Partlow, 2007: 61). This study extends past research to question whether principals place importance on specific positions for referent others when determining the equity of their pay and whether these comparisons are important for determining their pay satisfaction that subsequently impacts their turnover intentions.

As mentioned, some researchers (DeAngelis and White, 2011; Partlow, 2007) have found that principals are more likely to leave lower performing schools. These findings are particularly worrisome given related findings regarding the potential negative influence of frequent turnover on subsequent school outcomes. For instance, Weinstein et al. (2009) examined data for high schools in New York City and found that repeated changes in principal leadership have a negative influence on student performance. Beteille et al. (2012) reported similar findings in a large urban district. These findings paint a picture of a vicious cycle that starts with principals leaving schools because of the accountability pressures associated with lower achievement scores, and the perpetuation of negative school performance as a consequence of those departures.

If increasing principals’ pay satisfaction can help with preventing repeated principal turnover then perhaps the cycle can be broken. In light of the aforementioned findings concerning: (a) the relationship between education employees’ pay satisfaction and turnover intentions (Currall et al., 2005); (b) the predictive ability of turnover intentions on turnover (Lee and Mowday, 1978); and (c) the relationship between principal turnover with school outcomes (Beteille et al., 2012), this study seeks to examine the relationship between pay satisfaction and principal turnover intentions.

Research hypotheses

A structural equation model was used to test several hypotheses in this study. This same methodology has been used by others both in the business and education literature to examine the constructs explored in this present work (Currall et al., 2005; DeConink and Bachmann, 2007; Vandenberghe and Tremblay, 2008; Young et al., 2009). Due to the theory of different pay satisfaction dimensions (Heneman, 1985), initial tests were performed for the measurement model:

Hypothesis 1: The four dimensions of pay satisfactions (i.e., pay level, pay raises, pay benefit, and pay structure/administration) will load on an overall factor of pay satisfaction for high school.

Because “referent groups vary [by] type of focal position” (Young et al., 2009: 265), this study seeks to examine possible significant others for a different employment position (i.e., high school principals) than previously studied and their influences on pay satisfaction, using similar potential referent sources to those examined by Young et al. (2009):

Hypothesis 2: The path coefficients between pay satisfaction and the potential referent sources (i.e., teachers within the school districts, other high school principals within the school district, and other high school principals in different school districts) will be significant.

In addition, based on past research suggesting a relationship between achievement and principal turnovers (Partlow, 2007), a test for the structural relationship between school achievement and principal turnover intentions was also performed:

Hypothesis 3: Student achievement will be related to principal turnover intentions.

Finally, because pay satisfaction has been found to be related to turnover intentions for teachers (Curall et al., 2005), a test was also performed to examine that relationship for principals. The hypothesis for this relationship is:

Hypothesis 4: Principal pay satisfaction will be related to principal turnover intentions.

Methods

All high school principals employed by California (USA) public school districts serve as the population for this study. From a compensation perspective, it is appropriate to hold the focal position constant because “pay amount varies by focal position” (Young et al., 2009: 269). By focusing on only high school principals, this source of variation is addressed. Also, only principals from California were sampled in this study, effectively holding the state constant. This was done for two main reasons. First, states in America vary by their education funding formulas and holding the state constant holds the state funding formula constant as well. This latter point is important because principals’ feelings about their pay may differ depending on the types of financial allocations that are made available to their districts by the state. For example, principals may expect to be compensated at a higher rate if they know that the state has fewer restrictions placed on the use of different types of state funds for the purposes of salary increases. Secondly, school performance scores comprised of aggregated student standardized state test scores were selected as one of the main predictor variables. Specifically, California’s Academic Performance Index (API) score was used. The API ranges from 200 to 1,000, and California has set a statewide API goal of 800 for all their public schools (California Department of Education, 2011). Given that tests are unique to a state, holding the state constant holds constant the tests that comprise the school performance scores.

Control variables

Due to their potential influences on principals’ turnover intentions, controls for the school’s size, percentage of ethnic minority students (i.e., non-Caucasian), students from lower socio-economic (SES) backgrounds, and English Language Learners (ELL) were accounted for in the model.

School size was defined in this study as the school’s total student count enrolment and was used as a control for turnover intentions. Partlow (2007) noted that many principals are often frustrated by the amount of the time they must spend disciplining students, and principals from larger schools spend more time disciplining students than those from smaller schools. He argues that school size may be more related to high school principals’ turnover intentions because of the increased severity of the disciplinary problems involved with high school students (Heaviside et al., 1998). While it can be argued that principals at larger schools are likely to have more help (e.g., from assistant principals) dealing with student discipline, past research has suggested that principals are nonetheless more likely to turnover as the size of the student enrolment increases (Papa, 2004).

Schools with more students from lower SES backgrounds, of racial or cultural minority, and/or designated as ELL, served as additional controls for turnover intentions. This was done because past research has suggested that principal turnovers occur with increasing frequency in schools that have more students coming from impoverished backgrounds (Partlow and Ridenour, 2008) and identified as minority and/or ELL students (Gates et al., 2006; Papa, 2007). In this study, school SES was defined as the school’s percentage of students in the federal free/reduced lunch programme, with higher percentages of students in the programme indicating lower SES. The number of minority and ELL students was identified by the schools.

In addition to the school demographic controls, principals’ experience was used as a control variable for pay satisfaction and turnover intention. Because inexperienced principals may be more satisfied with their pay than experienced principals (as their market worth is likely less than those of more experienced principals, all else being equal), principals’ experience was included as a control for pay satisfaction. Principals’ experience was used as a control for principal turnover intentions, based on literature that suggests the increased likelihood of new principals leaving the profession as compared to veteran ones (Elfers and Plecki, 2006; Fuller et al., 2008; Gates et al., 2006).

Procedures

A comprehensive list of all principals in California was obtained from the California Department of Education (CDE). Each principal was assigned a number and a random generator helped identify a random sample of California high school principals who were subsequently approached for participation in this study via e-mail communications. More information regarding the details of the communication message is provided in the “Data Sources” section of this paper. Requirements for using a structural equation modelling method were taken into consideration as part of the sampling process. Specifically, the model’s identification status was examined prior to sampling participants and was determined to be acceptable given that the model’s degree of freedom was greater than zero (Kline, 2011).

Similarly, the sample size was also determined a priori, by meeting statistical power requirements (α=0.05, power =0.80; Muthén and Muthén, 2002; Young et al., 2009).

A two-step procedure was utilized to determine the power required for the model. The first step included the initiation of the Monte Carlo Method, using the Mplus program, as suggested by Muthén and Muthén (2002). This method generates population data with hypothesized “best estimate” parameter values based on past research, providing “the proportion of replications for which the null hypothesis that a parameter is equal to zero is rejected at the 0.05 level of significance, two-tailed test, with a critical value of 1.96” (Schumacker and Lomax, 2004: 114).

For example, the parameter values for the pay satisfaction construct on its indicators (satisfaction with pay level, satisfaction with benefits, satisfaction with pay structure, and satisfaction with pay raise) were all set at 0.7 (hypothesis 1). This is a conservative estimate based on the findings that indicated the smallest coefficient for the pay satisfaction dimension loadings was at least 0.7 (Young et al., 2010). The variance of the factor was fixed at the default value of “1.0” to scale the variable.

The effect of API on turnover was set at .3 (hypothesis 3) and the effect of pay satisfaction on principal turnover intention was set at .4 (hypothesis 4). These values were guided by findings from past research (Currall, et. al., 2005; Partlow, 2007). Using author specified best estimate parameter values with 1,000 repetitions, the Mplus Monte Carlo output indicates that a sample size of 126 will be able to detect the model’s critical effects of interest. In other words, power is over 0.80 for these effects. The achieved sample size for this study is 156 and thus meets the necessary power requirements.

Data sources

Like similar studies before (Currall et al., 2005; Young et al., 2010), this study’s methodological approach employs both archival data and survey data. From the archival aspect, state databases maintained by the CDE were used to obtain information regarding the control and predictor variables. Information regarding the independent, respondent demographic and dependent variable were obtained with survey methodology. Specifically, principals were sent a letter of introduction that introduced and described the research study, promised confidentiality, requested for participation and offered a mechanism for feedback to those who are interested. In addition, the letter was accompanied by: (a) a general survey that precedes the pay satisfaction questionnaire (PSQ), used to inquire about information regarding a respondent’s sex, age, number of contractual work days and experience; (b) a principal turnover intention scale; (c) survey items pertaining to referent sources; and (d) the PSQ.

In addition, this study follows the lead of Young et al. (2009) by modifying an item from the Minnesota Satisfaction Questionnaire [MSQ] into a new scale that examines pay satisfaction relative to different referent sources. Whereas the items were originally designed to compare individuals to general organizational workers, the scale was altered to fit the context of this study’s focal position (i.e., high school principals) within the school setting. Specifically, this new scale measures how satisfied the respondent is with his or her pay when compared to the pay of comparative peers in the education sector (i.e., other principals, teachers within the district, and principals in other districts) via a 1 to 5 scale, with “5” representing the most satisfied.

Instrument: pay satisfaction questionnaire

Pay satisfaction information was collected via the usage of Heneman and Schwab’s (1985) PSQ. This survey was chosen because it is a widely used survey for measuring the construct of pay satisfaction and has been validated by numerous studies (e.g., DeConinck et al., 1996; Heneman and Schwab, 1985). Indeed, according to Gieter et al. , “[t]he Pay Satisfaction Questionnaire is the main instrument one relies on to measure pay satisfaction” (Gieter et al., 2009: 844).

Validity of the survey instrument

Heneman and Schwab (1985) developed the PSQ that was purported to examine separate hypothesized dimensions of pay satisfaction. Response categories for the questionnaire items were formatted via a 5-point Likert-type scale, where “1” represented very dissatisfied and “5” represented very satisfied. Confirmatory factor analysis and exploratory principal components analysis conducted for the instrument on a sample of 1,980 nurses, revealed support for the dimensional nature of the PSQ (Heneman and Schwab, 1985). Similarly, DeConinck et al. utilized confirmatory factor analyses and found that the items from the “PSQ loaded on the hypothesized dimensions, and the overall fit supported the four dimensional model’ (DeConinck et al., 1996: 33).

Reliability

In terms of reliability, Fields indicates that “[c]oefficient alpha for the composite measure of pay satisfaction ranged from 0.77 to 0.88” (Fields, 2002: 33). Likewise, in this study, reliability coefficients were computed for the pay satisfaction construct. Items belonging to particular dimensions of the pay satisfaction scale were combined to form a composite score for each dimension (i.e., these are the indicators). A Cronbach’s alpha was conducted to determine the internal consistency of the composite score indicators (i.e., pay level, pay structure, pay benefits, and pay raises) on the pay satisfaction factor. Results suggest that the reliability of the construct is acceptable (α=0.82). This finding is aligned with prior research that has demonstrated acceptable reliability for the scale (Fields, 2002).

In addition to the PSQ, items from the principal turnover scale were used to compute a single turnover intention score for analysis in the model. A Cronbach’s alpha was conducted to determine the degree of internal consistency among the items. Results indicated that the items for the turnover intention scale were also internally consistent (α=0.80).

Principal and school characteristics

Of the 156 respondents, 107 were male and 49 were female. The higher number of male high school principals relative to females is consistent with past findings of more males holding secondary principalship than females (Gates et al., 2003). Further descriptive information for the sample of principals and their school characteristics are provided in Table 1. The ranges and standard deviations suggest ample variation in values for each of the variables. For example, the data included principal respondents from schools with very low numbers of financially impoverished students (e.g., zero) to very high numbers of them (e.g., 100% of the school). These variations represent diversity among the sample of principals and their schools, and helps with generalizability of results.

Table 1.

Descriptive statistics for the sample of principals and characteristics of their schools (n =156).

	Minimum	Maximum	Mean	Standard deviation
Principal characteristics
Age	28	66	49.74	8.12
Years of experience	1	28	7.87	5.98
Number of service days	109	261	220.76	14.13
Turnover intention	1	5	1.91	1.07
Satisfaction with benefits	1	5	3.4	1.2
Satisfaction with pay level	1	5	3.18	1.05
Satisfaction with pay structure	1	5	3.25	.91
Satisfaction with pay raise	1	5	2.86	.89
School characteristics
Percentage of English language Learners	0	85	11	12
Percentage of students on free and reduced lunch	0	100	45	26
Percentage of minority students	9	100	62	25
Enrolment	23	3300	1433.22	910.64
Academic Performance Index (school performance)	532	937	779.61	82.46

Results

In this study, a two-stage structural equation modelling approach (Anderson and Gerbring, 1988) was used, by examining first the measurement model related to facets of pay satisfaction (hypothesis 1) and subsequently testing the overall structural models (hypotheses 2 to 4).

Results were reported with standardized coefficients and Full Information Maximum Likelihood (FIML) was used to address missing data; while there are multiple ways to address missing data, “FIML is the recommended parameter estimation method when data are missing in structural equation model analyses” (Schumacker and Lomax, 2004: 43). FIML requires that data are either Missing Completely at Random (MCAR) or Missing at Random (MAR); MCAR is the more stringent of the two patterns of missingness and refers to missing data that do not depend on the values for any of the variables, whereas MAR refers to missing data from a variable that is unrelated to the value of that variable itself, after controlling for its relationship with values of other variables (Rubin, 1976).

To investigate whether the missing data in this study are consistent with either MCAR or MAR, visual inspections were performed for patterns of missing data to examine systematic patterns that could explain why the data were not reported. The dataset contained 147 observations with complete data and three variables with missing data (i.e., the referent source questions for teachers and principal in the same school districts and API). Little’s (1998) MCAR test was used to further examine the plausibility of the assumptions for the missing data patterns. Results yielded a non-significant Chi-square, χ² (111, n =156) = 133.43, ns, providing support that the data appears to be missing at random. Finally, it is worth noting that FIML yields: (a) consistent solutions when data are MCAR; (b) consistent and efficient estimates when data are MAR; and (c) provides less biased results than other methods of handling missing data even when data are not missing at random (Schumacker and Lomax, 2004). For all of these reasons, analysis proceeded with FIML.

Moreover, decisions regarding pay are often made at the district level (Currall et al., 2005) and this may influence principal pay satisfaction. For example, a district that has made salary reductions in the previous year may have principals who are less satisfied than a district that has not. This may result in an increased likelihood that principals will want to leave the school. Because of district-specific impacts such as these, standard errors were clustered at that level to address similar compensation practices or influences within each district. By doing this, resulting estimates obtained are more conservative. In addition, variables with larger values (i.e., the API and enrolment variables) were rescaled by dividing them by 1,000. This was done so they would be closer in size to the other variables. The outcome is a smoother analysis that does not make any substantive changes to the results.

Test of measurement model (Hypothesis 1)

A confirmatory factor analysis was used to assess whether the four dimensions of pay satisfaction loaded onto the higher order construct of pay satisfaction (hypothesis 1) and found support that they did. However, while pay levels (β=0.83, p<0.001), pay structure (β =0.90, b<0.001), and pay raises (β =0.81, b<0.001) loaded relatively strongly on the factor, the association for pay benefits (β =0.46, p<0.001) was weaker. This may be because benefits are: (1) substantively somewhat different than salary as there is less discretion regarding what it can be used for; and (2) often similar for most employees within a district and therefore may lack the discriminatory impact to contribute, as strongly as the other dimensions, to individual satisfaction with pay. Nonetheless, findings from all indicators supported the use of the construct. The Chi-square value for the measurement model supports the theory that it is consistent with the data, χ² (2) = 1.76, p=0.41 (Kline, 2011).

Test of structural model (Hypotheses 2–4)

Because the measurement model is determined to be adequate, fit statistics were obtained for the overall model. The model Chi-square value for this study suggests that we should not rule out this model as one that can be rejected, χ² (41) = 97.49, p<0.001. However, other fit indices suggest that a good/close fit cannot be ruled out as well. Specifically, the Comparative Fit Index (CFI) =0.89 and Tucker Lewis Index (TLI) =0.87. An appropriate model fit would yield a TLI/CFI value ≥0.95 (Browne and Cudeck, 1993).

All referent sources were found to be significantly associated with principals’ pay satisfaction (hypothesis 2), which indicates that principals found all three referent sources important for the purposes of their pay comparisons. Specifically, pay satisfaction was found to be predicted by the salaries of other teachers within a principal’s district (β=0.22, p<0.01), other principals within a principal’s district (β=0.29, p<0.001), and most importantly, by the salaries of principals in other districts (β=0.50, p<0.001). Experience was not found to be related to pay satisfaction.

Examination of other parts of the structural model indicates that achievement was not a significant predictor of principals’ turnover intention (hypothesis 3) and that only pay satisfaction was (hypothesis 4). Specifically, principals who are more satisfied with their pay are less likely to want to resign from their job (β= −0.49, p<0.001). This finding is important because it suggests that pay matters to principals. In addition, achievement was not found to be associated with pay satisfaction. The graphical representation of the structural equation model can be seen in Figure 1.

Figure 1.

Structural model examining the impact of pay satisfaction on turnover intentions (***p≤0.001; **p≤0.01; *p≤0.05). Note: coefficients for non-significant control variables are omitted. Standardized coefficients are displayed.

Conclusions

Results from this study revealed findings that are both consistent with outcomes of past research and advance current knowledge. For instance, a negative relationship was found between principals’ pay satisfaction and intent to turnover. That is, principals who were less satisfied with their pay were more likely to want to quit their job, and this has implications regarding the importance of compensation for the retention of high school principals. This finding is especially important given the prevalent nature of principal turnovers (especially among high school principals), the increase of teacher turnover in the presence of principal turnover (Fuller et al., 2008) and the resulting negative influences of such staff instability for the students (Ronfeldt et al., 2013).

There have been long debates regarding whether money is the proper motivator for educators. For instance, it has been argued that principals may instead be motivated by non-pay related factors. One argument is that educators come into the profession not for monetary gain, but rather to make a difference in the lives of students. Alternatively, past research has suggested that teachers prefer to live geographically close to where they were raised (Reininger, 2012) and therefore are more likely to seek employment with districts in the neighbouring area. Because most principals are former teachers, they may be motivated by similar factors. As a result of these various scenarios, pay may fail to act as an incentive for principal behaviours as other motivators could be serving as the behavioural driver.

Results from this study suggests that even if individuals do not choose to become principals for monetary purposes and financial incentives fail to motivate them to perform, like employees in other sectors (DeConink and Bachmann, 2007; Vandenberghe and Tremblay, 2008), pay nonetheless matters to principals. Principals who are unhappy with their pay were found to be more likely to intend to leave their schools; not all principal turnover is detrimental as the replacement of principals can represent an opportunity for the generation of new ideas, fuel reform efforts and facilitate replacement of ineffective leaders (Denis and Denis, 1995). Within this context, an overly generous salary policy may serve as a barrier to these benefits of principal turnover.

Despite this, frequent turnover can be problematic as it can create instability in the school environment, higher replacement training costs, disinvestment from faculty and staff on reform efforts that are subject to rapid change, loss of institutional memory, and the lack of necessary time and opportunities needed to see the fruits of reform efforts bloom (Fullan, 2001; Muscall and Leithwood, 2010). If principal turnover intention leads to actual turnovers as implied by past research (Lee and Mowday, 1978) and this scenario plays itself out repeatedly, then taken together with results of past work that have reported a negative relationship between frequent principal turnover and student achievement (Beteille et al., 2012; Weinstein et al., 2009), this study’s findings suggest that lower pay satisfaction may be indirectly related to student achievement.

Moreover, this study finds evidence to suggest that high school principals place importance on the salaries of teachers within their district, other principals within their district, and principals in other school districts as referent sources for pay comparisons. These results differ from Young et al.’s (2009) findings that elementary school principals only find teachers and other elementary principals within their district to be important as comparative peers. This is because high school principals consider referent sources from within and without the district for pay comparisons. In fact, high school principals from this study placed more emphasis on principals outside of the districts for comparative pay purposes than within their district. In tandem, these findings suggest that elementary school principals select employees within their district as their referent source for pay comparisons, whereas high school principals place more emphasis on principals of other districts.

Finally, unlike findings from past research, school achievement was not found to be related to turnover intentions. This may be a function of how school achievement was defined. Like most studies, one of the limitations of this study is that variables were operationalized in specific ways. School performance, for example, was defined as only school achievement scores. Achievement can also be defined as the percentage of students from a school who have scored at state determined levels deemed “proficient” or above. Moreover, past findings have suggested that principals turnover are associated with downturn in student performance (Miller, 2013), which defines achievement through a longitudinal perspective. This study was cross-sectional in nature and did not capture changes in achievement trends for any particular school, but rather achievement levels of a school for a particular year. Defining the variables of the study in different ways may yield different findings.

In sum, results from this study align with past findings regarding the critical importance of principal pay as it relates to employment. Specifically, high school principal candidates have been found to be influenced by salaries during the job selection process (Pounder and Merrill, 2004). As it relates to principal exit behaviours, principals with lower salaries relative to their peers have been found to more likely turnover from their schools (Baker et al., 2010). Relative pay is important because research has suggested that it is relative pay that impacts a principal’s pay satisfaction and not the absolute dollar amount (Young et al., 2009). Findings from this study support past findings and extend the literature by suggesting that high school principals’ pay satisfaction is influenced by relevant peer salaries and that principals that are less satisfied with their pay are more likely to intend to resign.

Interpreting the study’s finding as a whole suggests that districts should be cognizant of the internal consistency of its compensation practices for high school principals, as well their salary comparability to principal salaries in the external labour market (i.e., other school districts) in order to prevent frequent principal turnover. Understanding this from the framework of Adams’ (1965) equity theory suggests that districts must ensure that their salary offerings are perceived as equitable both with the internal and external market. Because public school districts operate within a resource-constrained environment, empirical evidence such as that generated from this study is critical for assisting districts with making resource allocation decisions.

The policy implication of increasing the perceived equity of principal offerings is the potential mitigation of the principal turnover crisis faced by school districts throughout the US and Europe (Beteille et al., 2012; Krüger et al., 2005). This recommendation is aligned with those provided by other researchers (Baker et al., 2010) as it relates to the use of salary policy to address the principal supply issue. While critiques may argue that it is too costly for districts to increase their salaries to keep pace with their peers, any costs incurred should be considered alongside the costs that would be incurred from principal recruitments and replacements, as well as the costs associated with lower student performance resulting from frequent principal turnovers. Cost-effectiveness and cost–benefit analyses should be conducted to help districts make the necessary trade-offs.

It takes approximately five to seven years to see a mobilized vision and substantive school change bear fruit from the efforts of effective school leadership (Fullan, 2001; Muscall and Leithwood, 2010; Seashore-Louis et al., 2010), yet unfortunately half of the new principals hired turnover by their third year (School Leaders Network, 2014). The results of this study suggest that a well designed pay policy may contribute to effectively retaining principals beyond the third year mark and hopefully they remain at least until that five to seven year period where the impacts of change efforts can be felt and where consistent leadership can positively impact student performance. Given its promising prospects, more research on the topic of using pay policies to prevent principal turnovers is warranted.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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