August 15, 2006 -- OUR reform strategy, which we call "Children First," is premised on the core belief that strong school-level leadership will result in high-functioning schools. Our aim is to accomplish three fundamental cultural shifts:
* First, moving from a culture of excuses - where we blame our failure on the kids, their parents or a lack of resources - to a culture of accountability, where we take responsibility for the work we were hired to do: educate all children in our charge.

Accountability starts at the top, with the mayor and me. In many ways, placing the ultimate accountability at the top was a necessary first step toward building an entire system that becomes infused with accountability.

This September, all schools in our system will receive an annual progress report with a grade of A, B, C, D or F based on student progress as well as absolute achievement. In addition, all of our schools will receive a qualitative review. Based on how well a school does on these evaluations, we will make tough-minded decisions about both replacing principals and closing schools.

* Second, moving from a culture of compliance to a culture of performance: We recently had a group of 321 of our principals voluntarily sign documents even though their own union told them not to. These principals accepted the challenge and signed performance agreements, taking responsibility for student performance outcomes.

Recognizing that real empowerment for school leaders involves providing them with real resources and the authority to spend them as they see fit, we are putting our money where our mouth is. Each empowerment school has received for the upcoming school year an average of $250,000 more in discretionary spending.

In return, of course, our empowerment principals will be held to demanding accountability standards. We will carefully monitor what's going on at their schools and take action where necessary to be successful.

* Third, moving from a culture of uniformity to a culture of differentiation: We cannot continue to treat our employees as if they were all the same. We need to start differentiating based on employee talent and organizational need.

The civil-service system that forms the basis of public employment is deeply entrenched and resistant to change. The basic pillars of that system - life tenure, lock-step pay and seniority - essentially mean that, whether you are good or bad or whether you work in a more challenging or less challenging school or whether your are qualified to teach in a hard-to-fill position like math or science, you get paid the same, with differentiation based on length of service.

This structure means that talent tends to gravitate toward the higher-performing schools and away from the more challenging ones. The resulting maldistribution of human resources has real consequences for our students.

Fortunately, we are beginning to change the culture of employee uniformity. Our most recent agreement with the teachers' union puts an end to the practice of teachers being able to insist on transferring from one school to another based solely on their seniority.

In addition, we have begun the process of using pay to differentiate our employees based on need and talent. We have a bonus program for principals and assistant principals based on student performance. And now, for the first time, we are able to offer generous signing bonuses for experienced math, science and special education teachers.

These are important first steps toward work-force differentiation. But make no mistake about it: We have a long road ahead of us. We need to create a real meritocracy to replace the civil-service culture of uniformity in public education. We need substantial merit pay, based on student performance, and a system that enables us to remove unsatisfactory employees.

The structures we are putting in place right now, and the culture changes that are well under way, will, I believe, unleash the power and potential of our public-education system.

Joel Klein is New York City schools chancellor. Adapted from a speech at the Academy of Management in Atlanta on Sunday.