PERFORMANCE PAY

Performance
Pay and Teacher
Motivation

Separating Myth from Reality

Little research has been done on performance pay
in education, but research in other fields may shed some light on
whether education would benefit from this practice.
Can you break out of prison by using dental floss to cut through the bars? Can you trust the claims made
by candidates in political debates? These and other popular beliefs are examined by such television shows
as Discovery Channels Mythbusters and CNNs Fact Check. Rather than simply accepting these claims,
these programs dig deeper to separate fact from fiction. In much the same way, we can evaluate the popular beliefs and myths surrounding performance pay in K-12 education.
One of the assumptions behind proposals to make performance pay part of the compensation package
for teachers is fairly simple: Teachers will be more motivated to do high-quality work if they know theyre
eligible to receive performance pay.
BY CHRIS S. HULLEMAN AND KENNETH E.
But are performance incentives really
the proper and most effective way of motivating teachers? And are teachers and other employees really motivated to do better work because of the carrot of better pay?
Unfortunately, education research on performance pay is still in its infancy. A number of studies are under way, but only six causal studies have been completed and all of those have been outside the United
States (India, Israel, Kenya, and Mexico) and may not translate to the U.S. education system. Those studies
suggest that performance pay can have small effects on short-term student outcomes, such as standardized
test scores, especially under high-stakes conditions. But none of those studies examined long-term student
learning or teacher outcomes, such as intrinsic motivation, job satisfaction, and burnout (Springer 2009).
So, to evaluate the myths surrounding performance pay, we turned to research from other fields, such as
psychology and business. We used this research to fact check a number of commonly held myths about
performance pay systems.

BARRON

Although proponents of performance pay often assume that this myth is a truism, research from management, finance, and economics provides a mixed picture of the effectiveness of performance pay in increasing productivity. An early review by Locke and his colleagues (1980) argued that individualized pay for
performance systems increased individual productivity over other methods. However, more recent reviews
using larger samples and more sophisticated meta-analytic techniques demonstrate that these effects
CHRIS S. HULLEMAN is an assistant professor of graduate psychology at the Center for Assessment and Research Studies, James
Madison University, Harrisonburg, Va. KENNETH E. BARRON is an associate professor of psychology at James Madison University, Harrisonburg, Va.

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Myth #1: Performance pay systems improve performance.

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Research from
management,
finance, and
economics
provides a
mixed picture
of the
effectiveness of

are limited in several important ways. Monetary incentives increase performance quantity but not quality. Monetary incentives are effective in manufacturing, but not in service firms, and they work for simple but not complex tasks (for a review, see Gagne
and Forest 2008).
In some countries, part of the problem is getting
teachers to show up in school and be present in the
classroom (Springer 2009), thus incentives to increase the quantity of teaching may be effective in
those cases. However, in the United States, creating
more effective teachers is more about the quality of
what happens in the classroom. The tasks of teaching are by far not simple, and the skills required are
more professional than industrial; thus, the results
of this research suggest that performance pay may
not be effective in improving teaching performance
in the United States.

performance

Myth #2: Performance pay systems enhance

pay in teacher motivation.
increasing
Intrinsic motivation is the desire to engage in a
productivity. task for its own sake. Although there is a lack of con-

sensus on the effects of rewards (such as money) on

intrinsic motivation, the most consistent result across
several meta-analyses from psychology is that expected rewards, which are received based on performing a task at a specific level, undermine intrinsic motivation on interesting tasks (for a review, see
Deci, Koestner, and Ryan 1999). These ideas were
subsequently captured by popular authors (Kohn
1993) and management consultants (Thomas 2009)
who decry the use of rewards in nearly all circumstances, including school and work. Despite the obvious parallels to performance pay systems in education, there is some reason to question the application
of this psychological research to K-12 education.
First, adults expect to get paid for their work and
are at least partially motivated by extrinsic reasons. In
many psychological experiments, participants volunteer to engage in interesting laboratory activities,
which is a quite different situation from getting paid
to go to work. Second, receiving a reward can signify
high performance quality, which in turn can increase
an individuals confidence and intrinsic motivation.
Third, rewards can also infuse job-related tasks with
extra meaning and value, which tends to enhance
intrinsic motivation in the psychology laboratory
(Harackiewicz and Sansone 2000). This extra value
could be especially important in professional work settings, where employees have choices regarding the behaviors and activities on which to focus in a given day.
Recent field research in economics and finance
suggests that performance pay may not always undermine intrinsic motivation. One large-scale study
of U.S. companies found a positive correlation be28 Kappan

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tween company performance pay policies and employee reports of intrinsic motivation (Fang and
Gerhart 2005), and a U.K. study showed increases
in job satisfaction with performance pay for the
highest paid workers and decreases in satisfaction
for the lowest paid workers (McCausland, Pouliakas, and Theodossiou 2005). Clearly, more research is needed. However, this research hints that
performance pay could positively influence intrinsic
motivation if the reward signifies high-quality performance and increases the value of engaging in the
desired behaviors.
Myth #3: Effective performance pay systems are
relatively free from adverse side effects.

Besides undermining intrinsic motivation, performance pay programs have other potentially negative consequences. In performance-based systems,
employees may simply neglect quality for quantity
on the performance indicator, such as when teachers instruct students in test-taking skills, rather than
teaching them to understand the material at a deeper
level (Kaufman 2008).
Second, performance pay systems designed on
quantitative outcomes are highly susceptible to goal
distortion, gaming, and other unethical behaviors
(Rothstein 2009), especially when based on such
narrowly defined outcomes as standardized test
scores. There are numerous examples of educators
altering test scores, holding low-performing students out of testing, and assisting students with testing (for example, Dewan 2010; Springer 2009).
Third, quantitative outcomes often fail to capture
the full breadth of expected outcomes and behaviors. Although standardized tests are widely used as
measures of student learning, their proliferation is
due more to their ease of administration than to the
belief that they actually capture the full range of student learning. Organizational researchers have
noted this deficiency in outcome measurement: It
is quite difficult to establish criteria that are both
measurable quantitatively and inclusive of all the important job behaviors. . . if an employee is not evaluated in terms of an activity, he will not be motivated
to perform it (Lawler 1971: 171).
Broadening the outcomes used to evaluate student
performance could reduce or eliminate these problems. More research needs to address the effect of
including subjective ratings and other qualitative
performance measures.
Myth #4: Performance pay wont work because
teachers are already motivated and working as
hard as they can.

When performance pay plans are effective in industry, about half of the increase in productivity oc-

curs when existing workers become more productive

an incentive effect and the other half comes from
replacing ineffective workers with more productive
ones a sorting effect (Lazear 2000). Teachers already work long hours, have a challenging population
to work with, engage in many hours of professional
development each year, and work in a profession that
requires specific content knowledge and pedagogical
skills. If performance pay were to have an incentive effect, it would likely be due to teachers working more
effectively by changing teaching and learning strategies, rather than simply working more hours.
In particular, performance pay systems could
help provide critical feedback to teachers and increase the value of acting on that feedback. A main
factor in determining the effectiveness of performance pay systems is whether teachers know how to
improve their productivity. If teaching effectiveness
rests solely on standardized test scores, then any behavior that improves test scores is reinforced, whether
its increased learning or increased test-taking skill.
But if the goal of performance pay systems is to increase teaching quality and student learning outcomes, then teachers must receive feedback on how
to become better practitioners. When designed correctly, performance pay reinforces behaviors that
make teachers better practitioners. Using rewards
this way can increase the meaning and value of engaging in best teaching practices, which can increase
intrinsic motivation (see Myth #2). However, when
this information isnt conveyed as part of the reward
or evaluation structure, then teachers must determine on their own how to improve the quality of
their teaching.
Myth #5: Performance pay, like other effective
business strategies, should be applied to K-12
education.

Before considering whether schools and businesses are similar enough to substantiate this myth,
consider the pervasiveness of performance pay programs in business. Several large-scale national and
international surveys indicate that only 16% to 30%
of employees reported receiving some type of performance pay, and only 6% of employees are in ongoing performance pay systems. The percentage of
overall earnings that bonuses represented was also
small, at around 6%, with most performance pay occurring in sales-related occupations, such as finance
and real estate (Adams and Heywood 2009).
Although schools have employees, budgets, and
bottom lines, the product of education is not simply
a good or service, but rather a quality of student that
is difficult to measure and not universally agreed on.
Moreover, employees who enter the education field
are likely doing so for reasons quite different from

those in sales-related sectors. As a result, teachers

may be less motivated by money and more motivated by the students they teach. As one middle
school math teacher writes:
Pay has never been a big motivator for me, or why
would I be in the profession? I am motivated by
connecting with students, having them experience
the aha of understanding something, and seeing
them develop the confidence to explore and apply
new ideas.
Erica, Ames, Iowa
(personal communication, Jan. 27, 2010)

Performance
pay systems

Several national surveys support the assertion

that public-sector employees are more likely to be
mission-driven and motivated by the goals of their
organizations, such as educating students or helping
the poor. In contrast, private-sector employees are
more likely to report being profit-driven and motivated by financial rewards, high pay, promotion, and
job security (Rothstein 2009). Certainly these attitudes are not true for all public-sector employees, as
some teachers may be motivated more by money
and job security than others, but the concern is that
performance pay could undermine the ethos of public service inherent to education. Enticing people
into teaching who are primarily motivated by money
may change the climate of education in unhealthy
ways. This sorting effect, which replaces ineffective
teachers with more effective teachers, may also operate on personality characteristics and select teachers with motivations at odds with the overarching
mission of education to make money rather than
to educate students. This misalignment could further distort the education mission away from students and to one more focused on producing highly
skilled test takers than self-regulated learners.
Alternatively, teachers might highlight the intrinsic rewards of the job to help them stay motivated because salaries are low. If salaries were higher,
perhaps teachers would be more motivated by financial reasons. Research in management and organizational psychology reveals that money is more important to employees than they tend to report. In one
study, pay ranked fifth for men and seventh for
women when asked how important pay was for
them. However, when asked to evaluate how important pay was for a person similar to them, pay was
ranked first (Rynes, Gerhart, and Minette 2004).
Surveys also show that performance pay plans are
more attractive to high-performing employees and
those high in self-efficacy, need for achievement,
and extroversion (Rynes, Gerhart, and Minette
2004). Educators may not be all that different from
private-sector employees, who report a range of attitudes toward money and performance pay plans.
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could help
provide critical
feedback to
teachers and
increase the
value of acting
on that
feedback.

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Only 16%
to 30% of
private-sector
employees
reported
receiving some
type of
performance
pay, with only
6% of
employees in an
ongoing
performance
pay system.

Luna-Arocas and Tang (2004) report that 58% of

university professors were classified as money worshippers who value money over other aspects of
their work and lives, whereas only 42% had apathetic or negative attitudes toward money. Although
most teachers are in favor of performance pay based
on education and opposed to it based on student test
scores, these preferences differ based on years of
service and perceptions of administrative fairness
(Trevor in press).
Thus, in the work world, money and motivation
are inevitably intertwined; even if we love what we
do, money is one of the reasons we work. Certainly,
most teachers would happily accept a pay raise.
What is less clear is whether performance pay will
have an energizing effect on teacher motivation and
quality or a negative effect on the public-service
ethos of education.
WHERE DO WE GO FROM HERE?

By evaluating these performance pay myths, we

hoped to shed light on this fundamental question:
Should teachers, administrators, and policy makers
be for or against performance pay? Based on this re-

view of the literature, a definitive answer is not apparent. Our inability to reach definitive conclusions
regarding the five myths is due, in large part, to the
lack of research on performance pay in education.
Even researchers in other fields, who have a much
more extensive research base on performance pay,
have noted that: Additional research is sorely
needed. . . studies that include control groups, intervening process variables, and/or careful longitudinal
analyses (Rynes, Gerhart, and Parks 2005: 594).
Several large-scale studies are currently filling that
void. The federal government has played a major
role in funding many of these projects. In 2006, the
National Center on Performance Incentives was
chartered by the U.S. Department of Educations
Institute of Education Sciences to focus on performance incentives in education. Recently, President
Obama announced his Race for the Top, which
provides education funding to states contingent on
including performance pay in their spending plans.
The ongoing research will need to address several important issues. First, a direct link between
teacher behaviors and outcomes is absent. Teachers
work with students on a daily basis, and at the end

TABLE 1.

A Scorecard for Performance Pay Mythbusting

Fact or Fiction scale:
-2 = Completely Fiction -1 = More Fiction Than Fact 0 = Equal Parts Fiction and Fact +1 = More Fact Than Fiction +2 = Completely Fact

Fiction
or Fact? Conclusion

Myth
Performance pay systems
improve performance.

-1

Although early research supported this belief, more comprehensive and technically sophisticated research
puts important limitations on the effectiveness of performance pay for improving worker productivity. Much
work is needed to evaluate its effect in K-12 education.

Performance pay systems

enhance employee
motivation.

+1

The undermining effect of rewards on intrinsic motivation hasnt been demonstrated in actual work settings.
In addition, the value of rewards when combined with feedback about effective performance can
signify competence and further energize effective performance.

Effective performance pay

systems are relatively free
from adverse side effects.

When focused on quantitative outcomes, goal distortion and unethical behaviors have been witnessed in
accountability and incentive systems in education. Enriching the outcomes used to evaluate performance
could reduce or eliminate these problems, but this idea is untested by research.

Performance pay wont

work because teachers
are already motivated and
working as hard as they
can.

Teachers work long hours, engage in many hours of professional development each year, and are motivated
to make a difference in the lives of students. However, improving teaching productivity may not simply be a
matter of working harder, but about working more effectively. Pay for performance systems can help provide
teachers with feedback and increase the value of acting on that feedback (resulting in an incentive effect). In
addition, if more effective teachers replace ineffective teachers, then the system as a whole becomes more
effective (resulting in a sorting effect).

Performance pay, like

other effective business
strategies, should be
applied to K-12
education.

There are documented differences in motivation between public- and private-sector employees, and these
differences could rend performance pay programs less effective in education. Furthermore, performance pay
might alter the public-service ethos of education by selecting teachers with aspirations tied more closely to
making money than doing public service. Although research suggests that even educators can be motivated
by money, there is no evidence that the effects of performance pay depend on money motivation.

Overall

Overall, almost all of these myths contain both fact and fiction. More research, particularly in education, is
needed before definitive conclusions can be made about the effectiveness and suitability of performance pay
for K-12 education.

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of the year, they receive feedback: Did test scores go

up or down? Teachers need more direct, frequent,
and meaningful feedback from observations that
link teaching behaviors to student learning. Without these components, even the most powerful performance pay systems will risk being ineffective because teachers wont know if their work is having a
positive impact on learning.
Second, a lack of consensus about which outcomes are most important makes designing and evaluating performance pay programs even trickier.
There is little agreement on the best way to quantify
either student learning or effective teaching. Standardized achievement tests capture part, but not the
complete picture, of what students have learned. Little consensus exists on the correct pedagogical approaches for even the most fundamental instructional practices, such as early reading instruction.
Finally, the discussion surrounding compensation systems has largely ignored teacher well-being
and mental health. These variables have important
implications for the longevity of teachers in the
workforce, the health and well-being of students,
and the overall effectiveness of school systems. We
encourage educators, researchers, and policy makers to include measures of well-being when considK
ering performance pay programs.
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