Is Performance Pay Effective in Education?
This is a summary of research commissioned by NZEI Te Riu Roa in 2012, and undertaken by Dr
Elizabeth Kleinhenz of the Australian Council for Educational Research. The full report A Stocktake of
Performance Pay Systems in Education can be accessed here. [add link]
NZEI commissioned this research at a time when there was political discussion occurring about
performance pay for teachers. The overarching question to be answered in the research was: is there
any evidence that suggests performance based pay and remuneration systems that are linked to
student progress and achievement data impact positively or negatively on:
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student achievement
teacher quality and/or
school effectiveness.
Findings from this research both affirm our views on performance pay and will inform on-going work
on career path development.
Summary
Kleinhenz describes two main approaches to teacher remuneration:
1. Merit (or performance) Pay. This approach is intended to reward teachers for the student
results they achieve. The results - or outputs - are identified by student assessment data in
order to measure teacher effectiveness. The research found that this approach, commonly
known as performance pay, has not been a success in education settings around the world.
Performance pay is not considered appropriate for use in complex professional settings such as
teaching.
2. Skills Based Recognition. The second approach is based on assessing what teachers bring
to their classroom practice; their knowledge and skills.
The research indicates that skills based recognition, when implemented in association with
independent professional oversight, is an appropriate remuneration system for use in complex
professional settings such as teaching.
Approach One: Merit/Performance Pay
Merit Pay
Any pay system in which workers are given financial rewards on the basis of ‘results’
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Has not been a success when applied within various education sectors around the world
Re-emerges as a political attempt to control teachers and student outcomes approximately
every 30 years (e.g., in Australia – 1850s, 1880s, 1920s, 1950s, 1980s, 2010s)
Invariably links teacher ‘success’ to national student test results
2012 OECD international overview found ‘no relationship between average student
performance in a country and the use of performance based pay schemes for teachers’
None of the five top performing PISA countries (Shanghai, Finland, Korea, Canada and New
Zealand) have a performance pay system in place
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Value Added Modelling (VAM): A variation on merit pay
VAM is an attempt to take into consideration external factors such as socioeconomic status and
ethnic diversity when using student data to measure student progress, and therefore, by implication,
teacher effectiveness.
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Requires student assessment data to be drawn from standardised national testing
Assumes any progression/regression is the consequence of teacher input
Is an attempt to measure progress
Has been found to contain serious flaws in relation to validity and reliability
Difficulties in controlling for complex variables undermines robustness
Sourcing base data from student test scores still fraught with difficulty
Performance Pay in other vocations
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Merit pay is generally limited to a narrow range of occupations: real estate, sales, and finance
Most suited to simple, repetitive types of work that fewer people are now engaged in
Based on obsolete ‘carrot and stick’ thinking
‘Ineffective for creative, conceptual, complex work’ (Daniel Pink. Washington Post, print edition, 9
January 2011)
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Has unintended and undesirable outcomes including:
(a) Diminished intrinsic motivation
(b) Lower performance
(c) Less creativity
(d) Unethical behaviour
(e) Short term thinking
Approach Two: Skills Based Recognition and Remuneration
Knowledge and Skills Based Pay
A system in which teachers who are able to show that they “meet certain standards or criteria-based
improvements in the knowledge and skills needed to improve students’ learning” are rewarded
according to their designated place on a competency scale (e.g., novice to expert).
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Can use either standards or criteria
Range of methods of evaluation used including classroom observations
Increasingly used to replace or reform traditional incremental salary scales
Wide ranging (inconsistent) outcomes for teachers can result due to variations in
interpretation, differing degrees of principal/appraiser expertise etc.
Professional Certification
Professional Certification is very similar to the knowledge and skills approach but with one critical
difference: As with other professions such as accountancy and engineering, the evaluation of
practitioners is under the control of an independent professional body rather than the in-house
employer or professional leader.
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Based on attaining pre-determined professional standards
Range of methods of evaluation used including classroom observation
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Standards set, monitored, and assessed by a highly credible independent professional body
Teacher pay linked to wider overall attainment of professional standards rather than one-off
evaluations
Credibility of the independent national professional body critical to both societal and withinprofession acceptance and success
Assumes that the professional certification process should be funded and controlled by the
profession itself rather than by government or other agencies outside the teaching profession
Independent, rigorous certification process provides an accurate, trustworthy indication of
teacher competency to all stakeholders
Research conclusions and recommendations
Kleinhenz concludes that merit (performance) pay has not worked in education settings around the
world. Its focus on student results or outputs as a measure of teacher effectiveness does not take into
account the complex variables that characterise professional, creative occupations such as teaching.
Consequently, merit/performance pay is not considered a suitable means of recognising and
rewarding good teaching practice.
A knowledge and skills based approach is more suited to teaching as it takes into account what
teachers bring to their practice. It is a more accurate and insightful means of assessing the
contributions made by teachers in the context of the many complex interactions, influences, and
relationships that shape the environment in which effective teaching and learning takes place.
Kleinhenz recommends that a knowledge and skills based career pathways approach that is closely
linked to a system of professional certification is the best way to recognise and reward good teaching
practice. The use of an independent attestation panel that assesses teacher practice in relation to
objective professional standards and/or criteria is considered by Kleinhenz to be best practice in the
context of the complex world of teaching and learning.
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