Why Pay Incentives Are Destined to Fail

—Nip Rogers

And How They Could Undermine School Reform

By Andrea Gabor

The quest for the perfect pay-for-performance plan has been the holy grail of management experts for decades. So it is no surprise that as education reformers want principals to act more like CEOs and to boost teacher performance, they are turning to pay incentives—for schools, principals, and individual teachers—as the panacea for turning around school performance.

If industry is any guide, the bid to use incentive pay to improve education and teacher performance is illusive at best. To the extent that individualized incentives undermine team-based collaboration, they could create more problems than they solve.

The pressure to offer educators pay incentives grows out of the powerful influence of corporate-management ideas on education. However, contrary to popular belief, there is virtually no evidence that pay is a driver of long-term good performance in industry. Indeed, some of the most respected business practitioners and thinkers oppose individualized incentives. The cultural resonance of differentiated pay, which conjures conflicting images of obscene Wall Street bonus checks and lofty notions of individual accountability, and the havoc that many incentive schemes have wreaked in industry suggest that the...