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.
Myth #1: Performance pay systems improve performance.

BARRON

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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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

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

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.

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.

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 May 2010 pdkintl.org

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.

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 could help provide critical feedback to teachers and increase the value of acting on that feedback.

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

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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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 reTABLE 1.

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

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

Myth Performance pay systems improve performance. Performance pay systems enhance employee motivation. Effective performance pay systems are relatively free from adverse side effects. Performance pay wont work because teachers are already motivated and working as hard as they can. Performance pay, like other effective business strategies, should be applied to K-12 education. Overall

Fiction or Fact? Conclusion

-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. 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. 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. 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). 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, 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.

+1

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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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