Does performance related pay work for teachers?

Back in 2014, schools were required to link teachers’ pay progression to their performance. The government wanted to stop weak teachers getting automatic annual pay rises, and to ensure that the best teachers progressed quickly up the pay scale.

On the face of it, this sounds very sensible.

And there is a considerable body of academic research demonstrating the effect of linking pay to performance.

The trouble is this research shows that, on the whole, linking pay to performance harms performance.

Professor Daniel Ariely at MIT has carried out lots of experiments where subjects are asked to perform a task and are paid money if they perform well on the task. Other subjects just get paid for their time. Those that are paid based on performance tend to perform worse than those doing the same task, but just paid for their time.

You might think that paying some university students (the subjects in psychology experiments are nearly always psychology undergraduates) some beer money isn’t comparable to the real world because the amounts of money are quite small.

So Ariely took his team to rural India and ran experiments there. The amount of money on offer for top performance was equivalent to six months household expenditure. The equivalent of tens of thousands of pounds in the UK. A fortune. Surely, with that kind of money at stake, people would perform better than if they are just paid for their time. Nope: in almost all cases, the more money was on offer as a reward, the worse performance became.

What’s going on here?

The simplest explanation is that putting money on the table raises the stakes and raises the pressure. This causes stress and this worsens performance. The amount of money at stake is quite large: on a 12-point Main Pay Scale, the jump between points is about £1k. A teacher moving up 2 points a year would have earned an additional £10,000 after five years, compared to a teacher moving up 1 point per year.

A more nuanced explanation is that the money supplants the intrinsic satisfaction gained from doing a good job. The greatest reward for completing challenging work should be the intrinsic satisfaction it creates. Whether that’s solving a scientific conundrum or getting all of your bottom set in maths to pass their GCSE. This is probably especially true for teachers: after all, teachers don’t go into the profession for the money.

But once performance is linked to pay, it may be that the financial reward actually replaces the intrinsic reward of feeling like you’ve done a good job. It becomes, like it or not, all about the money. Which might be fine in the first year. But a few years down the line, when you’ve run out of room on the pay scale to get any reward, you are going to have a problem.

That’s where we are now: a lot of teachers who were at the start of the Main Pay Scale in 2014 will be getting near the top of it now. They have become accustomed to doing a good job and getting a financial reward for that. What will happen when they get no reward, when their pay stops climbing up the scale?

Or even just consider the case where a teacher does really well one year so moves three points up the scale. Then the next year they also do really well, and work just as hard, but they don’t quite hit the “exceptional” target because of one child’s SATS mark. So they only move two points up the scale. For that teacher, that could be extremely demotivating. Ther are getting £1,000 a year less than they were expecting.

And consider the difficulty of ensuring that teachers in different parts of the school are treated consistently. You can write the most carefully-crated performance management policy, but the decision to offer pay progression still comes down to the appraiser. Some heads of department will inevitably interpret the policy more generously than others.

It is really, really hard to ensure that everyone is treated consistently over time, and across different parts of the school.

It doesn’t have to be like this. Schools can still choose to remove, in effect, the stark link between pay and performance. The unions’ model pay policy includes a mechanism whereby teachers get automatic pay progression unless there are serious concerns with their performance. So weak teachers don’t get pay progression. Everyone else moves up the scale, but all at the same rate. You keep intact the link between performance and intrinsic satisfaction. You don’t replace this with an ephemeral financial incentive. Teachers don’t have to stress about whether their SATs results will allow them to afford a bigger mortgage. They will know that, as long as they do a good job, they will be rewarded for their seniority and experience, not their performance in that one year.

The evidence suggests this will result in better performance.

About the author: Bruce Greig has been a school governor for 8 years and writes occasionally about education policy. When not devoted to governor duties, he is an entrepreneur (built and sold two businesses.) He set up School Staff Surveys in 2017 as a side-project to make it cheap and easy for schools to run regular staff wellbeing surveys.