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Performance-based pay in the US education system



Performance management can provide organizations with information on their status and progress, and it can influence the decision-making process. Among the different decision-making aspects, it can have an impact on the way resources are allocated, as it is the case in education. 

A recent article reports that North Carolina Governor, Pat McCrory, unveiled a compensation plan designed to reward teachers based on their performance, among other criteria. The goal is to enable teachers to earn more and, ultimately, to improve their efficiency in the act of teaching and learning.

This plan, which is to be submitted to the legislature, is put forward in the context in which, according to data provided in March 2014 by the National Education Association, North Carolina had a 14.3% turnover rate among teachers last year, and teacher pay in the state is one of the lowest in the US (46th place at national level, with an average of $45,737).

This program is set to reward high performers, while underperforming teachers would not automatically benefit from a pay raise. This way of measuring performance makes it difficult to draw a clearly defined line between performers and underperformers. What criteria will be taken into consideration when measuring performance? Teachers’ test results and their students’ performance. Attendance and dropout rates are some other possible performance measures.

The issue with performance measurement and providing incentives is, by no means, new to education. The challenge remains to define and implement a system able to provide accurate performance measurement. As Victor Lavy points out in his article on performance-based payment for teaching staff, the system implemented “must measure true performance in a way that minimizes random variation” and it should also prevent gaming.

Since there is a strong connection between performance and financial compensation, as the latter can influence the former, an increase in terms of teachers’ efficiency should be observed. Nonetheless, when implementing a compensation plan based on performance, both potential benefits and drawbacks should be taken into account. This could lead to a more competitive environment, which in turn could benefit higher performance. But, at the same time, it could limit the sharing of teaching experience, and ultimately hinder collaborative learning.


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