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Analysis: Teacher Incentive Pay Improves Student Performance

Teacher giving student a high five in classroom

Teachers receiving merit-based pay provide the equivalent of nearly four additional weeks of student learning, according to a recent study.

Researchers at Vanderbilt University conducted a meta-analysis of multiple previous studies on merit pay and found pay programs employing a group incentive design result in larger positive effects than incentives given to individuals.

Difficulties in Determining Merit Pay Effectiveness

The relationship between teacher pay and student performance has been discussed for decades, with no real consensus to settle the debate. Lack of adequate funding to maintain merit-based pay programs has deterred many districts from solving the issue on their own, and other factors add to the difficulty in evaluating the effectiveness of a merit pay program, such as:

  • Coming to a consensus on how to fairly evaluate teacher performance
  • Determining a standardized assessment system
  • Creating the best method for gauging an educator’s contribution
  • Judging one educator’s performance compared to another

Multiple studies on the subject during the 1980s failed to reach the goal of determining merit pay effectiveness because of these factors, and only recently has the topic resurfaced with the same intensity as it did decades ago.

The Effect of Merit Pay on Teacher Recruitment and Retention

Pay incentives are a big factor in retaining teachers, but districts with a merit pay program in place may see some of their recruiting difficulties fade away. The presence of an incentive plan for teachers is appealing for most candidates and could provide an edge in recruiting over a nearby district.

A 2009 Missouri study explored a pay program allowing teachers who meet state-and district-level performance criteria the opportunity to receive supplementary bonus pay for completing academic responsibilities. The result was promising. Teachers in participating districts were less likely than teachers in non-participating districts to move to a different district. They also were less likely to leave the profession.

Working Together

Merit pay programs aimed at groups of teachers who worked together to earn incentive pay resulted in twice the average effect compared to individuals competing against each other for incentives. The group merit pay structure encourages teachers to:

  • Collaborate together
  • Learn new instructional practices
  • Discover new ways to approach the curriculum
  • Share ideas and tools among one another

The Vanderbilt study focused strictly on merit-based pay incentives, which, in many cases, require a significant deal of funding.

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Keith McLemore
Keith McLemore
Senior HR and Compensation Consultant

Keith McLemore joined HR Services in 2015 and assists districts with compensation planning and development. He has 17 years of experience traveling the state supporting public education employees.

McLemore received a bachelor’s degree from Southwestern University and a master’s degree from Texas Tech University, both with a focus on research analysis and design. He is a SHRM-CP.

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