Performance Related Pay Case Study

In a controversial move in the UK education sector, the Department for Education has insisted that teachers' pay must be linked to performance as part of its plans to “modernise” public sector services - including workplace reform. The department is also considering giving individual schools more power to set pay rates for their staff.

The government is strongly of the view that the priority is not a general increase in pay above the rate of inflation but instead promoting workforce reform and tackling workload issues. In 2002, the government introduced a performance-related bonus scheme in order to boost teachers' pay and help retain staff. Experienced teachers can apply for a one-off bonus of ₤2,000. Currently, almost all teachers who apply for the performance pay get it. They can only apply after they have taught for six years.

A recent study has suggested that there is no evidence that paying teachers performance bonuses leads to better exam results or attracts more recruits to the profession. Researchers from the Institute of Education in London found little evidence to suggest the payments had improved results or attracted more people into teaching. The study argued that it is difficult to determine the impact of any one teacher on a pupil's progress: a pupil may have private tuition, help at home, or any number of external influences. It is impossible to state objectively whether performance-related pay has positive effects on pupil learning outcomes. Market theories do not necessarily work in the public sector. A bricklayer may lay more bricks if paid a bonus, but this does not apply to teachers, who are highly motivated professionals already working to maximum capacity.

The researchers even argue that bonus payments could be counter-productive because teachers were used to working together instead of competing with each other. It is a "difficult if not impossible task" to devise a performance-related pay system for teachers that makes them work harder and more productively, does not need expensive monitoring, encourages teamwork and discourages teaching to the test and grade inflation. Other countries, including the USA, have paid teachers performance bonuses but the study suggests they provide little convincing evidence for or against performance-related pay.

In a report - Milestone or Millstone? - Industry in Education suggests teachers have everything to gain and nothing to lose from the implementation of performance management. Teachers should earn the same as a middle professional in industry, but must be prepared to accept performance appraisals. Performance management results in high performers feeling valued and this fact almost universally outweighs the disadvantages of some poorer performers preferring a uniform system of reward.

Proponents of the system say that there is no better outcome from a management system than one that makes the best performers feel valued, particularly in a profession which relies totally on the performance of its staff. Head teachers, who are paid as managers, must behave as such and sell the system to their staff, it is suggested.