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Pay for Performance Where Output is Hard to Measure: the Case of Performance Pay for School Teachers

  • Richard Belfield
  • David Marsden

The introduction of performance-related pay with Performance Management in the state school sector of England and Wales represents a considerable change in the school management system. After 2000, all teachers were subject to annual goal setting performance reviews. Experienced teachers were offered an extended pay scale based on performance instead of seniority, and to gain access to the new upper pay scale, teachers had to go through a 'threshold assessment' based on their professional skills and performance. This paper reports the results of a panel survey of classroom and head teachers which started in 2000 just before implementation of the new system, and then after one and after four years of operation. We find that both classroom and head teacher views have changed considerably over time, from initial general skepticism and opposition towards a more positive view, especially among head teachers by 2004. We argue that the adoption of an integrative bargaining approach to performance reviews explains why a growing minority of schools have achieved improved goal setting, and improved pupil attainments as they have implemented performance management. Pay for performance has been one of the measures of organizational support that head teachers could bring to induce changes in teachers' classroom priorities. We argue that the teachers' case shows that a wider range of performance incentives than previously thought can be offered to employees in such occupations, provided that goal setting and performance measurement are approached as a form of negotiation instead of top-down.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0747.

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Date of creation: Aug 2006
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Handle: RePEc:cep:cepdps:dp0747
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. Adele Atkinson & Simon Burgess & Bronwyn Croxson & Paul Gregg, 2004. "Evaluating the Impact of Performance-related Pay for Teachers in England," The Centre for Market and Public Organisation 04/113, Department of Economics, University of Bristol, UK.
  2. Robert Gibbons, 1998. "Incentives in Organizations," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 115-132, Fall.
  3. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
  4. Richard Belfield & David Marsden, 2005. "Performance Pay for Teachers: Linking Individual and Organisational Level Targets," CEP Discussion Papers dp0703, Centre for Economic Performance, LSE.
  5. Victor Lavy, 2002. "Evaluating the Effect of Teachers' Group Performance Incentives on Pupil Achievement," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1286-1317, December.
  6. David Marsden, 2000. "Teachers Before the Threshold," CEP Discussion Papers dp0454, Centre for Economic Performance, LSE.
  7. repec:cup:cbooks:9780521590730 is not listed on IDEAS
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