Improving teacher compensation is a critical lever for improving student achievement and rewarding the impact of high-quality teachers. Teacher incentive structures remain a contested issue within education policy debates. The ultimate question of whether pay-for-performance (PFP) systems lead to more effective teachers and higher student achievement also has not been definitively answered.

A recent study addresses a different, but still important question: What factors motivate a teacher to participate in a PFP system? Understanding what motivates teachers to participate is important if policymakers wish to construct PFP systems that will encourage broad participation among teachers and, hopefully, raise teacher effectiveness and student achievement.

This study’s authors examined teachers’ participation in Denver Public Schools’ pay-for-performance system, ProComp. While participation in ProComp was mandatory for all new teachers entering the district, current teachers could choose whether to participate or continue on the traditional teacher salary schedule. ProComp was a multi-faceted PFP system, and bonuses could be earned in four categories:

1. Improving professional knowledge and skills through advanced degrees, additional training, or certification.
2. Receiving satisfactory professional evaluations.
3. Increasing student achievement growth.
4. Working in high-needs schools or staffing high-need positions.

Findings suggest that teachers are generally receptive to PFP systems under the right conditions, as well as the fact that individual teacher characteristics and teacher effectiveness can modestly heighten the likelihood of participating in PFP. Particularly important findings include:

• A large proportion of teachers are amenable to PFP. Over time, 40 percent of eligible Denver teachers voluntarily chose to participate in ProComp. The evidence also suggests that teachers prefer large one-time bonuses over incentives that provide smaller permanent increases in base salary.
• Teachers tend to prefer unambiguous, “automatic” bonuses. The bonuses that had the biggest impact on increasing the likelihood of participating in ProComp were those with the least amount of ambiguity (e.g., being assigned to a high-needs school).
• Teachers generally respond to financial incentives. As the authors predicted, the groups with the most financial incentive to participate in ProComp were more likely to opt in. However, many teachers with a high potential for reward still did not participate.
• Effective teachers are generally more likely to participate in PFP. There was a modest increase in the likelihood for effective teachers (as measured by past student achievement on state assessments) to opt in to ProComp.

These results have important implications for Tennessee’s state and local policymakers, who would be wise to consider these findings to inform future PFP implementations. The evidence suggests that teachers respond more strongly to incentives that are straightforward, well-defined, and highly predictable. Further, structures that include automatic bonuses – and are not limited solely to student achievement – are likely to be more popular among teachers. Examining whether the structure of PFP compensation draws different individuals into the teaching profession is another potential direction for future research.

Ultimately, pay-for-performance is but one promising component of improving teacher compensation and ensuring that high-quality teachers are rewarded for raising student achievement.