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Designing Teacher Variable Pay Plans

May 27, 2008

Variable pay, also often called incentive pay, or pay for results, aims to provide an incentive for teachers and principals to act in ways that contribute to organizational success, such as improving student achievement. It also contributes to the shaping of organizational culture by rewarding specific outcomes or high performance. The following guidelines are based on private sector literature, research done by the CPRE Teacher Compensation project, and districts’ experience in developing and rolling out incentive programs. 1) Know what the district wants to accomplish by paying for improved student achievement. 2) Create the design process to maximize the chances of success. 3) Review the affected educators’ total compensation package. 4) Assess the potential for financial sustainability. 5) Include principals and other administrators along with teachers. 6) Assess readiness for variable pay. 7) Plan for an effective and lasting implementation. 8) Consider developing a comprehensive compensation program that includes more than just paying for student achievement.