I spent the morning in a school improvement working group. When we came to the subject of incentives there were more questions than answers. I don’t think we know much about this, so here’s some moderately informed speculation
1. Pay for performance won’t work as well as business folks think. As a biz-guy turned superintendent, I found that teachers were psychologically different than the folks I worked with in the business world: they made different life choices, had different motivational profiles, and didn’t respond in the same way as people in the private sector. Public Agenda surveys’ indicate that incumbents want rationale and principled leadership and a good place to work.
2. Differentiated pay will help with recruiting. This is not a performance incentive–it’s a recruiting incentive. We have a few big gaps that could be narrowed with higher pay for jobs with shortages (e.g., math, science, special ed, rural)
3. Career ladder. Like differential pay, a career ladder that created a rapid path from $40k to $75k would likely change the applicant pool for teaching. Simple and effective alternative routes to certification would also help.
4. Student incentives appear to provide some benefit. In a culture where education is not strongly valued, paying student for grades appears to have some benefit. Check out results from AP Strategies: http://www.apstrategies.org/ip/apresults/APS%202008.pdf
5. uBoost.com and SmartyCard.com are experimenting with incentives for informal learning. These look promising but we have more to learn about motivation sciences.