The Best Laid Plans: Pay for Performance Incentive Programs for School Leaders

In an era of heightened accountability and limited fiscal resources, school districts have sought novel ways to increase the effectiveness of their principals in an effort to increase student proficiency. To address these needs, some districts have turned to pay-for-performance programs, aligning leadership goals with financial incentives to motivate and direct leadership efforts.

Pay-for-performance strategies have been applied to schools for decades (Barraclough, 1973; Educational Research Service, 1979; Kienapfel, 1984) but have expanded in scope and scale to now operate through public and private channels at the national, state, and district levels. These incentive programs have historically focused on teachers, but in recent years they have expanded to include principals as well.

The research presented here examines pay-for-performance plans for school principals, presenting the plans’ central features and defining programmatic elements within a framework that focuses on the key decisions that need to be made while designing incentive systems. In so doing, this analysis provides a descriptive overview of how pay-for-performance programs for school principals are conceptualized and developed while illustrating novel approaches, common shortcomings, and creative solutions to challenging dilemmas.

We base our analyses on the prevailing literature on teacher performance pay and related work from the business and public sectors to develop a framework of essential components that we apply, via document analysis, to 34 funded proposals from the federal Teacher Incentive Fund (TIF). This framework does not dictate the form of performance pay systems; rather it identifies the requisite considerations with which system designers must grapple as they construct the incentive architecture. We use this approach to address the following research questions:

What are the defining characteristics of pay-for-performance programs for school leaders, as conceived by practitioners across the country?

To what extent do practitioner-developed pay-for-performance plans for school leaders align with a robust design framework?

We chose to analyze the TIF grants because the program was one of the largest and most prominent avenues open to all school districts in the United States to implement incentive pay for principals. Through this analysis we learn about the prevailing pay-for-performance plans for principals and reach conclusions about their strengths, weaknesses, and likelihood for success.

Principal Incentives through the Teacher Incentive Fund

The federal government initiated TIF in 2006. By the end of 2014, the fund had awarded more than $2.16 billion in grant monies aimed at providing high-need schools funds and technical assistance to link performance measures to monetary rewards for principals and teachers. TIF requires all proposals to include incentive plans for principals. All of the 34 funded proposals from the first two rounds of TIF competition constitute the basis for this analysis.¹

To support applicants in crafting their proposals, the U.S. Department of Education offered technical workshops, conferences, and webinars to review selection criteria and requirements. For principals’ performance compensation, proposal guidelines required that applicants must (a) give significant weight to student growth in achievement, (b) include observation-based assessments of principals’ performance at multiple points in the year, (c) demonstrate that incentive payments will be substantial and justify the level of incentive amounts chosen, and (d) provide evidence that the proposed plan aligns with a coherent and integrated strategy for strengthening the educator workforce.

TIF applicants were supplied with a scoring rubric to aid in the preparation of their plans. Fifty of a possible 100 points were to be awarded for the quality of the program design. To obtain the full 50 points, applicants had to (a) link performance to changes in student achievement, (b) describe how the program develops principals (and teachers) while building capacity, (c) use valid and reliable measures, and (d) implement a fair and rigorous performance evaluation program. As outlined in more detail below, these selection criteria of the TIF are in keeping with the U.S. Department of Education’s educational goals as well as key components of a design framework for developing pay-for-performance systems.

It is important to note that...