The United States is not alone in experimenting with ways to use compensation to improve teacher performance. Around the world, nations are exploring ways that money can be used to attract newcomers to the profession, lure teachers into needy classes and schools, and boost student achievement.
The United States is also not alone in its reliance on the single salary schedule nor in its need to negotiate changes with teachers unions. The single salary schedule has been the dominant form of compensation for teachers across the world for over a half century. While some trade unions have negotiated differences in salary levels at the national, regional, and local levels, these have generally affected the level of pay rather than the structure. Indeed, in many countries, teachers unions have been instrumental in maintaining the single salary schedule with a few salary incentives, but have not recognized performance pay or incentives for those working in schools serving disadvantaged students.
In the last 15 years, however, both developed and developing countries have experienced shortages of qualified teachers in certain subjects or types of schools. At the same time, evidence has emerged that clearly identifies the teacher as one of the single most important factors in a student's learning (Hanushek 1992; Sanders and Rivers 1996; and Rivkin, Hanushek, and Kain 2001).
Effective teachers are critical to high student achievement, but two factors complicate efforts to ensure that schools attract and retain them. First, qualified teachers are in short supply overall in some places and in specific subjects in other places. Second, teaching appears to be a less popular professional choice for young people. In most countries, teaching is less respected than it once was, and yet teachers' roles have become more complex as student populations have become more diverse and expectations for their achievement have risen. Teachers are asked to be responsible for both the academic and socioemotional development of students and to remain up-to-date with emerging knowledge in their subjects and field (OECD 2005). As a result, teacher education programs are attracting students for whom the profession is not a first choice or whose academic backgrounds are weaker.
Given these conditions, some countries have implemented a variety of compensation and incentive programs aimed not only at improving teacher performance and increasing student achievement, but also at recruiting and retaining more effective teachers. These programs include individualized salaries, incentives for teacher education, knowledge and skills-based incentives, incentives for hard-to-staff schools, and incentives based on student performance on state or national examinations.
The exception to the single salary schedule is Sweden, which moved to an individually negotiated salary system in 1999. Strath (2004) found that Sweden's individualized salary system had accomplished many of its objectives, which were to recruit and retain teachers and improve productivity, performance, and quality of education. Under the original salary system, teachers topped out on the salary schedule by their early 40s and received only inflation increases for the rest of their careers. The new system enables experienced teachers to increase their efforts and productivity and receive salary increases on that basis for the future. At the same time, it provides a real incentive to newer teachers to raise their salaries through their increased productivity.
Strath also found that the evaluation criteria established to differentiate salaries were helpful in improving the quality of education. Principals can reward teachers who are most eager to participate in school improvement efforts and decline to reward teachers who don't improve productivity or quality of outcomes. In many cases, younger, less experienced teachers received the rewards. …