Performance-related pay has been around for some time. Its use has accelerated over the past 10 years as companies have tried to make their reward systems more individual and more flexible. A survey carried out last year for the Institute of Personnel and Development showed that 43 per cent of companies operated some kind of scheme with individual PRP being the most popular approach.
The value of such awards varied, but most employees were looking at an annual extra payment of about two weeks' salary. For senior managers, the rewards were greater with 10 organisations giving them the possibility of a 100 per cent bonus annually.
The survey revealed that employers were likely to see benefits in terms of individual performance and the reinforcement of messages about the need for overall organisational effectiveness. Workers saw PRP as a means of introducing more fairness into pay decisions and as a reward for effective past performance.
High performers were more likely to respond to the carrot, whereas poor performers could be alienated. There was deterioration in "effective team working" in 13 per cent of organisations.
There was a clear difference in attitudes between the public and private sectors. In the former only 28 per cent thought that PRP "improved employee loyalty and commitment"; 47 per cent in the private sector took the same view. And public-sector workers were much less likely to see PRP as a fair way of rewarding people.
These findings were echoed in a survey by David Marsden at the London School of Economics. "In hospitals and the civil service, a lot of line managers felt that it had raised productivity," he reported. "But staff felt it has demotivated them. I don't think teachers will be any different." He found that appraisal was undermined when linked to pay: staff were less likely to discuss their weaknesses and problems and more likely to exaggerate their successes.
Duncan Brown, a consultant specialising in human resources, is a supporter of PRP, but points out that there are pre-conditions for success. "Employers have to be clear about the objectives," he says. It is important that people have confidence in the assessment that underpins the process.
Crucially, he argues, there has to be enough money to bankroll the project. "It would be a disaster if successful teachers were denied performance bonuses because of Treasury-inspired budget restrictions," he says.
The unions have been frosty. Doug McAvoy, general secretary of the NUT, felt that fast-tracking would "leave the vast majority of teachers who have worked hard feeling hurt and insulted". A survey by the union last month demonstrated considerable opposition to the proposals.
Nigel de Gruchy of the NASUWT, the second biggest union, is concerned about the appraisal process. "Year on year is too frequent," he said. "The system will fall into disuse. It should be done at intervals of three, four or even five years."
But an NUT-commissioned study carried out by Coopers and Lybrand last year did not support the knee-jerk opposition to PRP. Commenting on the existing pay arrangements, the management consultants argued: "There is no provision for accelerated progression on the scale in recognition of exceptional performance I interviewees were concerned with I a system that provided automatic and safeguarded salary progression regardless of commitment, effort or quality of teaching."
Kevin Satchwell would echo that point. Satchwell is head of the Thomas Telford Technology College in Telford, Shropshire, one of the most successful schools in the country and an early test-bed for performance-related pay.
"If I have a first-class teacher," he says, "I would be an absolute fool if I didn't recognise that success and reward it." Ninety per cent of his staff received a performance payment last year, with a minimum of pound;500.
"It's got to be by negotiation," he says. "A top-down model won't work. Against the background of the ability range for the cohort, I set targets I If the team delivers, they all win. So they work together."
Mr Satchwell warns against unrealistic targets, what he calls a "barrel to the head approach". "Your staff will leave. They'll lack motivation. They'll be scared. Anxiety levels will soar.
"You can't deliver on that sort of approach, but neither can you let people set their own targets. Unless you have leadership the weaker departments in the school will opt for the cop-out."
Peter Mortimer, the director of London's Institute of Education, is less sanguine about the idea. He argues that PRP is "the wrong answer to the wrong question". He does not believe there is any evidence to support the view that there is a cadre of outstanding teachers held back by incompetent colleagues. PRP, he believes, could encourage teachers to concentrate on those aspects of their work that can be easily measured.
"If the Government accepts that teachers are underpaid," he argues, "then surely it has a duty to raise the pay and thereby the status of the whole profession?" Phil Revell