Problem$-$Solving Application Incentives, Performance, and Schools

The Houston Independent School District $($HISD$)$ attempted to improve the performance of its poorest$-$rated schools by offering a monetary incentive to teachers. However, the desired result$-$that better teachers would migrate to worse schools and improve their ratings$-$did not materialize. This activity is important because it demonstrates how performance management decisions such as these have multiple effects, not all of which are desired.

The goal of this exercise is for you to consider what went wrong with HISD's plan and what alternatives may now exist.

Read about HISD and its incentive plan. Then, using the three$-$step problem$-$solving approach, answer the questions that follow.

Like organizations in other industries, the Houston Independent School District $($HISD$)$ believed it could direct, motivate, and improve performance with monetary rewards. The goal was to improve the skills and test scores of students at $40$ underperforming schools.

Officials thought the underlying reasons for the underperformance were low performing teachers, as those at the target schools were twice as likely to be rated "ineffective" or "needs improvement" than in in well$-$performing schools. Worse still, teachers at these same schools were half as likely to be rated "highly effective." School district leaders reasoned that offering money$-$ $$5000$ signing bonuses$-$would attract better teachers to the poor performing schools.

Officials spent nearly $$7$ million to incentivize highly rated teachers to move to the target schools in the $2017-2018$ school year, and they planned to spend a similar amount in $2018-2019.$ But there was a problem$-$it didn't work. The $40$ schools experienced tremendous turnover$-40-60$ percent of teachers at the worst schools quit$-$but the teachers who replaced them had nearly identical $($poor$)$ ratings when they arrived.