Incentives make people move. They get us to be creative in figuring out how to achieve a goal, and they give us the extra energy to get there. We're all familiar with the use of incentives in the business world -- indeed, they're one of the foundations of our economic system. And recently we've heard some promising ideas about using incentives to encourage serious attempts at school restructuring. A well-designed system of incentives, which includes financial incentives, could lead schools and school systems to be entrepreneurial, to take chances they might otherwise not consider. And that's what we need to turn our schools around. But if we are going to use incentives, we need to be careful: Incentives that are badly handled can demoralize instead of encourage and turn willing workers into people who see no point in making an effort. 

Planned economies offer plenty of cautionary stories about the misuse of incentives. Here's a classic I heard a number of years ago when I was involved in the Sakharov Hearings. The hearings, named for the Soviet physicist and dissident Andrei Sakharov, brought together many people who had managed to get out of the Soviet Union and gave them a chance to testify about conditions there. Some workers described how the regime routinely managed to turn an incentive into a disincentive. They and their fellow workers would be promised that if they exceeded a certain work quota, they'd receive a bonus. This was very attractive because it would help them to purchase something they wanted -- like a nicer home or a car. So they'd work very, very hard and, sooner or later, exceed the quota. But as soon as they got the bonus, the workers would find that the level they'd just worked so hard to reach was now taken for granted and they had a new - and far more difficult -- quota to reach. The rules of the game had been changed. And the workers learned the lesson that there was no point in working hard because they could never work hard enough. 

But we don't need to go to a planned economy to find examples of how misusing incentives can actually turn people off instead of spurring them on. This country offers plenty. And teachers figure prominently in some of them. 

In Texas, for instance, where the state legislature passed a merit pay law in 1984, teachers were told they'd be evaluated and that those who got a certain score would be awarded merit pay. I don't know how many teachers the legislature thought would qualify - and how much lawmakers thought the program would cost -- but teachers are very goal-oriented. So five years later, 100,000 Texas teachers had done well enough on their evaluations to draw merit pay. But the lawmakers reneged and passed a bill that makes it much harder to qualify for merit pay. It's retroactive, too, so 29,000 teachers who qualified under the old rules will have to try again. And who knows? After they succeed, as most of them probably will, perhaps the legislature will raise the standards again. John Cole, president of the Texas Federation of Teachers, says this is like deciding in the middle of a football game that too many touchdowns are being scored and moving the end zone. And you can imagine what it does for the morale of the players. 

Part of the problem with the Texas incentive scheme, Cole says, is that you can't tell when you start what you'll need to be successful. With the Florida Merit Schools program, the issue is not uncertainty but the question of whether it's worth playing the game at all. In 1984, the Florida legislature passed a law instituting a system of awards to schools that met certain high goals. The first year, the awards in winning schools came to approximately $3,000 per person -- not great but not bad. The second year the legislature changed the rules so that awards average $1,000 per person, and they've stayed at that figure ever since. The incentives here are not demoralizing -- unless you look back to the awards people got the first year - but if the point is to spur people on to make an extraordinary effort, these incentives are not likely to succeed. 

The Fairfax County, Virginia, teachers' story is a simpler version of the Texas story in which the powers-that-be also snatched away the reward they had promised just as teachers were about to claim it. Several years ago, the teachers in Fairfax County finally agreed to the superintendent's plan for restructuring teachers' salaries -- and they lived to regret it. The plan, which provided for a 30 percent raise over three years, had a merit pay feature that allowed qualified teachers to apply for I0 percent merit increase. But when the time came to award the merit increases, the school board apparently decided that they couldn't afford the I0 percent and that, furthermore, adding it to the winners' salaries had unpleasant long-term financial and pension implications. So teacher who qualified got a one-time 9 percent bonus instead of a I0 percent merit increase. And a plan that should have been an incentive became, instead, a source of anger and frustration. 

The point here is not that labor practices in American public education resemble those in the Soviet Union (though they sometimes do). It's that, generally, we have used incentives poorly and cynically. If we are serious about finding incentives that will help in restructuring our schools, we'll need to do a lot of experimenting to discover which ones work. We'll also need to avoid the mistakes of the past. And if we don't, instead of arousing the entrepreneurial spirit in our schools, we'll be faced with people who ask, and wisely, "Why bother?"