This Policy Brief focuses on the nature and effectiveness of these plans. Generic descriptions of three types of plans are provided, followed by a synthesis of research results on their effectiveness. A set of guidelines for effective practice is then provided to help states and districts embarking on these forms of performance pay. The authors conclude with a look ahead at recent developments in performance pay plans and other deviations from the traditional teacher salary schedule. Appended are: (A.1) Research Findings on School-Based Performance Award Programs (SBPA); (A.2) Research Findings on Knowledge- and Skill-Based Pay; and (A.3) Research Findings on Combined Plans.