In the business world, top performers are routinely rewarded with handsome financial bonuses and generous raises. The flip side is true as well: missing the mark entirely just might mean getting the boot. Such a reality-based compensation system of cause and effect keeps employees on their toes.

Public education, on the other hand, generally operates under a far different – and counterintuitive – set of incentives, linking financial remuneration for teachers with credentials and years on the job, instead of individual student achievement gains. This system may work for veteran teachers with stacks of academic degrees, but it gives short shrift to effective teachers unwilling to jump through bureaucratic hoops.

Until fairly recently, many mainstream educators viewed compensation plans based on teaching merit with suspicion and disdain, labeling them as the pet policy darlings of conservative reformers. Fortunately, in school districts in multiple states across the country, merit pay’s common-sense pragmatism is winning converts. And lawmakers in Washington are taking notice.

In fact, if current draft legislation updating the federal education law, No Child Left Behind (NCLB), is passed, “outstanding” teachers could be eligible for bonuses up to $10,000. In order to qualify, teachers would have to raise student test scores.

This new way of redefining teacher quality is spearheaded in part by the bipartisan Commission on No Child Left Behind. According to a recent article in the Christian Science Monitor, this group is advocating for $400 million in federal funds over the next four years to help states build “growth models” that reveal how students fare academically over time with a particular teacher.

Opposition to merit pay is considerable. The country’s largest teachers’ union – the 3.2 million member National Education Association – is pitching a fit, actively lobbying against merit pay and NCLB draft legislation. NEA’s adversarial stance is no surprise, really; this organization reflexively wars against any sort of meaningful, market-based reform. Despite the ideological shortcomings of its objections, however, the NEA also flexes a powerful political muscle, meaning merit pay may face an uphill battle in Congress. The American Federation of Teachers and the California Teachers Association (CTA) have also voiced objections to the legislation, with CTA President David Sanchez calling merit pay “insulting.”

But local unions in states like Colorado and Minnesota have already broken ranks with the oppressive dogma of the national union. ProComp, a partnership between the Denver Classroom Teachers Association and the Denver Public Schools, has quickly caught on as a way to reward high-performing teachers for student gains and attract competent teachers to hard-to-serve schools. A merit pay initiative in Minnesota has also gained the support of the union; teachers voted by large margins to expand the program in Minneapolis in June.

In North Carolina, Guilford County Superintendent Terry Grier’s “Mission Possible” merit pay plan has garnered national attention, with stories in the New York Times and on National Public Radio. Grier’s program lures teachers to high-poverty schools with bonuses; teachers receive additional money for raising student achievement. Grier is emphatic about a programmatic focus that goes beyond just qualifications, saying to teachers: “We’re also going to pay you based on whether or not you get strong academic rewards from your students’ learning.” Are other school districts around the state watching? Let’s hope so.

What’s the bottom line? Merit pay makes good sense, for students and teachers. Research has shown that merit pay systems may result in more sizeable student gains than traditional compensation programs, so kids clearly win. But so do teachers. Merit pay rewards teachers who are at the top of their game, inspiring excellence and boosting retention. What’s so insulting about that?