How can we differentiate the pay of teachers on the basis of their performance while also treating them fairly? This familiar education-policy debate used to play out at the Hood family dinner table.

My father spent most of his career as a principal in the Charlotte-Mecklenburg school system. The way he saw it, most principals had the ability to distinguish among their excellent, average, and awful teachers even before the advent of value-added testing and careful third-party evaluations. They watched the teachers perform, examined student work and records, and listened to parents.

On the other hand, principals lacked the tools to use this information effectively. They couldn’t offer large pay raises or bonuses to high-performing teachers to keep them in the classroom. Dismissing consistent low-performers was often a challenge, as well, because of the distortions of the tenure process. If a teacher complained that no matter how hard she worked and how much success she had with her students, she was still being paid the same as the slacker down the hall, my dad could only offer words of encouragement.

My mom heard my dad say all this. She spent most of her career in the Charlotte-Mecklenburg Schools, too, but as a teacher. Her subject was art. For a time, her job consisted of teaching art at several schools throughout a single academic year. Later, she was assigned to single schools on a full-time basis. The point is, she worked at many different schools over the years. She experienced many different principals.

Some of them, she said, were good managers and inspiring leaders. If they had possessed more authority to hire, fire, and compensate teachers on the basis of performance, she would have had confidence in the decisions they made. Naturally, my mom would have expected to make more in this scenario.

But other principals, in her experience, were lazy, vindictive, or in over their heads. To give them greater authority would have been disastrous, my mother argued. They’d have played favorites and punished teachers who dissented, made other teachers look bad (by working harder), or provoked parental complaints (by being a tough grader, for instance).

My mother still thought it was foolish for the school system to pay teachers by a rigid formula based on such factors as years of experience and academic credentials. She didn’t see any practical alternative at the time, however. A couple of visits by an outside evaluator wouldn’t be enough to form a valid judgment, she believed. And a tool like value-added assessment would have been difficult to apply to her work teaching art.

Like most non-educators, I’m an advocate of ditching tenure and paying teachers more if they take on more duties, work in difficult-to-staff jobs, and excel at teaching students. I don’t think we can just throw up our hands, say the job is impossible, and do what we know doesn’t move the needle on student performance, such as giving teachers raises when they acquire master’s degrees in education. But I also recognize that reforms have to be built on trust, empirical study, and clearly defined goals and measures.

We need to employ a mixture of tools, including but not limited to value-added assessment. Principals need training in order to use these tools effectively and to be held accountable for results. To address the concern that performance pay for individual teachers might discourage collaboration and teamwork, there also needs to be a way to reward teachers as part of groups (although you have to avoid making the groups so large that a teacher can shirk his responsibilities and still float with a rising tide).

While it has proven difficult to do performance pay well, there are some promising models. For example, a paper recently published in the Journal of Policy Analysis and Management found that the District of Columbia’s IMPACT system seems both to have motivated good teachers to excel and nudged low-performing ones to find more suitable careers.

There has to be a way to move forward here that both my dad and my mom would endorse. Let’s find it.

John Hood is chairman of the John Locke Foundation. Follow him @JohnHoodNC.