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The purpose of the study was to investigate the factors influencing school systems' decisions behind crafting, developing, and revising differentiated pay plans that require districts to abandon the practice of providing only across-the-board salary increases for experience and advanced degrees by adding at least one additional criterion for compensating educators. In addition, this study determined the effectiveness of the differentiated pay plans through the perspectives of directors of schools, school principals, assistant principals, and teachers employed in Tennessee public schools. Nine directors of schools, 29 school administrators, and 99 certified teachers employed in 15 school systems agreed to complete an online survey to determine the factors that influenced the crafting and development of differentiated pay plans in their school district. District goals for developing and implementing differentiated pay plans included rewarding teachers for demonstrating outstanding classroom performance, assuming additional instructional roles, filling hard-to-staff positions, increasing responsibility of highest performing teachers, and improving student achievement. Results of the study revealed that when changes to differentiated pay plans were made, directors of schools attributed those changes to a shift in district goals and to their plans' inability to produce the desired effect on combating hard-to-staff vacancies. When asked how they would rate the effectiveness of their districts' differentiated pay plans, approximately half of participating directors of schools and school administrators assigned a letter grade of D to their own district's plan, which may be attributed to offering low bonus amounts, ineffectively communicating pay plans to educators, and not surveying teachers to determine their perceptions of the district's pay plan. Results of the study also revealed that 92% of surveyed teachers supported salary components that included more elements than degree and experience level, as compared to traditional salary models. Additionally, 50% of teachers confirmed that performance bonus opportunities increased their motivation to improve their classroom performance, and 78% of surveyed teachers reported that bonuses would cause them to accept additional instructional responsibilities. Fifty percent of participating teachers reported that they would be willing to take a hard-to-staff position when a bonus was offered. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://www.proquest.com/en-US/products/dissertations/individuals.shtml.]