This research focuses on the relationships between principal instructional leadership and the change process of teachers while a district is undergoing the implementation of a performance pay program. The researcher utilized a mixed methods approach. The Vanderbilt Assessment of Leadership in Education (Porter, Murphy, Goldring, & Elliott, 2007) developed by researchers at Vanderbilt University and Penn State was one of the quantitative measures. This instrument is designed to measure instructional leadership from the perspective of teachers and the principal. The Stages of Concern Questionnaire (SoCQ) (George, Hall, & Stiegelbauer, 2006), based on the Concerns Based Adoption Model (CBAM) (Hord, Rutherford, Huling-Austin, & Hall, 1987), is the quantitative instrument used to determine the stage of change of the participants or potential participants of the new performance pay program. Interviews of school district administrators and a review of relevant documents regarding the performance pay implementation serves as the data for the qualitative component of the study. A grounded theory approach was utilized in gathering and analyzing information. This approach allows for discoveries of themes and concepts that are not preconceived by the researcher. Results of the research indicate increased teacher collaboration and fidelity of implementation of the targeted instructional strategies and practices after a performance pay program funded by a United States Department of Education Teacher Incentive Fund Grant was implemented. The monetary incentive and the incentive of professional development may have had equal value to participants. Principals positively impacted the implementation when they were skilled communicators who advocated for teachers and held them to high standards for student performance and supported their efforts in implementation of new instructional strategies to produce higher levels of student achievement. The performance pay implementation was supported by "layers of leadership" which established and continues to sustain the project. [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.]