Thomas J. Kane, Eric S. Taylor, John H. Tyler and Amy L. Wooten:

“The Widget Effect,” a widely read 2009 report from The New Teacher Project, surveyed the teacher evaluation systems in 14 large American school districts and concluded that status quo systems provide little information on how performance differs from teacher to teacher. The memorable statistic from that report: 98 percent of teachers were evaluated as “satisfactory.” Based on such findings, many have characterized classroom observation as a hopelessly flawed approach to assessing teacher effectiveness.
The ubiquity of “satisfactory” ratings stands in contrast to a rapidly growing body of research that examines differences in teachers’ effectiveness at raising student achievement. In recent years, school districts and states have compiled datasets that make it possible to track the achievement of individual students from one year to the next, and to compare the progress made by similar students assigned to different teachers. Careful statistical analysis of these new datasets confirms the long-held intuition of most teachers, students, and parents: teachers vary substantially in their ability to promote student achievement growth.