The trend of the development in the study of incentive theory today is characterized by the transition from the study of incentive method to the study and planning of the incentive system. As a material incentive form, the performance payment system designed for the teachers in the institutions of higher learning has already been implemented for a few years in Jiangsu and many other provinces. But, How is its efficiency? What's its internal incentive device? And what kind of system of human resource management best meets the need of our new era of knowledge economy and most fits the people who are the mainstay of the time? All these problems remain to be answered. The desire for the solutions of these pressing problems drives the author of the paper to focus her attention on this topic.On the basis of a peruse study of a great amount of literature both at home and abroad, the author has made a thorough and systematic research of the incentive system in both theoretical and positive way, with emphasis on its effectiveness and internal device, the way of which is believed to be the first of its kind in the study of the system in our country. Through the author's painstaking efforts, the study has so far achieved some valuable innovative results and reached the following conclusions: (l)it has verified, for the first time, the effectiveness of the performance payment system in positive method; the two aims of the PP system have been, though not wholely, arrived, ie. to better the performance of the beneficiary and to fulfill the organizational commitment, (2) it has for the first time revealed the components of the satisfaction of payment and pressure of the job, (3) it has revealed the two components of the PP system: the performance and the post-rank, (4) it has, for the first time, demonstrated in a positive way the interaction of the two psychological factors in the internal device of the PP system, ie. the satisfaction of the payment and the pressure of the job, (5) it has for the first time classified, in a positive way, the different payment systems into three types: the performance payment system, post-rank payment system, and the integration of the above two systems, and their respective incentive modals: high work pressure modal, low work pressure modal and high satisfaction of payment and low work pressure modal.