No one can doubt Sir Michael Wilshaw's credentials when it comes to determining what will get the best performance out of pupils in a school in a disadvantaged community. His record in sending 10 pupils from Hackney's Mossbourne Academy to Oxford University last year speaks for itself.

It is for this reason that the head of Ofsted's message yesterday – that teachers need to go the extra mile, keep their pupils in schools longer, and be rewarded for it – should be heeded. Likewise, his exhortation to future headteachers not to be afraid to say to poorly performing subordinates that they have forfeited their right to an annual pay rise would go hand in glove with such a system.

It is a message that also has the backing of the Secretary of State for Education. Michael Gove has asked the teachers' pay review body to look at introducing more flexibility into the system and produce a report on the subject by September. Originally, this instruction concentrated on the idea of regional pay – with teachers serving the poorest areas earning less, in line with the salaries of the rest of the community. By removing the inducement for teachers to work in the poorest-performing schools, however, such a proposal stands in direct contradiction to the thrust of Sir Michael's argument, that teachers' incentives should reward the hardest workers rather than be distributed regardless of performance. As such, the expectation that Liberal Democrat opposition will see the Cabinet scrap the plan is welcome.

With regional pay off the table, the review body is left grappling with the issue of flexibility. And a note of caution must be added here, too. There is a growing sense that the Government's emphasis is more on either penalising, or even weeding out, the poorest performers, than on rewarding excellent teachers. It is an impression which must be dispelled, if we are to continue to attract sufficient, and sufficiently talented, recruits into teaching, particularly in inner-city schools.

Serious thought also needs to be given to the question of how to assess a good classroom teacher. Simply concentrating on the performance of the pupils, as has historically been the case, is not good enough. The message last week from Michelle Rhee – the former head of education in Washington DC who has a reputation in the US as a "witchfinder general" of bad teachers – is an interesting one. Ms Rhee says teachers should be assessed on the commitment they show towards promoting extra-curricular activities and out-of-school events as well as on their actual teaching.

The balance can, of course, tip too far. Teachers cannot, and should not be expected to, solve all society's ills. Sir Michael's message that pupils in disadvantaged areas should be kept in school longer to insulate them from the chaos of their lives has much to recommend it. Activities at school cannot fail to be preferable to the drugs and gangs to which many young people in deprived areas are exposed. That does not mean, though, that there should be any lack of effort in tackling the issues of poor housing, the lack of youth club facilities, or the need for good parenting classes for those who find it more of a struggle to bring up children.

Sir Michael's speech to future headteachers yesterday was interesting, then. But more interesting still is his ability to address the problems he has enumerated. Ofsted is both the education standards watchdog and is also responsible for children's services. Sir Michael's background leaves him more familiar with school matters, but there are issues on the other side of his beat that he needs to be addressing, too. Teachers must do more. But even the best can only achieve so much.