Teacher incentive systems enable school districts to address the current concerns of their constituencies: teachers' concern with salaries, administrators' concern for attracting good people into the teaching profession, and community concern that increased expenditures for teacher salaries have not improved education. Accordingly, this handbook is designed to assist local school district planners in improving teacher quality and motivation. First, an analysis is provided of the causes of difficulty in attracting highly qualified teachers, motivating all teachers, and retaining superior teachers. Next, major alternative teacher incentive systems are identified, based on analogous systems in the private sector. These include compensation plans, career options, enhanced professional responsibilities, nonmonitary recognition, and improved working conditions. Findings from research and experience about the effectiveness of these alternative incentives are then summarized. Finally, guidelines are provided for selecting, adapting, and implementing teacher incentive programs. An appendix suggests complementary responsibilities for national and state agencies to help strengthen teaching through the improved use of incentives. A 68-item bibliography is included. (TE)