Unless investments in education increase significantly, schools will probably experience difficulty competing for talented teachers. This report presents findings of a study that investigated issues of teacher recruitment, compensation, development, and retention in private schools. Data were obtained through a questionnaire of 652 teachers at 21 different independent schools in the United States and abroad, from a case study of one independent school, and a review of research literature. The study concluded that: (1) the demand for teachers, particularly mathematics and science teachers, will intensify during the next decade; (2) the structure of a compensation system has less impact on teacher satisfaction than does the school's salary in comparison with the salary offered by competitors; (3) a school's board of trustees and head should design a compensation system that complements the mission and philosophy of the school; (4) a school's faculty should be included in any substantial effort to design or redesign a compensation system; (5) school leaders have three basic choices in considering salary systems: a strict scale in which salary depends on years of experience, a "band" scale, in which a school head has the discretion to calibrate pay in part according to performance, and no scale, in which a school competes under a free market system; and (6) schools that are not clear about their compensation policies will create the perception among some teachers that the school is biased against women in its salary practices, particularly if there is no salary scale. Twenty-two figures are included. Appendices contain survey responses from the 21 schools and a summary of survey data. (Contains 74 references.) (LMI)