This paper explores one approach to principal evaluation based on the interaction of principals with the social system of schools. The paper examines some dynamics that shape a social-context/student-achievement connection and their application to principal evaluation. The first part provides a brief background on current principal-evaluation systems and the sparse basic research on principal evaluation. The second part reviews a few principles drawn from scholarship on the social and organizational influence of formal leaders. The implications of this literature for an evaluation framework based on leader-school interaction form the third part, which discusses the importance of effective work relationships, principals' skill in performing organizational analysis, the power of the interaction view of schools, and its applicability to the improvement of principal evaluation. This framework affirms principals' call for a best professional practice standard. Whatever the motives, morals, or beliefs of educators, the standard to which they adhere is grounded in outcomes that are assessed in context. The paper refers to Schon's (1983) context-grounded, interactive view of principal assessment that uses context-imbedded criteria. (Contains 50 references.) (LMI)