This report is the fifth in a series on cultivating excellence in education for the purpose of training and retraining school leaders of the 1990s. The role of school administrators, and especially building principals; the characteristic administrative functions; the step-by-step procedures for implementation; and the advantages and possible disadvantages of school-based management are discussed. Framing the discussion are two fundamental beliefs: (1) Those most closely affected by decisions should play a significant role in making those decisions; and (2) educational change will be most effective and long-lasting when carried out by people who feel a sense of ownership and responsibility for the process. (JAM)