This guide is intended as a resource for school or school district leadership teams who desire to rethink the teacher evaluation process. Three chapters address the task of designing a teacher evaluation system that encourages self-reflection and continuous improvement, as well as the personal and professional growth of experienced teachers. The first chapter explores the differences between a formative teacher evaluation system (for professional growth) and a summative system (for accountability). Chapter 2 outlines the who, what, and how of formative evaluation. Chapter 3 examines the design steps involved in developing a formative evaluation system, describes some formative evaluation systems currently being piloted in the SouthEastern Regional Vision for Education (SERVE) region, and provides a sample planning worksheet. The guide includes: a model dual-purpose teacher evaluation system (formative in the first and second years, summative in the third year); and a matrix of evaluation methods by sources of feedback (in-class observation, videotape of teaching, student achievement results, journals, portfolios, questionnaires, and interviews. An annotated bibliography and 24 references complete the document. (LL)