The objective of the project was to develop methods for establishing output and input performance standards for the placement and placement-support functions of the U.S. Employment Service (ES). Volume 3 presents the conceptual framework, practical definitions, and feasibile methods for establishing and using performance standards. The ES labor exchange function is conceptualized as a production process at the labor area level, with employment, unemployment, growth, and composition of labor force and industry imposing constraints on performance. Placement standards can be developed for each individual labor area using statistical techniques to represent the effects of these constraints, and a comparison of actual performance with the standard used for evaluation and budgeting. For input standards, 13 functional activities were defined. Time ladders and questionnaires were developed for use with secondary data sources in a sample of labor areas to establish initial input standards. These standards would be based on the patterns of resource utilization, service, and quality characteristic of high-performing areas within each type of labor area. A detailed implementation plan is presented. (Author)