The Strategic Management of Human Capital in Education Project was founded in 2008 with one goal: to improve student achievement dramatically in the 100 largest urban school districts. Unless teaching quality and principal leadership improve significantly, lasting education improvement is impossible. In policy terms, without "strategic management" of human capital the nation's schools will not be able to attain their goal: increased student achievement. "Human capital" is the "people side" of education reform. The "strategic management" of human capital is the systematic process of aligning school district academic goals with school district organization and practices, from curriculum and assessment to teacher and administrator recruitment, retention and compensation. This report calls for close cooperation between states and districts, determined commitment from all parts of the education policy community including teachers, teacher union/associations, and administrators, and strong political leadership. The report is based on six broad Strategic Management of Human Capital in Education (SMHC) principles and 20 state and local recommendations. The six principles are: (1) Improving performance, closing the gap; (2) Effective teachers in every classroom, effective leaders in every school; (3) Excellent instruction, successful learning; (4) Strategic human capital management, system alignment, continuous improvement; (5) Rewards and consequences: Rethinking career progression and pay; and (6) Core competencies: Explicit, transparent, accountable. These six guiding principles undergird the strategic management of human capital, reflecting emerging understanding of the 21st century school. In a word, the overarching issue is "alignment." It is the concept that knits the six principles together. Among the bold actions this report advocates for at the state and district levels are: (1) At the state level, requiring districts to use the results of performance-based teacher and principal evaluation systems to identify professional development needs, career leadership opportunities, and specific emphases in ongoing professional development; (2) At the district level, systematically developing new teacher intensive induction and mentoring; and (3) At the district level, providing intensive, ongoing and high quality professional development. A critical element of any reform effort is an intensive, targeted and sustained professional development program that brings consistency to teaching and assessment. This report lays out a clear blueprint for reform and urges state and local policymakers to implement these recommendations as soon as they are able.