This paper provides an overview of some of the issues involved in developing and implementing vocational education effectiveness indicators and systems. The paper first discusses educational effectiveness indicator systems--with the emphasis on "systems" in contrast to individual effectiveness indicators taken alone--and stresses the need to create a coherent system. Policy issues related to indicator development and use are the next focus of the document, with cautions being given about indicators measuring the wrong outcomes and being used for the wrong reasons. The next two sections focus on the two types of effectiveness indicators: labor market outcomes as indicators of program performance and student learning outcomes as indicators of program performance. Examples of states using both types of measure are then provided. States that use the labor market approach include Missouri, Kansas, South Carolina, Florida, and Kentucky. States using student learning outcomes include Ohio, New York, Arkansas, and North Carolina. Alternative vocational education system effectiveness measures are then discussed. Examples of states that use effectiveness indicators that go beyond outcomes are Illinois, Oklahoma, Minnesota, Tennessee, and California. Finally, the Virginia approach is used as a model for a two-step approach to developing effectiveness indicators. A summary of the document points out the pitfalls in both labor market and student learning outcomes indicators but urges development of indicator systems as a step in improving vocational education. Thirty references are included in the document. (KC)