This monograph, one of a series prepared for the Employment and Training Administration, attempts to provide a new approach to on-the-job training (OJT) and to offer the Comprehensive Employment and Training Act (CETA) prime sponsors a basis for new programmatic directions. The monograph is divided into seven chapters. Subject areas included are (1) philosophy and purposes of OJT; (2) historical development of OJT policies; (3) considerations in developing and operating OJT programs; (4) considerations for marketing OJT contracts; (5) OJT contract design; (6) OJT program alternatives, innovations, and flexibility; and (7) conclusions and recommendations. Suggestions and examples are given involving such concepts as incentive payments, variable reimbursement rates, and contract extensions. Specific tailoring of contracts to individual trainee needs is explained. Also, some opinions are provided on the use of voucher systems wherein trainees develop their own personalized training programs. It is recommended that prime sponsors should give priority to establishing and maintaining a good management information system, give priority to disadvantaged clients, consider personal voucher contracts, strive for more meaningful employment opportunities in OJT contracts, and plan and utilize OJT to a much greater extent. (LRA)