Medical schools are being challenged to develop innovative mechanisms of faculty governance and management that enlist faculty in meeting the demands of a competitive marketplace. The authors describe some of these mechanisms in this article, which is the result of case studies made in 1997 of ten schools. Measures to increase the accountability of faculty to the strategic directions of the school include having appointment letters that specify explicitly the roles and responsibilities of the faculty member, conducting annual performance reviews based upon more objective criteria, tying salary to performance, lengthening the pre-tenure probation period, instituting post-tenure review, and redefining the salary guarantees of tenured faculty. Equally important is balancing these policies with initiatives to strengthen the accountability of schools to their faculty. Improved methods of communication between administrators and faculty and more efficient processes to enable faculty to participate in decision making are appearing. Formal approaches to mentoring and faculty development are being implemented. Recognition and reward programs are being strengthened. Alternatives to tenure are being developed in recognition of the need for increasingly diverse roles of faculty and to ensure job security. The reengineering of the processes that will lead to shared vision and accountability will require massive cultural change. The realization of these goals is likely to depend on the skill of medical school managers and the ability and willingness of faculty members to work collaboratively and creatively in designing new methods to accomplish old missions. Next month's AAMC Paper will explore changes in the structure and management of medical schools and their owned or closely affiliated facilities to improve the efficiency of achieving their core missions.