THIS DEMONSTRATION PROJECT WAS CONDUCTED BY THE MICHIGAN DEPARTMENT OF SOCIAL SERVICES FROM JULY 1, 1975 TO JUNE 30, 1976 WITHIN THE LOCAL AGENCIES OF THE FOLLOWING FOUR COUNTIES: WAYNE (NORTHWEST DISTRICT), GENESEE, WASHTENAW, AND MIDLAND. TWO AGENCIES IN THE SOUTHWEST DISTRICT OF WAYNE COUNTY, AND IONIA COUNTY SERVED AS CONTROLS. THE PURPOSE OF THE AGENCY DEVELOPMENT PROGRAM WAS TO ASSIST ADMINISTRATORS AND SUPERVISORS TO DEVELOP AN EFFICIENT MANAGEMENT SYSTEM BASED ON RELEVANT FACTORS IDENTIFIED IN TWO NATIONAL STUDIES OF SOCIAL SERVICE AGENCIES. THE PROGRAM WAS DESIGNED FOR ASSESSMENT OF AGENCY CONDITIONS, DIAGNOSIS OF PROBLEMS, AND IMPLEMENTATION OF STRATEGIES FOR IMPROVEMENT. IT CONSISTED OF THE FOLLOWING PROCEDURES: (1) TRAINING PROGRAMS FOR ADMINISTRATORS AND SUPERVISORS; (2) A PLANNED ANALYSIS OF AGENCY WORK CONTEXTS WITH STRATEGIES FOR IMPLEMENTING CHANGES; AND (3) JOB AIDS FOR IMPROVING MANAGEMENT. CRITERION DATA WERE COLLECTED PRIOR TO THE START OF THE PROGRAM AND AFTER ITS COMPLETION. THE FOLLOWING MEASURES OF AGENCY CLIMATE AND VARIABLES INDICATIVE OF OPERATIONAL EFFECTIVENESS ARE DESCRIBED: APPLICATIONS PROCESSED, ADMINISTRATIVE COSTS, WORK INCENTIVE PROGRAM (WIN), SUPERVISORY ACTIVITIES, MEDICAID SCREENING, OVERDUE REDETERMINATIONS, CRITICAL ERRORS, AND EMPLOYEE TURNOVER AND ABSENTEEISM. DURING THE DEMONSTRATION YEAR, POSITIVE CHANGES OCCURRED IN TWO DEMONSTRATION AGENCIES. NO CHANGES WERE FOUND IN THE CONTROL AGENCIES. IT IS CONCLUDED THAT, WHEN USED ACCORDING TO THE GUIDELINES PROVIDED, THE AGENCY DEVELOPMENT PROGRAM IS FEASIBLE FOR IMPROVING THE WORK CONTEXTS AND OPERATIONS OF LOCAL SERVICE AGENCIES. SUCCESSFUL PROGRAM IMPLEMENTATION REQUIRES EFFORT AND SKILL ON THE PART OF LOCAL AGENCY MANAGERS, WHO SHOULD RECEIVE SUPPORT FROM CONSULTANTS KNOWLEDGEABLE IN THE CONCEPTS AND OPERATIONS OF THE PROGRAM. THE BENEFITS, PROCEDURES, AND REQUIREMENTS SHOULD BE INCLUDED IN THE PLANNED INTRODUCTION OF THE PROGRAM TO LOCAL MANAGERS. TABULAR DATA, FIGURES, AND APPENDIXES INCLUDING SAMPLES OF THE TRAINING PROGRAMS, AGENCY PERSONNEL QUESTIONNAIRE, WORK CONTEXT FACTORS, AND SCORES ARE PROVIDED. (AUTHOR ABSTRACT MODIFIED--JCP)