Abstract
Hospital mergers are common events, producing highly complex corporate structures that allow the member hospitals to position themselves more competitively in a managed-care environment. Associated with this growing merger trend is the practice of performance-based employee compensation that links both individual and team efforts directly with the business strategies of the newly formed system. A unique challenge of initiating performance-based compensation for nurses is defining and quantifying the important aspects of nursing practice so that differentiation between performance levels can be identified. When highly individualized nursing cultures meet to create a performance appraisal tool, this challenge is accentuated. The authors describe the development of a performance appraisal tool for registered nurses by a newly merged healthcare system.