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A number of innovative practice models have been introduced in an effort to resolve the hospital nursing shortage and improve the working conditions and retention of registered nurses. This study examines the effects of a unit-level self-management model (including salaried compensation and gainsharing) in a number of clinical areas at The Johns Hopkins Hospital in Baltimore, Maryland. In comparisons of nurses on self-managed and traditional nursing units, outcomes examined were nurses' perceptions of their work process, nurses' work satisfaction levels, and nurses' retention. The self-management model is found to increase work satisfaction through effects on two work process variables: coordination of care and effective team performance. The model is also associated with higher retention. Nurses on self-managed units work longer hours but earn increased pay; the effects of hours and pay on work satisfaction and retention are discussed.