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Compensating the red-circle employee.

P R Reed, M J Kroll

    Health Progress (Saint Louis, Mo.)
    |September 7, 1985
    PubMed
    Summary
    This summary is machine-generated.

    Hospitals often have "red-circled" employees, paid above their salary grade maximum. The "no increase" policy best maintains wage structure integrity, though it requires proactive employee development to retain talent.

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    Area of Science:

    • Healthcare Administration
    • Human Resources Management
    • Organizational Behavior

    Background:

    • Red-circled employees, compensated beyond their pay grade's maximum due to merit or tenure, are prevalent in hospital settings.
    • These employees pose a significant challenge to the fundamental principles of established wage and salary structures.
    • Existing compensation practices require careful examination to address the complexities introduced by red-circled personnel.

    Purpose of the Study:

    • To identify and analyze current strategies employed by hospitals to manage red-circled employees.
    • To evaluate the implications of different compensation approaches on wage structure integrity and employee retention.
    • To determine the most effective approach for managing employees compensated beyond their designated pay grade maximums.

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    Main Methods:

    • A survey was conducted across 18 hospitals located in the Southwestern United States.
    • Data collection focused on the specific policies and practices implemented to address red-circled employees.
    • Five distinct management strategies were identified and categorized based on survey responses.

    Main Results:

    • Identified five common approaches: regular increases, no increases, limited increases, lump-sum bonuses, and no established policy (case-by-case).
    • The 'no increase' strategy aligns most closely with maintaining the integrity of a wage/salary structure by ensuring pay reflects job value.
    • Case-by-case handling exhibits significant variability in application among different red-circled employees within the same institution.

    Conclusions:

    • The 'no increase' policy is recommended for preserving the intended structure and fairness of compensation systems.
    • While this approach may risk losing valuable staff, proactive investment in employee training and development can mitigate turnover.
    • Institutions must balance adherence to salary structures with strategic support for employee career progression to retain top talent.