Question

8-12. How should companies address red circle rates for high performers and low performers, respectively?

Answer 1

The company should implement and use the red circle policy of its overall compensation strategy to dig out the benefits. The company should use the policy without affecting the employees in an unpleasant manner and to cost-cutting ideas through the reducing base salary rates. The red circle policy on one hand affect the employee’s existing salary and on the other hand affects negatively the morale among the employees of the company. So, often the red circle policy is used to cut cost on part of both employer and employee.
As a rule, duly defined in the organization, the application of a red circle policy at company place should be handled carefully through :

1) Careful in implementation : Company should use it as motivating factor for all those employees who are working under a disciplined situation. The elimination for the under-performers should be a point of Red circle policies. Thus, the discrimination among the employees should be a aim of the policy.

2) Compensation policy application: The red circle policies should be used to award the High performers and cost saving from the under-performers. The compensation policy should be defined on merits of the employees and not on living standards. The red circle policy always helps in developing good compensation policy.

3) Boosting morale of employees: The red circle policy should be used to boost the morale of the performers and a lesion for the non-performers. It could be best used in promoting an employee and de-grading the employees.

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