1. What is Compa Ratio?

The Compa Ratio (or Comparative Ratio) is a measure that compares an individual's salary to the midpoint of a salary range for their position. It helps organizations assess how an employee's pay compares to the market rate for their role.

2. How Does the Calculator Work?

The calculator uses the Compa Ratio formula:

Where:

• \( \text{Salary} \) — The employee's current salary
• \( \text{Midpoint of Pay Range} \) — The middle point of the established salary range for the position

Explanation: A ratio of 100% means the employee is paid exactly at the market midpoint. Below 100% indicates below-market pay, while above 100% indicates above-market pay.

3. Importance of Compa Ratio

Details: Compa ratio is crucial for compensation analysis, pay equity assessments, and ensuring competitive compensation strategies. It helps organizations maintain internal equity and external competitiveness.

4. Using the Calculator

Tips: Enter the employee's current salary and the established midpoint for their pay grade. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good compa ratio?
A: Typically 80-120% is considered acceptable, with 100% being the market midpoint. However, ideal ranges vary by organization and position.

Q2: How often should compa ratios be reviewed?
A: Annually during compensation reviews, or when significant market changes occur.

Q3: Can compa ratio be over 100%?
A: Yes, this indicates pay above the market midpoint, which may be appropriate for high performers or critical roles.

Q4: How does compa ratio differ from range penetration?
A: Range penetration shows where salary falls within the entire range, while compa ratio compares to the midpoint specifically.

Q5: Should compa ratio be the only compensation metric?
A: No, it should be used alongside other metrics like performance ratings, experience, and market benchmarks.