1. What is Compa Ratio?

The compa ratio (comparative ratio) is a metric that compares an individual's salary to the midpoint of a salary range for their position. It's expressed as a percentage and helps organizations assess how an employee's pay compares to the market rate.

2. How Does the Calculator Work?

The calculator uses the compa ratio formula:

Where:

• Salary — The employee's current salary
• Midpoint of Pay Range — The middle point of the salary range for the position

Explanation: A compa 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. It helps organizations maintain internal pay equity and external competitiveness.

4. Using the Calculator

Tips: Enter the employee's current salary and the midpoint of the pay range for their position. 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 market midpoint. However, ideal ranges vary by organization and position.

Q2: How is pay range midpoint determined?
A: The midpoint is usually determined through market salary surveys and represents the median salary for a particular position in a specific market.

Q3: Can compa ratio be over 100%?
A: Yes, this indicates the employee is paid above the market midpoint, which may be appropriate for high performers or long-tenured employees.

Q4: How often should compa ratios be reviewed?
A: Annually, or whenever significant market changes occur or pay ranges are adjusted.

Q5: What's the difference between compa ratio and range penetration?
A: Range penetration shows where a salary falls within the entire range, while compa ratio compares to the midpoint specifically.