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:

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

Explanation: The ratio shows what percentage of the market rate an employee is being paid. A ratio of 100% means the employee is paid exactly at the market midpoint.

3. Importance of Compa Ratio

Details: Compa ratio is crucial for compensation analysis, pay equity assessments, and salary structure design. It helps organizations maintain fair and competitive pay practices.

4. Using the Calculator

Tips: Enter both the employee's current salary and the midpoint of the pay range for their position in dollars. 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. Below 80% may indicate underpayment, above 120% may indicate overpayment.

Q2: How often should compa ratios be reviewed?
A: Annually, or whenever salary ranges are updated or significant market changes occur.

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

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

Q5: Should compa ratio be the only factor in pay decisions?
A: No, it should be considered alongside performance, experience, skills, and other relevant factors.