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Compa Ratio Formula:
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The compa ratio (comparative ratio) is a measure that compares an individual's salary to the midpoint of a salary range for their position. It's expressed as a percentage and helps determine how an employee's pay compares to the market rate.
The calculator uses the compa ratio formula:
Where:
Explanation: A compa ratio of 100% means the salary is exactly at the market midpoint. Below 100% indicates below-market pay, while above 100% indicates above-market pay.
Details: Compa ratio is crucial for both employees and employers. It helps in salary benchmarking, pay equity analysis, and compensation planning. Employers use it to ensure fair pay practices, while employees can use it to understand their market position.
Tips: Enter your current salary and the midpoint of the pay range for your position (both in the same currency). The midpoint is typically provided by HR or can be found in compensation surveys for your role and location.
Q1: What is a good compa ratio?
A: Typically, 80-120% is considered acceptable. 100% means you're paid at market rate. Below 80% may indicate underpayment, while above 120% may indicate overpayment or a highly specialized role.
Q2: How often should compa ratio be calculated?
A: Annually, or whenever there's a significant change in salary or market rates.
Q3: Does compa ratio vary by location?
A: Yes, as salary ranges vary by geographic location due to cost of living differences.
Q4: Can compa ratio be over 100%?
A: Yes, this indicates pay above the market midpoint, which may occur for high performers or in hard-to-fill positions.
Q5: 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.