1. What is Compa Ratio?

The Compa Ratio (or Compensation Ratio) is a measure that compares an individual's actual 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:

• \( \text{Actual Salary} \) — The employee's current salary
• \( \text{Midpoint Salary} \) — The midpoint of the salary range for the position

Explanation: The ratio shows where an employee's salary falls within the pay range for their position. A ratio of 1.0 means the salary is exactly at the midpoint.

3. Importance of Compa Ratio

Details: Compa Ratio is crucial for compensation analysis, pay equity assessments, and salary planning. It helps organizations maintain fair and competitive pay structures.

4. Using the Calculator

Tips: Enter both actual salary and midpoint salary in dollars. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good compa ratio?
A: Typically, 0.8-1.2 is considered acceptable, with 1.0 being the market midpoint. Values below 0.8 may indicate underpayment, while above 1.2 may indicate overpayment.

Q2: How often should compa ratios be reviewed?
A: Annually, as part of compensation reviews, or whenever salary ranges are updated.

Q3: Can compa ratio be more than 1?
A: Yes, values above 1 indicate the salary is above the midpoint of the range.

Q4: How does compa ratio differ from range penetration?
A: Range penetration shows where salary falls between minimum and maximum, while compa ratio compares to the midpoint.

Q5: Should compa ratio be used for all positions?
A: It's most useful for positions with well-defined salary ranges. For unique or executive roles, other metrics may be more appropriate.