What is Compa-Ratio?
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Compa-ratio is calculated as the employee’s current salary divided by the current market rate as defined by the company’s competitive pay policy. Compa-Ratios are position specific. Each position has a salary range that includes a minimum, a midpoint, and a maximum. These three values represent industry averages for the position. A Compa-Ratio of 1.00 or 100% means that the employee is paid exactly what the industry average pays and is at the midpoint for the salary range, A ratio of 0.75 means that the employee is paid 25% below the industry average and is at the risk of seeking employment with competitors at a higher pay that is perceived equitable. A ratio of 1.15 compa-ratio would mean the employee is paid above the industry average.