Compa-ratios:
Compensation professionals must consider each employee’s pay level relative to the midpoint of the pay grade.
The midpoint represents the company’s competitive stance relative to the market.
Compa-ratios index the relative competiveness of internal pay rates based on pay range midpoints.
It is calculated as the average rates actually paid divided by the range midpoint:
Base Salary ÷ Midpoint of Salary Range
Interpreting compa-ratios:
A comp-ratio of 1 means that the employee’s pay rate equals the pay range midpoint.
A compa-ratio of less than 1.00 means that the employee’s pay rate falls below the competitive range for the job. In other words, the employee is paid less than the competitive pay rate for the job.
A compa-ratio of greater than 1.00 means that the employee’s pay rate exceeds the competitive pay rate for the job.
Calculate the compa-ratios: (Also, show compa-ratios as percentages.)
Anthony’s base salary is $51,000. The midpoint of his salary range is $46,000. What is Anthony’s compa-ratio? How would you interpret his compa-ratio?
Compa-ratio is:
Interpreted as: