Compa-Ratio

Compa ratio is a ratio used to measure the competitiveness of an organization's salary structure. It is calculated by dividing an employee's actual salary by the midpoint of the salary range for the position they hold.

If a company offers a competitive salary, an employee's compa ratio will be equal to 1 (100%). If their salary is less than the midpoint of their salary range, their compa ratio will be less than 1 (less than 100%). On the other hand, if their salary is above the midpoint of their salary range, their compa ratio will be greater than 1 (more than 100%).

Compa ratio is often used by HR professionals and compensation analysts to evaluate how competitive an organization's pay practices are compared to the market. It can help identify areas where salaries are lagging and adjust pay structures to attract and retain top talent.