Compa-Ratio

Compa- ratio is also known as compensation or comparative ratio. It is a measure used to compare current pay rates with midpoints of the salary range. The midpoint of a pay range represents the average pay for that range in other organization’s. An employee’s actual salary to midpoint ratio indicates whether he is paid below and above market rates.

Compa-Ratio Formula

Compa-Ratio = Actual salary rates / Midpoint of the pay range

Different types of Compa-ratios are :

Individual Compa-Ratio:

The individual compa-ratio is a metric that compares a person’s position within a pay range to the midpoint of that range. If an individual’s salary is excessively high or low, it can be adjusted using this calculation.

Individual Compa-ratio = Actual pay range / Midpoint range

Group compa-ratio:

The group compa-ratio measures the difference between privacy and policy for the whole organization.

Group Compa-ratio =  Sum of actual pay / Sum of job reference point rate.

Average Compa-Ratio: The average compa-ratio is computed by summing the individual’s compa-ratio and dividing by the number of individuals.

Average compa-ratio = Sum of Individual Compa Ratio / Total  Number of Individuals