Compa-Ratio allows you to evaluate employee salaries against market medians for similar roles & levels. It offers essential insights into individual employees via the 'Employee' tab, and extends to encompass roles and departments through their respective tabs. With this tool, you can make sure your compensation strategies are aligned with performance, tenure, and market standards.

Compa-Ratio, or compensation ratio, is a ratio that compares the salary of an employee with a specific comparative pay target.

By deafult, Compa-Ratio = Employee Salary / Salary range median (midpoint)

Compa-Ratio is calculated by dividing the employee’s salary by the median (midpoint) of the salary range for their position. For example, if an employee’s current salary is $50,000 and the median is $45,000, the compa-ratio would be $50,000 / $45,000 = 1.11 ,which means the employee is +0.11 above the median salary for their role and level.
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By creating a Compensation Philosophy and defining a target percentile, the compa-ratio will be calculated and compared against your target percentile.
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A good tip is to aim for a compa-Ratio between 0.8 and 1.2. However, an employee’s salary within this range may be based on a variety of factors such as experience, skill level or the organization's overall compensation strategy.
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On the People page, under the Role and Department tabs, you will find the ‘Compa-Ratio’ and the ‘'Compa-Ratio Avg.' column.

​Group (role or department) Compa-Ratio Calculation:

​Compa-Ratio Avg. Calculation:

The group (role or department) compa-ratio evaluates the alignment between your actual compensation expenditures and your stated pay strategy, with a particular focus on financial implications. This metric acknowledges that higher earners in your organization disproportionately influence your overall compensation budget. Unlike the average compa-ratio, which treats all employees' pay equally, the group compa-ratio weighs these high earners more heavily, thus providing a more nuanced view of how your pay practices align with your compensation philosophy in terms of budgetary impact.
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​Changing your employee’s salary can impact the compa-ratio, but also in the future when your compa-ratio can be defined by a target percentile, this will also change the calculation of the compa-ratio.

Determining your company's competitiveness is an important part of your compensation philosophy. This is done by setting a target percentile . The compa-ratio can tell if an employee, role or department is above, below, or on target.
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Percentile:

A percentile is a measure that tells you what percentage of the population falls below a certain value. In compensation terms, an employee ranked in the 85th percentile, with a salary of $150K, means that their salary is higher than 85% of the salaries of other employees with the same Compete role and Compete Level in other companies.

Percentiles help organizations determine where an employee's pay stands in comparison to the external job market. For example, aiming for the 75th percentile could be a strategy to attract and retain top talent by offering more competitive pay.

Compa-Ratio:

Compa-ratio is a ratio that compares an individual’s salary to the market average or median for similar positions. It is calculated by dividing the individual’s salary by the market median salary for their position. A compa-ratio of 1.0 means the individual’s pay is exactly at market average. A ratio above 1.0 indicates they are paid above market average, while below 1.0 indicates below market average pay.
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Market Positioning: Percentiles help you position your compensation in the market. For instance, deciding to pay at the 60th percentile can be a strategic move to position your company as a better-than-average payer.

Individual Equity: Compa-ratios can be used to ensure equity in pay among employees within your organization when compared to the market. It allows you to see who is paid above or below the market and by how much.
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Strategic Planning: Use percentiles to set overall compensation strategies. For example, you might decide that certain key positions should be paid at a higher percentile to attract the best talent.

Pay Equity Analysis: Use compa-ratios to ensure individuals are being paid fairly when compared to the external market. It helps to identify discrepancies that may require adjustment.