What is Compa Ratio?

Compa ratio, or comparative ratio, is a metric that compares an individual’s or group’s salary to the midpoint of a defined salary range. It indicates whether an employee or a group of employees is paid below or above market rates and is one of the most widely used compensation   metrics.

A compa ratio that is too low indicates a risk of losing your top performers to jobs and organizations that offer higher compensation and also a challenge to replace them. On the other hand, a compa ratio that is too high means that you might be paying your employees more than most other organizations, and this can eat into your bottom line. 

You can compare the average ratios of groups, for example, departments or teams, to see differences between groups. Identifying those results can help ensure pay equity in and across groups in your organization and determine pay raises and promotion potential. 

HR and compensation professionals have found a variety of ways to use the compa ratio metric. As a result, it has become one of the most helpful ratios in pay and compensation analysis.