A Compa-Ratio (Compensation Ratio) is a critical human resources metric used to compare an individual employee's salary against the market midpoint for their specific role or pay grade. It helps organizations ensure internal equity and external competitiveness.
The percentage result tells you exactly where an employee stands relative to the average market rate:
80% or lower: Often seen for new hires or employees in a "learning" phase of a new role.
90% to 110%: Considered the "market competitive" range. This is where fully proficient, experienced employees should ideally sit.
110% to 120%: Reserved for high performers, those with niche expertise, or employees nearing promotion to a higher grade.
Above 120%: May indicate a "red circle" rate where the employee is overpaid for the current market value of that specific role.
Practical Example
If a Senior Developer earns $105,000 and the market midpoint for that position in your city is $100,000, the calculation is:
($105,000 / $100,000) * 100 = 105%
This indicates the employee is paid 5% above the market average, suggesting they are a seasoned professional or a strong performer.
Frequently Asked Questions
Why is the midpoint used instead of the maximum?
The midpoint represents the competitive "market rate." Paying at the midpoint suggests the company is paying exactly what the market requires for a fully competent employee.
Should everyone be at 100%?
No. Newer employees typically start lower (e.g., 85%), while top performers or long-tenured experts are often positioned above 100%.
function calculateCompRatio() {
var salary = parseFloat(document.getElementById('currentSalary').value);
var midpoint = parseFloat(document.getElementById('payMidpoint').value);
var resultDiv = document.getElementById('compResult');
var ratioDisplay = document.getElementById('ratioDisplay');
var interpretation = document.getElementById('interpretation');
if (isNaN(salary) || isNaN(midpoint) || midpoint <= 0) {
alert("Please enter valid positive numbers for both Salary and Midpoint.");
return;
}
var ratio = (salary / midpoint) * 100;
var message = "";
var color = "#2c3e50";
if (ratio < 80) {
message = "Under-Market: The salary is significantly below the market midpoint. This is typical for entry-level roles or suggests a need for a market adjustment.";
color = "#e67e22";
} else if (ratio >= 80 && ratio < 90) {
message = "Learning Zone: The employee is likely still developing the full skill set for the role or is a recent hire.";
color = "#f1c40f";
} else if (ratio >= 90 && ratio <= 110) {
message = "Market Competitive: This is the target range for a fully competent employee meeting performance expectations.";
color = "#27ae60";
} else if (ratio > 110 && ratio <= 120) {
message = "Premium Zone: The salary is above market average, usually reserved for high-potential experts or top performers.";
color = "#2980b9";
} else {
message = "Above Market: The salary is highly competitive. Monitor this to ensure the role still matches the compensation level or consider promotion.";
color = "#8e44ad";
}
ratioDisplay.innerHTML = ratio.toFixed(2) + "%";
ratioDisplay.style.color = color;
interpretation.innerHTML = message;
resultDiv.style.display = "block";
}