Enter your salary details to see your compensation ratio.
Understanding Your Compensation Ratio
The Compensation Ratio (also known as Salary Range Penetration) is a crucial metric used by HR professionals and employees to understand an individual's salary in relation to the established salary range for their position. It helps determine if an employee's pay is appropriately positioned within the competitive market rates defined by the company's compensation structure.
How is it Calculated?
The Compensation Ratio is calculated using the following formula:
Compensation Ratio = (Actual Salary / Salary Midpoint) * 100
Where:
Actual Salary: The employee's current base pay.
Salary Midpoint: The midpoint of the defined salary range for the job role. This represents the expected pay for a fully proficient employee at the market rate.
This calculator also uses the salary minimum and maximum to provide context.
Interpreting the Results
The resulting percentage gives insight into where an employee's salary falls within the range:
Below 80%: Typically indicates the employee is paid below the market midpoint. This might suggest room for growth, a need for negotiation, or a potential mismatch in role expectations.
80% – 100%: Generally considered a healthy range, showing the employee's salary is aligned with or approaching the market midpoint.
100% – 120%: Suggests the employee is paid at or above the market midpoint. This often reflects strong performance, extensive experience, or a higher-level role.
Above 120%: May indicate a highly experienced or specialized employee, or that the employee is paid at the very top of the range, with limited room for significant base salary increases without a promotion or change in role.
Why is it Important?
For employers, the Compensation Ratio is vital for:
Equity and Fairness: Ensuring pay is equitable across employees in similar roles.
Budgeting: Managing salary costs effectively.
Talent Management: Identifying high performers who may be underpaid relative to their value and the market.
Retention: Preventing the loss of key talent due to compensation concerns.
For employees, understanding their compensation ratio can:
Empower Negotiations: Providing data to support discussions about salary increases.
Clarify Value: Offering perspective on how their pay aligns with market standards.
Guide Career Development: Highlighting potential pay progression within their role or department.
Use this calculator to gain a clearer understanding of your position within your salary range.
function calculateCompensationRatio() {
var actualSalary = parseFloat(document.getElementById("actualSalary").value);
var salaryMidpoint = parseFloat(document.getElementById("salaryMidpoint").value);
var salaryMinimum = parseFloat(document.getElementById("salaryMinimum").value);
var salaryMaximum = parseFloat(document.getElementById("salaryMaximum").value);
var resultValueElement = document.getElementById("result-value");
var resultInterpretationElement = document.getElementById("result-interpretation");
var resultContainer = document.getElementById("result");
if (isNaN(actualSalary) || isNaN(salaryMidpoint) || isNaN(salaryMinimum) || isNaN(salaryMaximum)) {
resultValueElement.innerText = "N/A";
resultInterpretationElement.innerText = "Please enter valid numbers for all fields.";
resultContainer.style.backgroundColor = "#f8d7da"; // Light red for error
resultContainer.style.borderColor = "#f5c6cb";
return;
}
if (salaryMidpoint <= 0) {
resultValueElement.innerText = "Error";
resultInterpretationElement.innerText = "Salary midpoint must be greater than zero.";
resultContainer.style.backgroundColor = "#f8d7da";
resultContainer.style.borderColor = "#f5c6cb";
return;
}
if (actualSalary < 0 || salaryMinimum < 0 || salaryMaximum salaryMidpoint || salaryMaximum < salaryMidpoint) {
resultValueElement.innerText = "Input";
resultInterpretationElement.innerText = "Warning: Salary minimum is greater than midpoint, or maximum is less than midpoint. Ensure your range is set correctly.";
resultContainer.style.backgroundColor = "#fff3cd"; // Light yellow for warning
resultContainer.style.borderColor = "#ffeeba";
} else {
resultContainer.style.backgroundColor = "#e9ecef"; // Default background
resultContainer.style.borderColor = "#d0d5da";
}
var compensationRatio = (actualSalary / salaryMidpoint) * 100;
var formattedRatio = compensationRatio.toFixed(2);
resultValueElement.innerText = formattedRatio + "%";
var interpretation = "";
if (compensationRatio = 80 && compensationRatio 100 && compensationRatio 120
interpretation = "Your salary is at the upper end or exceeds the range. This may indicate high value or specialized expertise.";
}
resultInterpretationElement.innerText = interpretation;
// Highlight result value
resultValueElement.style.color = "#28a745";
}
function resetCalculator() {
document.getElementById("actualSalary").value = "";
document.getElementById("salaryMidpoint").value = "";
document.getElementById("salaryMinimum").value = "";
document.getElementById("salaryMaximum").value = "";
document.getElementById("result-value").innerText = "–";
document.getElementById("result-interpretation").innerText = "Enter your salary details to see your compensation ratio.";
var resultContainer = document.getElementById("result");
resultContainer.style.backgroundColor = "#e9ecef"; // Reset to default
resultContainer.style.borderColor = "#d0d5da";
}