For those of you who aren’t living the dream in “Compensation is My Life Land,” the compa-ratio calculation is an employee’s base salary as a percentage of the base salary range midpoint.

If the compa-ratio is 100% then the employee is paid the midpoint of the base salary range.

And range penetration (or position in range or PIR) is calculated by first subtracting the minimum of the pay band from the employee's salary, and then dividing those results by the difference between the maximum and minimum of the same pay band.

If the range penetration is 100% then the employee is paid the maximum of the base salary range.

There are companies that use both and companies that use one of these as their primary reference point.

Do you have a preference? Why?

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