1. Compa-Ratio, short for compensation ratio, is a comparison of an individual’s salary to the midpoint of a given pay range.
2. Range Penetration measures an employee’s salary as a percentage of the total pay range.
3. Market Ratio compares an employee's salary to the market rate for their job.
4. Salary Range Spread is the percentage difference between the minimum and maximum salaries in a pay range.
5. Midpoint Differential (or Midpoint Progression) measures the percentage difference between the midpoints of two consecutive pay ranges.
6. Pay Equity Ratio (or Pay Gap Ratio) compares the pay of different demographic groups (e.g., gender, race) to assess pay equity within the organization.
7. Geographic Differential refers to the comparison of the cost of labor in different geographic locations.
8. Compensation to Revenue Ratio compares total compensation costs to the revenue generated by the organization. It helps in assessing the efficiency and sustainability of compensation expenses relative to the organization’s revenue.
9. Overtime Ratio measures the proportion of overtime pay to total base pay. This ratio helps in understanding the extent of overtime usage and its impact on overall compensation costs.
10. Pay Compression Ratio compares the average salary of subordinates to the salary of their supervisor.
11. The Employee Productivity Ratio compares the total output of employees relative to their total compensation.
12. Performance-Based Pay Ratios assess the relationship between performance and pay, often used in incentive plans.
13. Return on Investment (ROI) for Compensation measures the return on investment for money spent on compensation, helping to evaluate the effectiveness of compensation strategies.
14. An Executive Pay Ratio compares the total executive compensation of the CEO (usually) to the median employee compensation within the same company. This ratio is often used to assess and highlight disparities in compensation within an organization and to promote transparency regarding pay practices.
What is missing from this list?
Using these compensation-related ratios helps organizations:
· Gain a comprehensive understanding of the financial implications of compensation decisions and help make informed strategic choices
· Ensure their pay practices are competitive, equitable, and fair
· Align compensation strategies with their overall business objectives
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