A compa-ratio calculation is an employee’s base salary as a percentage of the base salary range midpoint.

· To calculate compa ratio, you divide the employee’s salary by the salary range midpoint, which will give you a decimal figure. For a percentage figure, you can multiply this number by 100.

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

If the average compa-ratio of a group of employees is 90% to 110%, that is good news. You aren’t over or underpaying overall. But the details matter so check those employees and jobs that are above and below that range. You may have outliers that need further research and pay adjustments.

A range penetration (or position in range or PIR) is a different comparison.

· It is calculated by first subtracting the minimum of the pay grade range from the employee's salary, and then dividing those results by the difference between the maximum and minimum of the same pay grade range.

· If the range penetration is 100% then the employee is paid the maximum of the base salary range. 50% means the employee is paid at the range midpoint. 0% means they are paid at the minimum.

Some employers use both when they analyze employee pay vs. the range (aka market). And some employers prefer one, compa-ratio or range penetration, as their primary reference point.

Do you have a preference? Why?

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