About the Compa-Ratio Calculator
This compa-ratio calculator shows where an employee's pay sits within its salary range. Enter the salary and the range minimum, midpoint and maximum. It returns the compa-ratio (salary ÷ midpoint), range penetration (how far through the band the salary is), the quartile, the range spread and the raise needed to reach the midpoint.
Compensation teams, HR business partners and managers use these measures in merit reviews, promotion decisions, offer approvals and pay equity audits. A compa-ratio of 1.00 means the employee is paid at the midpoint, which is usually set at the market rate for a fully competent person in the role. Below 0.90 often points to someone new to the role or underpaid. Above 1.10 usually means a long-serving expert, or pay that has run ahead of the range.
If you only know the minimum and maximum, set the midpoint to 0 and the calculator will use the halfway point. Compa-ratio and range penetration answer slightly different questions, and the table under the results compares them, so it helps to look at both. Ranges that are not symmetrical around the midpoint are handled correctly.
With the default inputs, the compa-ratio is 0.96. Change any value above to recalculate instantly.
How to use the compa-ratio calculator
- 1Enter the employee's base salary.
- 2Enter the minimum and maximum of the pay range for the role.
- 3Enter the midpoint, or 0 to use the halfway point.
- 4Read the compa-ratio and range penetration, and check the quartile.
- 5Use the raise-to-midpoint figure when planning merit or equity adjustments.
Formula and method
The compa-ratio (short for comparative ratio) compares pay with the midpoint of its range. The midpoint is usually the market rate for a fully competent employee, so a ratio of 1.00 means the employee is paid at market and 0.90 means 10% below it. Range penetration measures how far the salary has moved from the bottom of the band to the top. 0% is the minimum, 50% is halfway and 100% is the maximum.
The two measures agree when the midpoint sits exactly halfway, but compa-ratio is relative to the midpoint and penetration is relative to the width of the range. Range spread is the width of the band as a percentage of its minimum, often 30–60% depending on job level. A salary below the minimum is often called green-circled, and one above the maximum red-circled.
- salary
- Employee's base pay
- min / max
- Bottom and top of the pay range
- midpoint
- Market reference point of the range
Worked examples
Salary just below midpoint
A $72,000 salary against a $75,000 midpoint is a compa-ratio of 72,000 ÷ 75,000 = 0.96. It is $12,000 into a $30,000-wide range, so penetration is 40%, in the second quartile. A raise of $3,000 (about 4.2%) would reach the midpoint.
Long-serving employee above the maximum
At $95,000 the compa-ratio is 95,000 ÷ 75,000 = 1.27 and penetration is (95,000 − 60,000) ÷ 30,000 = 116.7%, beyond the top of the range. Employers often freeze base pay for red-circled staff, or pay increases as lump sums, until the range moves up.
Midpoint worked out from min and max
With the midpoint left at 0 it is taken as (40,000 + 60,000) ÷ 2 = 50,000. A salary of $50,000 then has a compa-ratio of exactly 1.00 and 50% penetration, in a range with a 50% spread.
Asymmetric range
The midpoint ($68,000) is not halfway, so the two measures differ: the compa-ratio is 64,000 ÷ 68,000 = 0.94, but penetration is (64,000 − 55,000) ÷ 30,000 = 30%. Reaching midpoint would need $4,000.
Frequently asked questions
What is a good compa-ratio?+
Most organisations aim for 0.90 to 1.10 for employees who are fully competent in their role. New starters or people still developing often sit between 0.80 and 0.90, and top performers with long service can be 1.10 to 1.20. A team or company average near 1.00 means pay is broadly in line with the market reference.
How do you calculate compa-ratio?+
Divide the employee's salary by the midpoint of their pay range. For example, $72,000 ÷ $75,000 = 0.96, often written as 96%. For a group compa-ratio, divide total actual salaries by the total of the midpoints for the same people.
What is the difference between compa-ratio and range penetration?+
Compa-ratio compares pay with the midpoint, while range penetration shows how far pay has moved from the minimum to the maximum. In a symmetrical range a compa-ratio of 1.00 equals 50% penetration. In a lopsided range the two can differ by several points.
What does red-circled or green-circled mean?+
A red-circled employee is paid above the range maximum, often after long service or a re-grade. A green-circled employee is paid below the minimum and usually needs an equity adjustment. Both should be reviewed in the next pay cycle.
How do compa-ratios feed into merit increases?+
Many companies use a merit matrix that gives larger percentage raises to strong performers with low compa-ratios and smaller ones to people already high in the range. Over time this moves high performers towards and past the midpoint without inflating pay that is already high.