Group compa-ratio
Compa-Ratio Calculator: Compa-Ratio, Range Penetration and Group Compa-Ratio: This free compa-ratio calculator shows how an employee's pay compares with the midpoint of their pay range or the market rate. For one employee, it gives:
- the compa-ratio and what it means;
- range penetration (position in range);
- the gap to the midpoint and the increase needed to reach it;
- the new compa-ratio after a proposed increment.
For a team of up to 8 employees, it gives the group compa-ratio, the average of individual compa-ratios and how many people are below 80% or above 120%.
Compa-Ratio Formula
If the midpoint is not set, it is (minimum + maximum) ÷ 2. Use base salary only, on the same basis (annual or monthly) for every amount. 100% means pay equals the midpoint.
Compa-Ratio Example (Calculator Default)
Pay range ₹6,00,000 to ₹10,00,000 a year, so the midpoint is ₹8,00,000. The employee earns ₹7,20,000.
| Measure | Working | Result |
|---|---|---|
| Compa-ratio | ₹7,20,000 ÷ ₹8,00,000 × 100 | 90.0% |
| Range penetration | (₹7,20,000 − ₹6,00,000) ÷ (₹10,00,000 − ₹6,00,000) × 100 | 30.0% |
| Below midpoint by | ₹8,00,000 − ₹7,20,000 | ₹80,000 (10.0%) |
| Increase to reach midpoint | ₹80,000 ÷ ₹7,20,000 × 100 | 11.1% |
| After an 8% increment | ₹7,77,600 ÷ ₹8,00,000 × 100 | 97.2% (penetration 44.4%) |
Note that reaching the midpoint needs an 11.1% increase, not 10%, because the increase is worked out on the current salary.
Group Compa-Ratio Example
| Employee | Salary | Midpoint | Compa-ratio |
|---|---|---|---|
| 1 | ₹7,20,000 | ₹8,00,000 | 90.0% |
| 2 | ₹8,40,000 | ₹8,00,000 | 105.0% |
| 3 | ₹6,50,000 | ₹8,00,000 | 81.3% |
| 4 | ₹9,10,000 | ₹8,00,000 | 113.8% |
| 5 | ₹12,00,000 | ₹11,00,000 | 109.1% |
| Total | ₹43,20,000 | ₹43,00,000 | 100.5% |
The group compa-ratio is ₹43,20,000 ÷ ₹43,00,000 × 100 = 100.5%. The simple average of the five individual compa-ratios is 99.8%. The two differ because the group ratio gives more weight to higher salaries. Use one method consistently when you compare teams or years.
What Is a Good Compa-Ratio?
According to ADP, compa-ratios generally fall between 80% and 120%, with 100% meaning pay at market value. The common guide is:
| Compa-ratio | Usually seen for |
|---|---|
| 80% to 90% | New hires and employees still developing in the role, or low performers |
| 90% to 110% | Experienced employees who perform well |
| 110% to 120% | Rare skills or long tenure |
| Below 80% or above 120% | Outside the usual range; review the pay or the grade |
There is no single right number. A strong performer at 82% may be a retention risk, while a new hire at 85% may be fair. Read the compa-ratio together with performance, experience and your company's pay policy.
Compa-Ratio vs Range Penetration
| Compa-ratio | Range penetration | |
|---|---|---|
| Compares salary with | The midpoint (or market rate) | The whole range, minimum to maximum |
| At the midpoint | 100% | 50% |
| At the minimum | Depends on range width | 0% |
| At the maximum | Depends on range width | 100% |
| Best for | Market competitiveness of pay | Room left to grow in the grade |
A negative range penetration means the salary is below the range minimum; above 100% means it is above the maximum.
How HR Uses Compa-Ratio
- Annual increments: many companies use a merit matrix that gives larger increases to good performers with a low compa-ratio and smaller ones to those already high in the range.
- New hire offers: check where an offer lands against the range and existing employees in the same role.
- Pay equity reviews: compare group compa-ratios by team, gender, location or manager to find gaps that need explaining.
- Retention: flag good performers well below the midpoint. Losing them can cost much more than the raise; see the cost of attrition calculator.
- Promotions: see where the person will sit in the new grade's range after the promotion increase.
How to Use This Compa-Ratio Calculator
- Open Pay range: enter the range minimum and maximum for the grade. Enter the midpoint or market rate if your company sets it; otherwise it is (minimum + maximum) ÷ 2.
- Open Employee: enter the current salary on the same basis as the range, and a proposed increase % if you want to see the result after an increment.
- Open Team for a group compa-ratio: enter up to 8 salaries. Leave the midpoint blank to use the pay range midpoint, or enter each person's own midpoint.
- Read the compa-ratio, range penetration, gap to midpoint and group results. Use Copy to add them to your review sheet.
Frequently Asked Questions
How do you calculate compa-ratio?
Divide the employee's salary by the midpoint of the pay range and multiply by 100. ₹7,20,000 ÷ ₹8,00,000 × 100 = 90%.
What does a compa-ratio of 100% mean?
The employee is paid exactly at the midpoint of the range, which usually reflects the market rate for a fully competent person in the role.
What is a good compa-ratio?
Most fall between 80% and 120%. 90% to 110% is common for experienced employees who perform well; 80% to 90% for new or developing employees; 110% to 120% for rare skills or long tenure.
How do you find the midpoint of a pay range?
Add the minimum and maximum and divide by 2. A range of ₹6 lakh to ₹10 lakh has a midpoint of ₹8 lakh. Some companies set the midpoint from market salary surveys instead.
What is range penetration?
How far a salary has moved through the range: (salary − minimum) ÷ (maximum − minimum) × 100. ₹7.2 lakh in a ₹6 lakh to ₹10 lakh range is 30%.
How is group compa-ratio calculated?
Add the salaries of everyone in the group and divide by the total of their midpoints, then multiply by 100. It can differ from the average of individual compa-ratios.
Should compa-ratio use CTC or base salary?
Base salary is the usual measure, without bonus, variable pay or benefits. Whatever you use, the pay range must be on the same basis.
Can compa-ratio be more than 100%?
Yes. Above 100% means pay is above the midpoint, often for long tenure, rare skills or strong performance. Above 120% is usually reviewed.
How much increase is needed to reach the midpoint?
(Midpoint − salary) ÷ salary × 100. From ₹7,20,000 to an ₹8,00,000 midpoint needs 11.1%.
How is compa-ratio used in increments?
In a merit matrix, the increase depends on both performance rating and compa-ratio, so good performers low in the range get larger increases and pay moves towards the midpoint over time.