Compa-ratio is a short form of Comparative Ratio. It is used by HR professionals to assess the competitiveness of an employee’s pay level in their company. It simply by comparing that pay level with midpoint salary of current market rate. This compa-ratio calculator contains formulas to calculate that ratio automatically. You can use this spreadsheet to consider increasing of salary after yearly employee performance review.
But, you need to have data of current market rate from similar industry. To determine compa-ratio, you need to divide employee’s base salary by the mid-point of the internal salary range for his/her position. For example, if the mid-point of the range is $80,000 and the employee’s salary is $65,000, then the compa-ratio is 81.25%.
Purpose of Compa-Ratio
You can use compa-ratio to compare salary levels within your organization’s job grade ranges. Comparing two employees salary would simply tell you that one employee is paid less than, equal to, or more than the other.
Furthermore, it depends on your company’s budget on how to appreciate your employees. You can use salary range calculator to develop your own salary table. If the average of your pay levels are below its current market midpoint rate, then you need to prepare to lose your employee, if they know the situation. But, if your company is a startup company with a good prospect to get funded, you can offer shares to your employees to compensate their salaries.
Three Types of Compa-Ratio
There are three models on how compa-ratio is calculated.
It describes the individual’s position in the pay range against other individuals.
It is a calculation of the sum of actual pay as a percentage of the sum of job reference point rates. This ratio has an important part to play in the overall pay management process. Basically, it compares salary among departments within your organization.
The average compa-ratio is different from the group compa-ratio. It will calculate the spread of individual compa-ratios at different job sizes.
How this Compa-Ratio Calculator Can Help You
This spreadsheet consists of several worksheets you can use to calculate percentage of your employee’s pay level based on above three types of compa-ratio. Type your employee’s names. Then put their base salary. Then adjust their salary yearly. Remember to put your company’s budget for the whole employee’s compensation. It is to make sure that your company has enough money to pay all the compensation.