Comp Ratio Calculator – Compensation Ratio Analysis
Calculate your compensation ratio to assess salary positioning
Table of Contents
How to Use
- Enter your actual annual salary
- Enter the salary range midpoint for your position
- Click calculate to see your compensation ratio
- Review your positioning within the salary range
What is Comp Ratio?
Compensation ratio (compa-ratio or comp ratio) is an HR metric that compares an employee's actual salary to the midpoint of the salary range for their position. It's calculated by dividing the actual salary by the range midpoint and expressing it as a percentage.
A comp ratio of 100% means the employee is paid exactly at the market midpoint. Ratios below 100% indicate below-midpoint compensation, while ratios above 100% indicate above-midpoint pay.
Understanding Comp Ratio Ranges
| Comp Ratio | Interpretation | Typical Action |
|---|---|---|
| Below 80% | Significantly underpaid | Priority for salary increase |
| 80-90% | Below midpoint | Consider for adjustment |
| 90-110% | Near midpoint | Well-positioned |
| 110-120% | Above midpoint | Monitor and justify |
| Above 120% | Significantly overpaid | Review and assess |
How Organizations Use Comp Ratio
- Assess internal pay equity across similar roles
- Identify employees who may need salary adjustments
- Make data-driven compensation decisions
- Budget for merit increases and promotions
- Ensure competitive positioning against market data
- Support salary negotiation conversations
- Monitor compensation strategy effectiveness
- Identify potential retention risks
Factors That Influence Comp Ratio
Several legitimate factors can result in comp ratios above or below 100%:
- Tenure and experience level
- Performance and contribution quality
- Specialized skills or certifications
- Geographic location and cost of living
- Market demand for specific skills
- Internal promotion vs. external hire
- Time since last salary review
- Company budget constraints
Frequently Asked Questions
- What is a good comp ratio?
- Generally, comp ratios between 80-120% are considered normal, with 90-110% being ideal for most organizations. A ratio of 100% means you're paid exactly at market midpoint. However, acceptable ranges can vary by industry and company compensation philosophy.
- Why is my comp ratio below 100%?
- Comp ratios below 100% can occur for several reasons: you're newer to the role, you were recently promoted, market rates have increased since your last adjustment, or you're still developing in the position. It doesn't necessarily mean you're underpaid—context matters.
- Should I ask for a raise if my comp ratio is low?
- A low comp ratio can be a data point to support a salary discussion, but consider the full context: your performance, tenure, market conditions, company budget, and when you last received an increase. Combine comp ratio data with performance achievements for a stronger case.
- How do companies determine the midpoint salary?
- Companies typically determine salary midpoints through market research using compensation surveys, benchmarking data from industry sources, and analysis of what similar companies pay for comparable roles. The midpoint represents the target market rate for a fully competent employee in the role.