How to use this calculator
A compa-ratio compares an employee's pay with the midpoint of their salary range. It's the quickest way to spot people who are underpaid for their role, check whether an offer will create compression with the current team, and steer merit budgets toward people low in their range.
Enter the salary and the range. The calculator returns the compa-ratio and range penetration, which shows how far through the range the employee is. If you don't have ranges yet, start with our guide to building salary bands.
- Enter the employee's current base salary.
- Enter the range minimum and maximum for their job level.
- Add the midpoint if your range isn't symmetrical, or leave it blank.
- Compare the result across employees in the same role.
How it's calculated
Compa-ratio = salary / range midpoint
Range penetration = (salary minus range minimum) / (range maximum minus range minimum)
A compa-ratio of 1.00 means pay equals the midpoint, which many companies treat as the target for a fully proficient employee. Below 0.90 often signals someone new to the role or underpaid. Above 1.10 usually means long tenure or a range that needs review.
Worked example
A benefits specialist earns $68,000 in a range of $60,000 to $90,000, with a midpoint of $75,000. Her compa-ratio is 0.91 and her range penetration is 27 percent.
The team just made an offer to a new specialist at $74,000, a compa-ratio of 0.99. The existing specialist has three years of strong reviews, so the merit cycle should move her closer to the midpoint, or the team will have a compression problem and probably a resignation. Our merit cycle kickoff email includes a reminder for managers to check exactly this.
Rules to know
Compa-ratios are a useful screen for pay equity, but not a full analysis. Differences in pay between employees doing similar work must be explained by job-related factors under the Equal Pay Act and state equal pay laws. Pay transparency laws in a growing number of states now require ranges in job postings, which makes compression and out-of-range pay more visible to employees. See our pay transparency guide.
This is general information for US employers, not legal or tax advice. Rates and rules change and vary by state and city, so confirm current figures with the agency or a qualified advisor.
Common mistakes
- Comparing compa-ratios across roles with ranges built on different market data.
- Treating 1.00 as the right answer for every employee regardless of experience.
- Ignoring range penetration when ranges are wide.
- Using stale ranges that haven't been updated for the market.
Email templates that go with this
Once you have the number, these templates help you explain it to employees, candidates, or managers.
Where to go from here
A calculator answers one question. The right process and software keep the numbers right every pay period.
Build the skills behind this calculation
- CCP: Certified Compensation Professional$7,812 to $11,160. None required.
Frequently asked questions
What is a good compa-ratio?
What's the difference between compa-ratio and range penetration?
How do I calculate a group compa-ratio?
Can a compa-ratio be above 1.2?
Written by the HRTally Research Team
Our guides are written and reviewed by people with hands-on US HR, payroll, and HR technology experience. Legal and tax facts are checked against primary sources, such as the Department of Labor, IRS, EEOC, and USCIS, and linked at the end of each guide. Vendors never review or pay for our editorial content.