Critical HR Ratio Explained: What is Compa-ratio, Range Penetration and more

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Formula for calculation:
Compa-Ratio: Salary / Range Mid
Range Penetration = (Salary – Range Min)/(Range Max – Min)
Position in Range = Range Penetration
Range Spread = (Range Max – Min)/Range Min
Note: Range Max = Range Min * (1+ Range Spread)
Market Index = (if benchmark with P50) Salary / Market P50
Position to Market = Market Index

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[junri-johr]

Hi.. Thank you so much for this. Question though, this is more of compensation management. What are the strategies we can implement if, after compensation analysis, we've seen that there are overpaid employees?

[vasanththukkaram]

Hi thanks for the detailed explanation

[hbroumi]

Hi thanks for details. I saw some definition of compa ratio is the employee salary devided by market median. Example Kornferry. What is your feedback on this?

[heraldrohan]

HI, why is the internal mid and market mid different in the examples. Usually i create internal ranges by using market mid.

[mariajauslin]

Who defines the range salary and where could you take the values for each job grade from? Could you please give an example?

[elisan]

Excellent presentation. I really like the question Vasanth raised. I'm curious as to how this compensation ration works as well. Can you elaborate?

[vasanththukkaram]

I have question..what if an employee stay in same grade for more than four years how this compensation ratio works?? Still to consider mid salary range