Compa Ratio Analysis and Methodology
University Human Resources (UHR) Compensation utilizes a compa ratio based methodology that factors
in the length of time an employee is in a job (job entry date) to analyze internal compensation equity.
Compa ratio represents the position of employee pay in reference to pay grade midpoint. Compa ratio
is calculated as the employee’s current salary divided by the current market rate as defined by the
University’s compensation philosophy, which is the midpoint of the pay grade.
Compa ratios are employee and pay grade specific. Each position has a salary range that includes a
minimum, a midpoint, and a maximum. These three values represent industry averages for the position.
A Compa ratio of 1.00 or 100% means that the employee is paid exactly what the industry average pays
and is at the midpoint for the salary range. A ratio of 0.75 means that the employee is paid below the
50th percentile of the industry market value, but within a competitive market range. A ratio of 1.15
compa-ratio would mean the employee is paid above the 50th percentile of the industry market value.
Compa Ratio Example
Employee A
Employee B
Employee C
Annualized
Salary
$39,000
$49,134
$54,200
CA&P|15|
Minimum
$38,537
$38,537
$38,537
CA&P|15|
Midpoint
$49,134
$49,134
$49,134
CA&P|15|
Maximum
$59,732
$59,732
$59,732
Compa
Ratio
.79
1.00
1.10
Expected Compa Ratio
When analyzing internal compensation for purposes of equity, UHR Compensation reviews employees’
current compa ratio against expected compa ratio. Expected compa ratio is derived from expected
compensation based on length of time in job given industry best practices. Typically, an employee who
meets minimum qualifications and is able to perform basic duties and responsibilities would have a
compa ratio in the range of .75 - .85 (entry level). Employees who are gaining experience, skills and
proficiency and have consistent “successful” performance would have a compa ratio range of .85 - .99
(intermediate). Employees who are fully experienced and qualified, have a fully proficient skill level, and
frequently exceed expectations would have a compa ratio of 1 (market level). Experienced employees
who have successfully demonstrated performance consistently over their career typically have a compa
ratio in the range of 1.01 – 1.25 (experienced).