Calculate compa ratio from current pay and market midpoint, pay range, or target ratio, and find the raise needed to reach target pay.
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Compa Ratio Formula
Compa Ratio = (Current Pay / Market Midpoint) * 100
- Current Pay — the employee’s base salary or hourly rate.
- Market Midpoint — the middle of the salary range for the role, or the market rate from a salary survey.
If you only have the range minimum and maximum, calculate the midpoint first:
Midpoint = (Range Min + Range Max) / 2
To solve for the pay needed to hit a target compa ratio:
Target Pay = Midpoint * (Target Compa Ratio / 100)
Use the same pay basis on both sides of the formula. Compare annual salary to an annual midpoint, or hourly to hourly. A ratio of 1.00 (100%) means pay equals the midpoint exactly.
Reference Tables
Most organizations group compa ratios into bands that signal where an employee sits relative to the market midpoint.
| Compa Ratio | Typical Interpretation |
|---|---|
| Below 80% | Likely below range; flight risk or new hire still ramping. |
| 80% – 95% | Developing in role; common for newer or less experienced staff. |
| 95% – 105% | Fully competent; aligned with market midpoint. |
| 105% – 115% | Strong performer or long tenure; above midpoint. |
| Above 115% | Near range max; future increases may be limited. |
A standard salary range usually spreads about 40% to 50% from minimum to maximum, which puts the min and max at predictable compa ratios.
| Range Spread | Min Compa Ratio | Max Compa Ratio |
|---|---|---|
| 30% (narrow) | ~85% | ~115% |
| 40% (typical) | ~80% | ~120% |
| 50% (broad) | ~75% | ~125% |
Example
An employee earns $65,000. The market midpoint for the role is $70,000.
Compa Ratio = (65,000 / 70,000) * 100 = 92.86%
The employee sits below midpoint. To reach a 100% compa ratio, pay would need to rise to $70,000, a $5,000 increase. To reach 95%, pay would need to rise to $66,500.
FAQ
Is a compa ratio above 100% bad? No. Ratios above 100% are normal for tenured or high-performing employees. Concerns usually start above 115%, where there is little room left in the range.
What if I do not know the midpoint? Use the “From pay range” tab and enter the range minimum and maximum. The calculator averages them to get the midpoint.
Group compa ratio vs. individual compa ratio? The formula is the same, but for a group you replace current pay with the average pay of the group. It shows where the team sits relative to midpoint as a whole.
Can I use it for hourly pay? Yes. Just keep both numbers on the same basis, either hourly or annual.
