Enter the employee’s salary and the median salary for their role or industry into the calculator to determine the compensation ratio. This calculator can also evaluate any of the variables given the others are known.
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Compensation Ratio Formula
The following formula is used to calculate the compensation ratio.
CR = S / MS
Variables:
- CR is the compensation ratio
- S is the employee’s salary ($)
- MS is the median salary for the employee’s role or industry ($)
To calculate the compensation ratio, divide the employee’s salary by the median salary for their role or industry. A ratio greater than 1 indicates that the employee is paid more than the median, while a ratio less than 1 indicates they are paid less.
What is a Compensation Ratio?
A compensation ratio is a metric used in human resources to compare the salary of an employee to the median salary of their peers in the same role or industry. This ratio is used to determine if an employee’s compensation is fair and competitive. It is calculated by dividing the employee’s salary by the median salary for their role or industry. A ratio greater than 1 indicates that the employee is paid more than the median, while a ratio less than 1 indicates they are paid less.
