Definition of Compa Ratio
Compa-ratio, also known as the comparative ratio, is used to calculate the employee’s current salary as compared to the market average. Compa-ratio varied from position to position. Each position has three compa-ratio values. Each value shows the salary average industry position.
Compa-ratio resulting in 1 or 100% means that the employee is getting a salary that is equal to the salary offered in the market. A ratio with 0.65 means that the employee is receiving a salary that is 35% less than the salary offered in the market. Employees with these ratios may jump and join other organizations that offer competitive salaries. A ratio of 1.35 means that the employee is getting 35% above the salary offered in the market. Employees with a ratio greater than 1 are more satisfied and have little chance of them leaving the company.
Formula of Compa-Ratio: