Compa ratio
Reviewed by Jakob Schubert · Co-Founder, Basqo · 2026-11-03
Definition
Compa ratio compares an employee’s salary with the midpoint of the salary band for their role: salary divided by midpoint. A value of 1.0 (100 %) means the salary sits exactly at the midpoint. Below 1.0 it sits under the midpoint, and above 1.0 it sits over it. HR and Finance use it to see where pay stands within a band and to plan salary increases.
Formula
Compa ratio = salary ÷ midpoint of the salary band
Key takeaways
- Compa ratio = salary ÷ midpoint of the salary band; the midpoint is (minimum + maximum) ÷ 2.
- 1.0 (100 %) means the salary sits exactly at the midpoint; below 1.0 it is under the midpoint, and above 1.0 it is over it.
- Example: in a band from 60,000 to 80,000 (midpoint 70,000), a salary of 63,000 has a compa ratio of 0.9.
- Compa ratio shows closeness to the midpoint; range penetration shows how far a salary has moved through the band.
- Read one value together with performance, time in role and the whole team, not in isolation.
How do you calculate compa ratio?
Take the employee’s base salary and divide it by the midpoint of the band for the role. The midpoint is the average of the band’s minimum and maximum.
Example with illustrative numbers: a band runs from 60,000 to 80,000, so the midpoint is 70,000.
Salary | Calculation | Compa ratio |
|---|---|---|
56,000 | 56,000 ÷ 70,000 | 0.8 (80 %) |
63,000 | 63,000 ÷ 70,000 | 0.9 (90 %) |
77,000 | 77,000 ÷ 70,000 | 1.1 (110 %) |
The figures are an example, not a benchmark. Use the same pay element for every person (usually annual base salary) and the band that applies to the person’s role and level. Base salary is the most common basis, but compa ratio can also be calculated on total compensation (base salary plus variable pay), as long as the salary band is defined on the same basis.
How do you read a compa ratio?
1.0 (100 %): the salary equals the midpoint of the band.
Below 1.0: the salary is below the midpoint. This is common for people new to a role, and worth checking for people who have been in the role for a long time.
Above 1.0: the salary is above the midpoint, which can come from experience or from past increases.
A single value says little. Read it together with performance, time in role and the whole team: a group of people far below the midpoint can mean the band is out of date or that pay has fallen behind.
What is the difference between compa ratio and range penetration?
Compa ratio compares salary with the midpoint. Range penetration shows how far a salary has moved through the band, from the minimum (0 %) to the maximum (100 %). Both use the same salary band, and they answer different questions: compa ratio says how close the salary is to the middle, and range penetration says how much room is left to grow.
Why does compa ratio matter for salary planning?
Increase budgets: a salary review budget can be split by compa ratio, so that people far below the midpoint get more room than people near the top of the band.
Cost impact: moving everyone with a compa ratio below 1.0 towards the midpoint has a cost that Finance can calculate before the review starts.
Pay structure: if many people sit at one end of a band, the band itself may need a review. See the guide to salary bands and compa ratio.
Common mistakes
- Comparing salaries with a band that does not match the role or level.
- Mixing base salary with total pay in the same calculation.
- Reading one person’s value in isolation instead of alongside the team and the band.
In Basqo
How to plan with compa ratio
In a spreadsheet, compa ratios go out of date as soon as bands or salaries change. Basqo plans salary reviews and compa ratio against salary bands inside the workforce plan: planning cycles with versions, targets as an absolute amount or as a percentage, and approvals that can be configured freely. Finance sees the cost of a salary review together with the rest of the workforce costs, per position.
Einhundert models compensation scenarios 90 % faster with Basqo (customer story).
Salary planning in BasqoFrequently asked questions
There is no single good value. A ratio near 1.0 means pay sits at the midpoint of the band, and what is right depends on performance, experience and the company’s pay policy. Compare the ratio with the person’s time in role and the rest of the team.
The salary is 80 % of the band’s midpoint, so it is below the midpoint. For a band with a midpoint of 70,000, that is 56,000. Whether this is a problem depends on the role and how long the person has been in it.
No. Compa ratio measures salary against the band’s midpoint; range penetration measures how far the salary has moved from the minimum to the maximum of the band.
Yes. Most companies use base salary, but compa ratio also works with total compensation (base salary plus variable pay), as long as the band is defined on total compensation too. Mixing the two bases in one calculation gives a misleading result.
Related resources
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