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Compa ratio calculator: the compa ratio formula, worked examples and target ranges

Compa ratio is an employee's base salary divided by the midpoint of their salary band, expressed as a percentage. A $95,000 salary in a band with a $100,000 midpoint is a 95 percent compa ratio. Most compensation teams run 80 to 120 percent as the full working band and 90 to 110 percent as the normal zone.

Use the calculator to get an individual compa ratio and band position instantly, then read on for the group compa ratio method, the target ranges by performance level, and the averaging trap that hides pay gaps from the people looking for them.

Last updated July 2026 / Runs in your browser, nothing is sent anywhere

Compa ratio calculator

Compa ratio

95.0%

Range penetration

33.3%

What this reads as

Normal zone: fully competent in the role

Use base salary, not total compensation. If your band publishes its own midpoint, enter that rather than the arithmetic middle of the minimum and maximum, because skewed bands are common above the manager level.

No. / Formula / 01

The compa ratio formula, and the three ways it goes wrong

Compa ratio, short for comparative ratio or compa-ratio, is a single number that answers one question: how does this person's pay compare to the market target for their role? The arithmetic is trivial. The value comes entirely from whether the midpoint underneath it is real.

The formula

compa ratio = base salary / band midpoint x 100

$95,000 base salary, $100,000 band midpoint. 95,000 divided by 100,000 is 0.95, so the compa ratio is 95 percent. The employee is paid 5 percent below the market target for their level.

Three mistakes account for nearly every wrong compa ratio we see. First, using total compensation in the numerator when the band was built on base pay, which inflates every ratio and makes an underpay problem disappear. Second, dividing by the market median for the job family instead of the midpoint of the band the person is actually in, which quietly re-levels everybody. Third, comparing a national salary to a band built for one expensive metro, which makes remote employees look underpaid when they are not.

Worked examples

Salary Midpoint Compa ratio
$72,000$90,00080.0%
$85,500$90,00095.0%
$90,000$90,000100.0%
$99,000$90,000110.0%
$112,500$90,000125.0%

Same midpoint, five salaries. Notice the ratio moves in a straight line, which is why compa ratio is easy to compare across roles but tells you nothing about how much headroom is left in the band.

No. / Targets / 02

What a good compa ratio actually is

There is no universal right answer, but the convention is stable enough to plan against. Most US compensation teams run bands from 80 to 120 percent of midpoint and read positions inside that span roughly as follows.

Compa ratio Reads as Typical situation What to do
Under 80% Below the band Long-tenured employee whose band moved, or a misleveled hire. Investigate now. This is where retention and equity risk concentrate.
80 to 90% Lower quartile New to the role, promoted recently, still building the skill set. Fine temporarily. Put a path to midpoint in writing.
90 to 110% Normal zone Fully competent, delivering what the level describes. Nothing. Most of your population should sit here.
110 to 120% Upper quartile Consistently exceeding the level, deep expertise, hard to replace. Intended. Check whether the next level is the real answer.
Over 120% Above the band Outgrown the role, or a counteroffer that never got structured. Promote, relevel, or hold base and move increases to bonus.

A healthy population usually averages somewhere near 95 to 100 percent. Materially below that and you are probably underpaying relative to the market you chose to benchmark against, which shows up as slow offer acceptance long before it shows up as attrition. Materially above it and your bands are stale rather than your people overpaid, which is the more common of the two in a company that has not re-benchmarked in two years.

No. / Groups / 03

Group compa ratio, and the averaging trap

Individual compa ratios are easy. The group number is where most teams introduce an error that then survives into a board deck. There are two ways to compute a group compa ratio and only one of them is right.

Correct

Sum of salaries over sum of midpoints

Add every salary in the group, add every corresponding band midpoint, divide the first by the second. This weights each person by the size of their band, so a director counts more than an analyst, which is what you want when the number is meant to describe spend.

Wrong

Average of the individual compa ratios

This treats a $60,000 role and a $260,000 role as equally important. A team where the junior half sits at 108 percent and the senior half sits at 88 percent averages to a comfortable 98 percent, and the comfortable number is exactly what stops anyone from looking at the senior half.

Whichever method you use, one group compa ratio for the whole company tells you almost nothing. The number becomes useful when you slice it: by department, by level, by tenure band, by manager, and by gender or ethnicity where you have the data and the privilege protection to look. A company-wide 97 percent that hides a 91 percent for women in engineering is not a good number, it is a number that delayed a problem. That slicing is the substance of a pay equity audit, and it is also how pay compression first becomes visible: compression shows up as new hires with higher compa ratios than the tenured people training them.

No. / Compare / 04

Compa ratio vs range penetration: which to use when

Both numbers describe where someone sits in a band and they disagree constantly, which makes people assume one is wrong. They measure different things. Compa ratio measures pay against the target. Range penetration measures pay against the room available.

Compa ratio Range penetration
Formula salary / midpoint (salary - minimum) / (maximum - minimum)
At the midpoint 100% 50%, only if the band is symmetric
Answers Are we paying market for this level? How much room is left before we hit the ceiling?
Best for Market positioning, budget, equity analysis across roles Merit planning and promotion timing inside one band
Weakness Ignores band width entirely Meaningless if the band edges are arbitrary

A worked contrast: $85,500 in a band of $72,000 to $108,000 with a $90,000 midpoint is a 95 percent compa ratio, which sounds close to target, but only 37.5 percent range penetration, which says there is a lot of runway left. In a wide band, penetration is the more honest signal for merit planning. In a narrow one, the two converge and compa ratio is simpler to explain to a manager. Our full guide to salary range penetration works through the penetration version, the merit matrix guide shows how compa ratio becomes a raise percentage, and the compa ratio explainer goes deeper on definitions.

No. / Method / 05

The compa ratio is only as good as the midpoint

Every problem with compa ratio is really a problem with the denominator. If the midpoint came from a competitor's job ad, a recruiter's opinion or a two-year-old survey, the ratio is precise nonsense. Four steps make it defensible.

  1. Step 01

    Anchor the midpoint to a percentile you chose on purpose

    Decide where you want to pay: the median of your market, or the 60th percentile if you are competing for scarce skills, or the 40th if you pay in equity and mission. Write it down. The midpoint is that percentile for the occupation and metro, not a number that emerged from negotiation.

  2. Step 02

    Use one market definition per role, not per person

    If two engineers at the same level are benchmarked against different metros, their compa ratios are not comparable and any equity analysis built on them is invalid. Set one national band per level with a documented geographic multiplier applied afterward.

  3. Step 03

    Re-benchmark on a schedule, not on complaint

    Midpoints drift with the market whether or not you update them, so a company that re-benchmarks only when someone resigns will always discover the gap at the most expensive possible moment. Annual is enough for most roles. Twice a year for anything in a hot skills market.

  4. Step 04

    Keep the methodology attached to the number

    Record the data source, the occupation code, the metro, the percentile and the date next to every midpoint. This is what turns a compa ratio into evidence in a posted-range dispute or an equity review, and it costs nothing if you capture it when the band is built.

Do it now

Wagelist builds the denominator for you. Give it a role, a market, a seniority level and a company stage and it returns a P25/P50/P75 band with a real midpoint from public U.S. BLS wage data, methodology attached, ready to drop into the calculator above or into a posted range.

See how salary bands are built
No. / FAQ / 06

Compa ratio questions

What is the compa ratio formula?

Base salary divided by the midpoint of the employee's salary band, expressed as a percentage. Someone earning $95,000 in a band with a $100,000 midpoint has a 95 percent compa ratio. Use base salary only, and use the band midpoint rather than a market average for the whole job family.

What is a good compa ratio?

Most teams treat 80 to 120 percent as the full working band and 90 to 110 percent as the normal zone for a fully competent employee. Below 80 percent usually means someone is ramping, misleveled or underpaid. Above 120 percent means the person has outgrown the band.

How do you calculate group compa ratio?

Divide the sum of all salaries in the group by the sum of the midpoints of their bands. Do not average the individual ratios: that weights a junior analyst and a director equally, and it is how a comfortable company-wide average hides a real gap in the senior half of the population.

What is the difference between compa ratio and range penetration?

Compa ratio measures pay against the band midpoint, so it answers whether you are paying market for the level. Range penetration measures where pay sits between the minimum and maximum on a 0 to 100 percent scale, so it answers how much room is left. Penetration is more useful in wide bands.

Should compa ratio use base salary or total compensation?

Base salary in almost every case, because salary bands are built on base pay. Mixing bonus or equity into the numerator compares two different things and inflates every ratio. To see total compensation against market, build a separate total cash band and compare against that.

Can a compa ratio be over 100 percent?

Yes, and it should be for your strongest people. Above 100 percent simply means paid above the midpoint, which is the intended outcome for someone consistently exceeding the level the midpoint describes. It only becomes a real issue above roughly 120 percent, where the answer is usually a promotion rather than a raise.

No. / Related / 07

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