PHR · Question #105
What is the compa-ratio for an employee that earns $75,000 per year, but the midpoint for the role is $85,000 per year?
The correct answer is D. 88 percent. The compa-ratio measures an employee's salary relative to the midpoint of their pay range, expressed as a percentage. Dividing $75,000 by $85,000 yields approximately 0.88, or 88 percent.
Question
What is the compa-ratio for an employee that earns $75,000 per year, but the midpoint for the role is $85,000 per year?
Options
- A$10,000 difference
- B1:88
- C113 percent
- D88 percent
How the community answered
(21 responses)- A14% (3)
- B5% (1)
- C5% (1)
- D76% (16)
Why each option
The compa-ratio measures an employee's salary relative to the midpoint of their pay range, expressed as a percentage. Dividing $75,000 by $85,000 yields approximately 0.88, or 88 percent.
$10,000 is simply the arithmetic difference between the two salaries, not a compa-ratio calculation.
1:88 is not a valid compa-ratio format - compa-ratios are always expressed as a percentage, not a colon-separated ratio.
113 percent would result if the calculation were reversed - dividing the midpoint by the employee salary ($85,000 / $75,000), which is not the compa-ratio formula.
The compa-ratio formula is (employee salary / range midpoint) x 100. Calculating $75,000 / $85,000 = 0.8824, multiplied by 100 gives approximately 88 percent. A compa-ratio below 100 indicates the employee is paid below the midpoint for their role.
Concept tested: Compa-ratio calculation for compensation analysis
Source: https://www.shrm.org/topics-tools/tools/hr-answers/what-is-a-compa-ratio-how-is-it-calculated
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