COMPENSATION UPDATE
HRIS has enabled functionality in PeopleSoft that will allow leaders to see enhanced information on
their direct reports. Compa-ratio is one of the new pieces of information being provided to managers
and supervisors. Accordingly, we wanted to give you some helpful guidance to help you answer any
questions that may come your way about this term.
What is compa-ratio, and how is it calculated?
Compa-ratios are used to measure and monitor an individual's actual rate of pay to the midpoint of their
pay range. It is a useful gauge for leaders to use in assessing experience versus salary level, magnitude of
salary adjustment, etc. Compa-ratio is determined by the following formula: current base salary (based
on 1.0 FTE) / midpoint of the salary range.
Example: a full-time employee in grade 8 has a base salary of $35,000 per year.
$35,000 / $46,500 = 0.75 (compa-ratio is 0.75)
A compa-ratio of < 1.0 indicates that the salary range is less than the midpoint.
A compa-ration of > 1.0 indicates that the salary range is greater than the midpoint.
How is compa-ratio used?
Compa-ratio is most often used as a measure to indicate salary range progression. Normally, an
experienced, fully proficient employee who is successfully meeting all job expectations is expected to
have a compa-ratio of at or near the salary range midpoint1 (~0.95 – 1.05). Progressively fewer
employees are expected to be paid at levels from the salary range midpoint out toward either end of the
pay range.
2nd Quartile 3rd Quartile
(P25 to P50) (P50 to P75)
1st Quartile Midpoint 4th Quartile
(Minimum to P25) Compa-ratio (P50) Compa-ratio (P75 to Maximum)
Compa-ratio typically 0.85 – 0.99 At midpoint, 1.01 – 1.15 Compa-ratio
< 0.85 Compa-ratio = 1.0 typically > 1.15
Novice employee; Gaining Experienced and fully Experienced Highest salary
new to the job and experience, qualified employee employees level for an
on a learning curve skill and with employee with
proficiency Fully proficient skill performance extensive
Minimal level that experience with
experience related Consistent consistently performance
to the position “successful” Performance is “exceeds consistently
performance consistently expectations” rated
Meets minimum “successful” and “outstanding”
qualifications and frequently “exceeds
is able to perform expectations”
basic duties and
responsibilities
Normally initial pay levels should not have a
Intermediate Career or “Market” Level
Entry Level CR > 1.06, and almost never > CR 1.15 (must
Level Compa-ratio ~ 0.95 – 1.05
demonstrate “outstanding” performance)
University of Missouri System myTotal Rewards
COLUMBIA | KANSAS CITY | ROLLA | ST. LOUIS
Compensation • 1000 W. Nifong Blvd. • Bldg. 7, Suite 201 • Columbia, MO 65211 • 573-884-1312 www.umsystem.edu/totalrewards
Compa-ratio is also used along with the performance rating to determine merit increases. The high end
of the merit increase range is recommended for the employees with lower compa-ratios and higher
performance scores; the low end of the merit increase range is recommended for employees with
higher compa-ratios and/or lower performance scores. Employees with a rating of improvement
expected or unacceptable are not eligible for a merit increase.
The chart below demonstrates the relationship between compa-ratio and performance rating in driving
merit increases.
MERIT MATRIX Minimum of Pay Range Maximum of Pay Range
PERFORMANCE COMPA-RATIO
RATING < 0.94 0.95 – 1.05 > 1.06
Consistently Highest Merit
exceeds Outstanding Increase %
expectations
Exceeds Expectations
Successful
Gaining
proficiency in Improvement Expected
meeting
expectations
Unacceptable 0% Merit Increase
If you have other questions about compa-ratio, or any of the other compensation elements now
available to managers, please feel free to contact your UM System Compensation partners:
Allen Johanning: (573) 882-2029
Debbie Hulett: (573) 884-2021.
University of Missouri System myTotal Rewards
COLUMBIA | KANSAS CITY | ROLLA | ST. LOUIS
Compensation • 1000 W. Nifong Blvd. • Bldg. 7, Suite 201 • Columbia, MO 65211 • 573-884-1312 www.umsystem.edu/totalrewards
