PHRHigh-YieldTotal Rewards 15%

the metric every comp analyst lives by

Pay Structures and Compa-Ratio

1.0

Midpoint

Compa-ratio at midpoint = 1.0

0.80–1.20

Healthy Band

Typical compa-ratio range

Structures

Traditional, Broadband, Market-Based

drag the dot, watch the math

Where the Employee Sits

Same employee, two different metrics. Compa-ratio compares to midpoint. Penetration shows position in the range.

Min

$60k

Mid

$75k

Max

$90k

$78k

compa-ratio

$78k ÷ $75k

1.04

Above midpoint. Healthy.

range penetration

($78k − $60k) ÷ ($90k − $60k)

60%

Sits 60% into the range.

Compa-ratio above 1.0 = above midpoint. Below 0.80 typically signals underpayment. Above 1.20 typically signals overpayment relative to the structure.

Three Pay Structures

Traditional

spread: 30–40%

Large bureaucracies

Broadband

spread: 100%+

Flat or matrix orgs

Market-Based

spread: Job-by-job

Dynamic labor markets

Exam Traps

Compa-ratio compares to MIDPOINT

Not minimum, not maximum. Salary divided by midpoint. The exam tests scenarios that misuse the comparator.

Range penetration ≠ compa-ratio

Penetration is positional (where in the range). Compa-ratio is relative-to-midpoint. Different math, different meaning.

Broadband does NOT mean no structure

It means fewer, wider ranges. Often used by flat or matrix orgs to support lateral movement. Not chaos.

Pay compression is a SYMPTOM

Compression happens when market increases for new hires outpace internal increases for tenured employees. It is not a structure type.

Compa-ratio < 1 is not always bad

New hires routinely sit below midpoint. Below 1.0 is a flag, not a verdict.

Watch for compression

Rapid market growth + slow internal merit = new hires earning more than tenured employees. Internal equity erodes.

The salary range is the rent range

Min is the cheapest unit, Max is the penthouse, Mid is the average.

Compa-ratio is your rent ÷ average

1.0 means you pay average. 0.85 means below average. 1.15 means above.

Range penetration is how far up the building you are

Min is ground floor (0%). Max is top (100%). Mid is halfway up.

Compression is when new tenants pay more than long-time tenants

Market changed. The building manager has an internal-equity problem.

Compa-ratio vs midpoint. Penetration vs min/max. Compression vs tenure equity.

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