Compa-ratio

What compa-ratios reveal

Individually: whether someone's pay matches their tenure and performance story (a high performer at 0.85 is a retention risk with a number attached; a coasting 1.15 is a different conversation). In aggregate: the patterns pay decisions have accumulated, teams sitting systematically low, new hires landing above incumbents, and, cut by gender or other attributes, the like-for-like gaps that summary pay-gap figures cannot isolate. It is the diagnostic layer between "our gap is X%" and knowing which decisions produced it.

Using it in cycles

Merit matrices typically pair performance rating with current compa-ratio: strong performers low in band get the largest increases, strong performers at the top of band get smaller rises (or one-off payments) plus a promotion conversation, and the budget concentrates where the equity and retention risk actually sits. That is the mechanism that stops annual increases drifting into flat percentages for everyone, which feel fair and slowly entrench every existing anomaly.

The health checks

A working structure shows most people between roughly 0.85 and 1.15, distributions centred near 1.0, and no systematic pattern by demographic group. Persistent clusters below 0.85 usually mean the market moved and midpoints did not; persistent clusters above 1.15 mean promotion paths are blocked or bands are stale. Either way, the ratio is doing its job: making the structure's drift visible while it is still cheap to fix.