Compa-Ratio Formula: How to Calculate and Read It

Compa-ratio is the simplest way to see where an employee sits in their salary range. It takes one division and one reference point. This guide shows the formula, a worked example with made-up numbers, and how to read the result without over-reading it.

The formula

Compa-ratio = base salary ÷ range midpoint

The midpoint is the middle of the salary range for the employee’s grade: (minimum + maximum) ÷ 2.

Worked example (hypothetical numbers)

Assume Grade 3 has a range of 34,000 to 51,000 baht per month. The midpoint is 42,500.

Employee	Salary	Compa-ratio
A	36,000	36,000 ÷ 42,500 = 0.85
B	42,500	1.00
C	47,000	47,000 ÷ 42,500 = 1.11

The figures are invented to show the arithmetic. They are not market data.

How to read the result

• Around 1.00: paid near the midpoint of the range.
• Below 1.00: paid under the midpoint. This is common for people new to the grade, and a concern for experienced people performing well.
• Above 1.00: paid over the midpoint. This is expected for experienced, high-performing people and worth checking for people who are new to the grade.

Treat compa-ratio as a prompt to ask questions. Read it alongside tenure, performance and role scope.

Compa-ratio vs. range penetration

Compa-ratio uses the midpoint as its anchor. Range penetration uses the whole range: (salary − minimum) ÷ (maximum − minimum). For employee C above, penetration is (47,000 − 34,000) ÷ (51,000 − 34,000) = about 76%.

The two answer slightly different questions. Compa-ratio tells you how you compare with the reference point; penetration tells you how much room is left before the ceiling. For salary ranges in a Thailand context, see the Thailand salary structure guide.

Where compa-ratio is used

• Pay reviews: deciding who to prioritize when the raise budget is limited.
• Equity checks: spotting people in the same grade whose position in range differs for no clear reason.
• Pay compression: noticing when new hires sit higher in the range than long-tenured colleagues.
• Budget planning: estimating the cost of moving people toward a target compa-ratio, for example everyone below 0.90.

Limits

• It depends on a well-built range. If the midpoints are wrong, every ratio is wrong.
• It ignores bonuses, allowances and benefits unless you define the salary measure that way on purpose.
• It does not say whether the midpoint itself matches the market. That is a separate check against market data.

Next step

If you do not yet have ranges by grade, start with what a salary structure is and the Thailand salary structure guide. If you want help building the ranges and a view of everyone’s position in one place, see our salary structure service and Pay Compass. A first conversation is free.