Enter Merit Review Inputs
Example Data Table
| Employee | Current Salary | Midpoint | Compa Ratio | Merit Increase | New Salary | New Compa Ratio |
|---|---|---|---|---|---|---|
| Aisha | $62,000.00 | $70,000.00 | 88.57% | 6.00% | $65,720.00 | 93.89% |
| Bilal | $74,500.00 | $72,000.00 | 103.47% | 3.00% | $76,735.00 | 106.58% |
| Maria | $51,000.00 | $60,000.00 | 85.00% | 7.50% | $54,825.00 | 91.38% |
| Omar | $92,000.00 | $80,000.00 | 115.00% | 2.00% | $93,840.00 | 117.30% |
Formula Used
1. Compa Ratio
Compa Ratio = (Current Salary ÷ Range Midpoint) × 100
2. Increase Amount
Increase Amount = Current Salary × (Proposed Increase ÷ 100)
3. New Salary
New Salary = Current Salary + Increase Amount + Market Adjustment
4. New Compa Ratio
New Compa Ratio = (New Salary ÷ Range Midpoint) × 100
5. Range Penetration
Range Penetration = ((Salary - Range Minimum) ÷ (Range Maximum - Range Minimum)) × 100
Compa ratio measures salary against midpoint. Range penetration shows where the salary sits inside the band. Together, they help compensation teams judge fairness, competitiveness, and budget impact before approving a merit action.
How to Use This Calculator
- Enter the employee name, department, and performance rating.
- Input the current salary and the salary range minimum, midpoint, and maximum.
- Add the proposed merit increase percentage.
- Enter any market adjustment and one-time lump sum bonus if applicable.
- Press the calculate button to view current and projected pay position.
- Use the CSV and PDF buttons to export the displayed result summary.
Frequently Asked Questions
1. What is a merit compa ratio?
It compares an employee’s salary to the midpoint of the assigned pay range. HR teams use it to judge pay competitiveness, internal equity, and merit increase reasonableness.
2. What compa ratio is considered healthy?
Many organizations view roughly 90% to 110% as a practical working zone, though the right target depends on tenure, performance, labor market pressure, and pay philosophy.
3. Why does midpoint matter more than range maximum?
Midpoint is usually the main reference for market-aligned pay. Maximum shows the ceiling, but midpoint better indicates typical fully competent pay for the role.
4. What does range penetration tell me?
Range penetration shows how far a salary has moved from the range minimum toward the maximum. It helps reveal growth stage and room for future increases.
5. Should lump sum bonuses affect compa ratio?
Usually no. Compa ratio focuses on base salary versus midpoint. Lump sums matter for total cash planning, but they generally do not change base pay positioning.
6. Can I use this for market adjustments?
Yes. The market adjustment field lets you test extra base movement beyond the merit percentage, which is useful when retention or benchmarking issues exist.
7. What if the result is above 120%?
That often signals premium pay positioning. HR may need stronger justification, policy review, or a shift toward lump sum awards instead of additional base growth.
8. Can this tool replace a full compensation review?
No. It supports decisions, but final actions should also consider peer equity, critical skills, performance history, budget limits, and organizational compensation policy.