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The formula commonly used by compensation professionals to assess the competitiveness of an employee's pay level involves calculating a compa-ratio. Compa-ratio is the short form for comparative ratio.
Compa-ratio is calculated as the employee's current salary divided by the current market rate as defined by the company's competitive pay policy. Compa-ratios are position specific. Each position has a salary range that includes a minimum, a midpoint, and a maximum. These three values represent industry averages for the position. A compa-ratio of 1.00 or 100% means that the employee is paid exactly what the industry average pays and is at the midpoint for the salary range. A ratio of 0.75 means that the employee is paid 25% below the industry average and is at the risk of seeking employment with competitors at a higher pay that is perceived equitable. A ratio of 1.15 compa-ratio would mean the employee is paid above the industry average. [1]
The individual compa-ratio, which describes the individual's position in the pay range against the pay policy reference point for the range and can be used to reposition an individual's pay in the range if it is too high or low. [2]
The group compa-ratio, which quantifies the relationship between practice and policy for the whole organization or a defined population group (function, department, occupation or job family). It is a calculation of the sum of actual pay as a percentage of the sum of job reference point rates. This ratio has an important part to play in the overall pay management process. It can be used to establish how pay policy has been implemented overall and identify differences between parts of the organization which may indicate problems in the policy itself or in the way it has been implemented by managers. It can also be used to plan and control pay budgets.
The average compa-ratio, which is the sum of each individual's compa-ratio divided by the number of individuals. It is therefore not the same as a group compa-ratio which is based on the relationship between the sums of actual rates of pay and the sums of job reference points of pay. The average compa-ratio can therefore differ from the group compa-ratio according to the spread of individual compa-ratios at different job sizes. The group ratio is more frequently used.
Compa-ratios establish differences between policy and practice. The reasons for such differences need to be established. They may be attributable to one or more of the following factors:
Some differences may be entirely justified, others may need action such as accelerating or decelerating increases or exercising greater control over ratings and pay reviews
Human resources (HR) is the set of people who make up the workforce of an organization, business sector, industry, or economy. A narrower concept is human capital, the knowledge and skills which the individuals command. Similar terms include manpower, labor, labor-power, or personnel.
Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any other entity, pays the other, the employee, in return for carrying out assigned work. Employees work in return for wages, which can be paid on the basis of an hourly rate, by piecework or an annual salary, depending on the type of work an employee does, the prevailing conditions of the sector and the bargaining power between the parties. Employees in some sectors may receive gratuities, bonus payments or stock options. In some types of employment, employees may receive benefits in addition to payment. Benefits may include health insurance, housing, and disability insurance. Employment is typically governed by employment laws, organisation or legal contracts.
A signing bonus or sign-on bonus is a sum of money paid to a new employee by a company as an incentive to join that company. They are often given as a way of making a compensation package more attractive to the employee. It also lowers the risk to the company as it is a one-time payment; for example, if the employee does not meet expectations, the company has not committed to a higher salary. Signing bonuses are often used in professional sports, and to recruit graduates into their first jobs.
A head coach, senior coach, or manager is a professional at training and developing athletes. They typically hold a more public profile and are paid more than other coaches. In some sports, the head coach is instead called the "manager", as in association football and professional baseball. In other sports, such as Australian rules football, the head coach is generally referred to as the senior coach.
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. Salary can also be considered as the cost of hiring and keeping human resources for corporate operations, and is hence referred to as personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts.
Equal pay for equal work is the concept of labour rights that individuals in the same workplace be given equal pay. It is most commonly used in the context of sexual discrimination, in relation to the gender pay gap. Equal pay relates to the full range of payments and benefits, including basic pay, non-salary payments, bonuses and allowances. Some countries have moved faster than others in addressing equal pay.
Piece work or piecework is any type of employment in which a worker is paid a fixed piece rate for each unit produced or action performed, regardless of time.
Performance-related pay or pay for performance, not to be confused with performance-related pay rise, is a salary or wages paid system based on positioning the individual, or team, on their pay band according to how well they perform. Car salesmen or production line workers, for example, may be paid in this way, or through commission.
In human resources, turnover refers to employees who leave an organization. The turnover rate is the percentage of the total workforce who leave over a certain period. Organizations and wider industries may measure their turnover rate during a fiscal or calendar year.
Saudization, officially the Saudi nationalization scheme and also known as Nitaqat, is a policy that is implemented in the Kingdom of Saudi Arabia by the Ministry of Labor and Social Development, which requires companies and enterprises to fill their workforce with Saudi nationals up to certain levels.
A pay band is sometimes used to define the range (band) of compensation given for certain roles. The range is based on factors like location, experience, or seniority.
The Organisation for Economic Co-operation and Development defines the employment rate as the employment-to-population ratio. This is a statistical ratio that measures the proportion of a country's working age population that is employed. This includes people that have stopped looking for work. The International Labour Organization states that a person is considered employed if they have worked at least 1 hour in "gainful" employment in the most recent week.
Occupational inequality is the unequal treatment of people based on gender, sexuality, age, disability, socioeconomic status, religion, height, weight, accent, or ethnicity in the workplace. When researchers study trends in occupational inequality they usually focus on distribution or allocation pattern of groups across occupations, for example, the distribution of men compared to women in a certain occupation. Secondly, they focus on the link between occupation and income, for example, comparing the income of whites with blacks in the same occupation.
Occupational segregation is the distribution of workers across and within occupations, based upon demographic characteristics, most often gender. Other types of occupational segregation include racial and ethnicity segregation, and sexual orientation segregation. These demographic characteristics often intersect. While a job refers to an actual position in a firm or industry, an occupation represents a group of similar jobs that require similar skill requirements and duties. Many occupations are segregated within themselves because of the differing jobs, but this is difficult to detect in terms of occupational data. Occupational segregation compares different groups and their occupations within the context of the entire labor force. The value or prestige of the jobs are typically not factored into the measurements.
Employee retention is the ability of an organization to retain its employees and ensure sustainability. Employee retention can be represented by a simple statistic. Employee retention is also the strategies employers use to try to retain the employees in their workforce.
Compensation and benefits (C&B) is a sub-discipline of human resources, focused on employee compensation and benefits policy-making. While compensation and benefits are tangible, there are intangible rewards such as recognition, work-life and development. Combined, these are referred to as total rewards. The term "compensation and benefits" refers to the discipline as well as the rewards themselves.
The Labor policy in the Philippines is specified mainly by the country's Labor Code of the Philippines and through other labor laws. They cover 38 million Filipinos who belong to the labor force and to some extent, as well as overseas workers. They aim to address Filipino workers’ legal rights and their limitations with regard to the hiring process, working conditions, benefits, policymaking on labor within the company, activities, and relations with employees.
The gender pay gap or gender wage gap is the average difference between the remuneration for men and women who are working. Women are generally found to be paid less than men. There are two distinct numbers regarding the pay gap: non-adjusted versus adjusted pay gap. The latter typically takes into account differences in hours worked, occupations chosen, education and job experience. In other words, the adjusted values represent how much women and men make for the same work, while the non-adjusted values represent how much the average man and woman make in total. In the United States, for example, the non-adjusted average woman's annual salary is 79–83% of the average man's salary, compared to 95–99% for the adjusted average salary.
The gender pay gap in the United States tech industry is the divergence in pay between men and women who work in areas such as software engineering. Despite applying for the same jobs at the same companies, women receive job offers that pay less than their male counterparts 63% of the time. In 2018, reports show that for every dollar the average man made, women only made 82 cents, and women from underrepresented communities earn even less. State legislatures have begun to take action to solve the gender pay gap with California leading the way, following Iceland's example. The gap does not affect women of all races equally, and discourages women, specifically those that are underrepresented minorities, from continuing to pursue opportunities in the technology industry. The wage gap in the tech industry is a result of a multitude of factors including lower initial offers and lack of negotiations. As the tech industry becomes more influential in the United States economy, it will be important that firms offer equal pay for equal for equal work and be intentional in constructing applicant pools that are more representative of the population at large. Companies such as Apple, Amazon, and Google have been proactive in attempting to rectify the pay gap and have begun committing financial resources to eliminate the gap. Reports in 2019 showed the pay gap narrowed to 3% after remaining at 4% for the previous two years.
Industry averages are generally using as benchmarks or tools which helps business to make comparisons that helps to determine its position within the industry and evaluate financial performance of the business. It is a useful tool for business managers and investors, helps with decision making process. It represent data figures of various business organizations across different industries of producing distinct products and services. Some individuals and organizations use industry averages as a useful tools, it gives a medium level of all other competitors performance. Compare their own data figure with those averages, it could help individual or organization to make decisions and predictions about possible outcomes. Such as, Investors compare an organization's financial ratios with industry averages to evaluate whether the organization have potential power to growth in the future, and level of risk for the investment. All those factors contribute to decision making and deeper analysis. Data required can be collect through survey or through several professional statistic websites, for individuals are more likely to obtain information using internet. Industry averages could also refer to terms related to industrial sector such as industry averages salaries, unemployment rates, Clickthrough rates and so on, using as benchmarks for comparisons.
