What is a Salary Band?

In corporate Human Resources, a Salary Band (or pay range) provides a structured minimum and maximum pay limit for a specific job classification. Instead of paying everyone with the same title the exact same salary, bands allow managers to pay less experienced workers near the Minimum, and highly experienced, top-performing workers near the Maximum.

Understanding Compa-Ratio

The Compa-Ratio (Comparative Ratio) is the most heavily used metric in compensation planning. It compares an employee's actual salary to the Market Midpoint of their salary band.

• Compa-Ratio of 100%: The employee is paid exactly at the midpoint, which is usually the target market rate for someone fully competent in the role.
• Compa-Ratio under 100%: Usually signifies a newer employee who is still developing into the role, or an employee who was recently promoted.
• Compa-Ratio over 100%: Usually signifies a highly tenured employee, a consistent top performer, or someone who possesses hard-to-find skills.

What is Position in Range (PIR)?

While Compa-Ratio tells you where a salary sits relative to the midpoint, Position in Range (PIR) tells you where the salary sits on the spectrum from Minimum to Maximum.

A PIR of 0% means the employee is at the exact bottom of the band. A PIR of 100% means they are at the absolute maximum. A PIR of 50% means they are exactly at the midpoint.

Red-Circled and Green-Circled Employees

When HR runs an annual compensation audit, they look for outliers:

• Green-Circled: An employee whose salary is below the band minimum. HR usually mandates an immediate off-cycle raise to bring them up to at least the minimum.
• Red-Circled: An employee whose salary is above the band maximum. They are considered "maxed out." Usually, they are ineligible for base salary raises until the band is adjusted for inflation, though they may still receive lump-sum bonuses.