Range Penetration

Introduction

As employees’ mastery of their roles increase, their salaries progress through the salary range.

Range penetration and compa-ratios show how an employee’s pay progresses with increasing skill and performance. Range penetration describes how far into a range an individual’s pay has progressed. Rather than just being a comparison to one piece of data (the midpoint), range penetration looks at a salary in relation to the whole pay range.

While range penetration can be useful on an individual basis, looking at where all of your employees fall within each of your ranges can also be a useful indicator that maybe your ranges are too wide or too narrow. In addition, range penetration can be useful if you use portions of the range as target levels for certain categories of employees, i.e. you want new hires to be in the first 25% of the range, and experts or consistent high performers to be in the top 25% of the range.

Definition

The level of an individual’s pay compared to the total pay range (rather than compared with midpoint, as in compa-ratio).

Formula

RANGE PENETRATION COMPA-RATIO
 

Range Penetration = (pay – range minimum) / (maximum – minimum)

 

 

Compa-ratio = pay / pay range midpoint

 

Diagram for Range Penetration

Sal Penetrate 1

Source: The WorldatWork Handbook of Compensation,Benefits and Total Rewards

Diagram for Compa-Ratio

You can use the following diagram to compare and understand the difference between compa-ratio and range penetration.

Sal Penetrate 2

Source: The WorldatWork Handbook of Compensation,Benefits and Total Rewards

Example of Formula in Use

Sal Penetrate 3

Source: The WorldatWork Handbook of Compensation,Benefits and Total Rewards

Sal Penetrate 4

Source: The WorldatWork Handbook of Compensation,Benefits and Total Rewards

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