What is compa ratio in SAP SRD-HR-CMS - HCM-Compensation?

SAP Term: compa ratio

• Component: SRD-HR-CMS

• Component Name: HCM-Compensation

• Description: The employee's earnings in relation to a target value normally the midpoint of a compensation grade. A compa ratio of 1 means that the employee is being paid exactly the target compensation. A compa ratio of less than 1 means that compensation is below the target, while a value greater than 1 means that it is above the target. Calculated as actual salary divided by target salary assigned to the employee's grade actual/target and expressed as a decimal value.

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• Key Concepts: 
  Compa ratio is a term used in SAP Human Capital Management (HCM) Compensation. It is a comparison of an employee’s salary to the market rate for similar positions. It is calculated by dividing the employee’s salary by the market rate for the same position. 
  
  How to use it: 
  Compa ratio can be used to determine if an employee’s salary is competitive with the market rate for their position. It can also be used to compare salaries across different positions and departments. This information can be used to make decisions about salary adjustments or promotions. 
  
  Tips & Tricks: 
  When calculating compa ratio, it is important to use accurate and up-to-date market data. This will ensure that the compa ratio is an accurate reflection of the employee’s salary relative to the market rate. 
  
  Related Information: 
  Compa ratio is just one of many metrics used in SAP HCM Compensation. Other metrics include merit increase, bonus, and total compensation. These metrics can be used together to gain a better understanding of an employee’s total compensation package.