Compensation Metrics

Cheat Sheet

How to use data to

overcome your most
pressing C&B challenges
Why compensation metrics matter
Organizations worldwide are facing an How to use this guide
unprecedented talent crisis. In this guide, we will explain how to use 12 key

77% of employers globally are struggling to fill compensation metrics and visualize

roles. According to Korn Ferry, by 2030, the talent compensation metrics in Excel.

shortage can cost companies $8.5 trillion in Table of contents

unrealized annual revenue. ● Salary range metrics

Having an effective compensation strategy is one Page 3

of the keys to attract and retain the best talent. ● Using ranges for compensation planning

This means you need to track compensation Page 9

metrics to understand what is and isn’t working, ● Other compensation metrics

and how you can help your organization remain Page 10

competitive in the war for talent. ● Creating compensation charts in Excel

Page 17

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1.Target percentile
Example
Formula
Target Percentile = Market Rate × If your policy is to pay twenty percent above the
(1 ∓ Policy Percent) market rate, your target percentile is 20 percent
above the 50th percentile. It is the 60th
percentile, not the 70th percentile (50+20).
What it means
In this case, the formula will be applied as
Your company’s target percentile is where you followed:
pay employees relative to market rates,
50 x (1+20%) = 60
expressed as a percentile.

If your policy is to meet the market, your target

percentile will be 50. Anything over the 50th
percentile is leading the market. Targets below
the 50th percentile are lagging the market.

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2. Range midpoint
Example
Formula
Midpoint = Market Rate × If your goal is to lead the market by 30% when
(1 + Policy Percentage) the market rate is $46,000, your range midpoint
would be:

$46,000 × (1 + 30%) = $59,800

What it means
If your goal is to lag the market by 10% when
This is the exact middle of your range, equally the market rate for a job group is $46,000, your
distanced from the range minimum and range range midpoint would be:
maximum, and aligned to the market value of
$46,000 × (1 – 10%) = $41,400
the job.

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3. Range spread
What it means

The spread or width between the range

minimum (e.g., the 25th percentile) and the
range maximum (e.g., the 75th percentile).
Learn more
Example A thorough compensation analysis provides
that data and insights you need for critical
You do not need to calculate the spread, as this
decisions relating to salaries and total
is something that you determine yourself. Do
benefits for employees.
you want it to be 25%, 50%, or 75%? Different
jobs would have different spreads. For example,
Read the guide
the spreads within an organization can look like
this:

● Hourly contract positions: 30%-40%

● Entry to mid-level to managerial positions:
40%-60%
● Executive positions: 60%-70%

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Illustration by Storyset.

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via the link in the description!

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