← HR Metrics·Compensation & Benefits
Pay Compression Index
Share of subordinates paid at or above their manager within a tolerance — a compression-risk indicator (lower is better).
How it’s computed
count(subordinate_pay >= manager_pay - tolerance) / count(subordinates)
What the evidence shows
Evidence (effect sizes, priors, validity) is syncing from Principia.
Run it on your data
This metric is computed in the People Analytics Toolbox on your own numbers. See pricing — posted, no quotes.
sources: toolbox:metrics-catalog
What the literature says
The measurement literature behind this signal — sourced, so you can defend it.
“Those accepting this position maintain that women performing jobs of comparable worth to those performed by men should be paid the same as men, excepting allowable differences (for example, seniority plans, merit plans, productionbased pay plans or different locations).[C1, C2,…”
— Worldatwork Handbook Compensationmatch 55%
“What is a Compa-ratio and How Do You Calculate it?In chapter 5, I talked about the market ratio, as in how well your internal pay compares to the market rate. Now I want to explain something called the compa -ratio , which is the relationship of your actual pay to the midpoint…”
— Pay Mattersmatch 54%
“Use 75th percentile of the market, if your pay strategy is 75th percentile of the market for the job. Critical jobs market-ratio analytics: Market-ratio of a critical employee: To get the market-ratio of a critical employee, divide that employee’s pay by the market pay of that…”
— Predictive HR Analyticsmatch 54%
Resources: Worldatwork Handbook Compensation · Pay Matters · Predictive HR Analytics