Calculations

COMPENSATION SCALE RATIO

When calculating the compensation scale ratio 1:X, 1 signifies the lowest employee salary, and X signifies the highest employee salary divided by the lowest employee salary.

EXAMPLE

• The lowest employee salary is $50,000
• The highest employee salary is $200,000

In this example, the compensation scale ratio is 1:4 ($50,000/$200,000).

ORGANIZATIONS WITH MULTIPLE LOCATIONS

EXAMPLE

An architecture firm has offices in New York, NY, Washington, DC, and Atlanta, GA.

• The compensation scale ratio for employees in the New York office is 1:15.
• The compensation scale ratio for employees in the Washington office is 1:10.
• The compensation scale ratio for employees in the Atlanta office is 1:12.
• The compensation scale ratio for all employees across the three offices is 1:20.

Single Office Basis

• The firm uses the individual office location with the highest compensation scale ratio, in this case, New York with 1:15. Taking this approach, the firm would achieve Level 4.

All Offices Basis

• The pay scale differential across all offices yields a ratio of 1:20. Using this approach, the firm would achieve Level 3.