Comp-ratios above or below 1 suggest compensation is not well-managed.

Question

Quizplus · Accepted Answer

A comp-ratio above 1 indicates that employees are being paid more than the market rate, which could lead to financial inefficiencies for the company. On the other hand, a comp-ratio below 1 suggests that employees are being paid less than the market rate, which could result in difficulties in attracting and retaining talent. Therefore, a well-managed compensation plan should aim for a comp-ratio close to 1, which indicates that employees are being paid fairly and competitively.

Comp-Ratios Above or Below 1 Suggest Compensation Is Not Well-Managed