The Employee Competitiveness feature serves a crucial role in assessing employee compensation relative to peers within the organization. It offers a user-friendly interface for searching and identifying any employee in the organization, after which it generates a list of employees holding similar positions.
This functionality allows for an assessment of how competitive an employee's compensation relative to their peers. The tool provides a side-by-side comparison of employees with similar roles, displaying essential details such as the employee's role, years of experience, location, employment type, compensation package and necessary changes in their pay-grades.
This data empowers organizations to ensure that employees at similar job levels receive fair and equitable compensation, thus supporting equitable compensation practices.
How to access this Feature?
Click on Payroll (1) from the left navigation pane, then click on Payroll Analytics (2). Under this tab you can find Employee Competitiveness (3).
How to make comparisons in Employee Competitiveness tab
Use the Search (1) bar to search for any employee to make comparisons. Now, you can find the list of the employees holding similar position in the organization. Click on the Check box (2) next to the employee names to select them. Click on Compare (3).
Note: Users can make up to three comparisons at a time, and comparisons are limited to individual selected from the provided list.
After clicking on Compare, you can see side-by-side profiles of the selected employees, making it easy for you to compare.
Parameters available for comparison
The parameters of the tables begins with the basic job details of the employee such as Job Role, Business Unit, Years of Experience, Location and Employment Type. The next tab displays annual compensation of the employee representing the data in the form of a scale, wherein you have breakup of Fixed, Bonus, Contribution and Other components.
The last parameter of the table is Comparative Ratio and Penetration Ratio. These are most commonly used compensation metrics. Let us understand about these ratio's in detail.
Comparative Ratio
A comparative-ratio measures the relationship between the salary of an employee (or a position), and the midpoint of the pay range for that employee.
Comparative-Ratio = The Salary Divided by the Range’s Midpoint
Therefore, if someone is earning the exact amount of the midpoint of their salary range, their comparative-ratio will be 1.0 (or 100%). Anything less than 1.0 means that they’re earning less than the midpoint. Anything more than 1.0 and they’re earning more than the midpoint.
Note: The range midpoint here is the exact middle of the range, equidistant from range minimum and range maximum.
For example, let’s say the range for Pooja's position is INR 60,000 to INR 90,000 and the midpoint is INR 75,000. Pooja’s pay is INR 70,000. Her comparative- ratio would be INR 70,000 / INR 75,000, which equals 0.93. This tells us that Pooja is currently earning 93% of the midpoint of her salary range.
Penetration Ratio
Range penetration could be useful in understanding about where an employee stands in their range and how much more room there is for them to move up in pay. What determines range penetration is how you’ve set your ranges and how wide they are.
Range penetration is a compensation metric you should look at in conjunction with a compa-ratio. Rather than just being a comparison to one piece of data (the midpoint), range penetration looks at a salary in relation to the whole pay range.
Range penetration = (Salary – Range Minimum) / (Range Maximum – Range Minimum)
Using Pooja as an example again. Her range penetration would be (INR 70,000 – INR 60,000) / (INR 90,000 – INR 60,000), i.e around 33%. Pooja’s salary is 33% into her range.
In the comparison table, you'll find data presented in scale format, with two key ratios: the comparison ratio and penetration ratio. Next to these ratios, you'll see a status indicator: "Good" if the ratios align and "Can be improved" if they don't, providing a quick assessment of compensation fairness.
In conclusion this tab makes it simple for the organization to check if people at the same level are paid fairly, helping them ensure everyone gets fair pay.