At carbon fine inc., a maker of premium art pencils, the human resource department is evaluating its pay structure. a compensation specialist computes the compa-ratio of the designers and determines that it is 1.9. what problem is most likely to result from a compa-ratio of this size?

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Anderson Branch

Business

18 November, 17:24

At carbon fine inc., a maker of premium art pencils, the human resource department is evaluating its pay structure. a compensation specialist computes the compa-ratio of the designers and determines that it is 1.9. what problem is most likely to result from a compa-ratio of this size?

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Nathaly Blake · Answer 1

Compa-ratio, short for comparitive ratio, is a formula used to determine competitiveness of an employees pay. A compa-ratio of 1.00 would mean the employee is making exactly the market average.

With a ratio of 1.9, this means the designers are making twice the industry average for their job. The biggest problem this could cause would be labor costs being to much. If the company is paying 2x the market rate for their designers, they aren't staying competitive.