Here’s a hard truth for compensation pros: nobody cares about your average compa-ratio.

Not leaders. Not the CEO. Definitely not the people actually getting paid. And if they do care, they shouldn’t. 

Why? Because averages lie. They tell a neat, tidy story that makes comp people feel smart, but they hide the messy truth about what employees actually experience. 

The Great Illusion of 1.0 

On paper, an average compa-ratio of 1.0 looks perfect. Market aligned! Balanced! Everything is working just as planned! 

But here’s the problem: you can get to that average a thousand different ways, and most of them don’t actually reflect “fair pay.” 

Example: 

• Half your employees are sitting at 0.80 (20% below market). 

• The other half are at 1.20 (20% above market). 

• Voila! Your average compa-ratio is 1.0. 

Looks like you’re “at market.” But is a single employee actually paid at market? Nope. Not one. That’s why averages are dangerous. They make leaders feel comfortable while employees live a very different reality. 

The Employee Experience Test 

Employees don’t experience averages. They experience their pay. 

When you tell an employee, “On average, we pay at market,” what they hear is: That’s great, but what about me? 

• If they’re below market, they feel undervalued. 

• If they’re above market, they feel nervous about sustainability. 

• If they don’t understand how their pay relates to their range, they feel confused. 

An average tells them nothing about their reality.  

Employees don’t want to hear about averages. They want to hear about their pay, their growth, and their path forward. 

The Leader Experience Test 

Leaders also don’t experience averages - they experience variability. 

When a manager tries to hire and realizes some jobs are priced way below market, they struggle to fill roles. When they try to reward talent but ranges feel too compressed, they get frustrated. When they see wide gaps across their team, they start asking uncomfortable questions. 

An average of 1.0 doesn’t solve any of those problems. It papers over them. 

Leaders don’t need a statistical story. They need a competitive story: 

• Where are we strong? 

• Where are we weak? 

• How does this help us attract and retain the people we need? 

Here’s an example: 

• Statistical story: “Our average compa-ratio is 1.0, so we’re right at market.” 

• Competitive story: “Our tech roles are trending above market, which is helping us retain talent in a hot area. Our operations roles are lagging, which may explain our turnover there. We need to rebalance over the next two cycles.” 

Which one do you think resonates more with a CEO? 

The statistical story makes you sound like an actuary. The competitive story makes you sound like a business partner. 

Variance is the Real Story 

The real value doesn’t come from the average. It comes from understanding the distribution: 

• How many people are well below market? 

• How many are way above? 

• Where do critical roles fall? 

• Are certain functions consistently misaligned? 

• What’s the spread, not just the midpoint? 

Variance tells you whether your pay philosophy is actually being lived out in practice, or whether it’s a nice theory that’s breaking down in reality. 

Because when you see where the outliers are, you can: 

• Adjust problem areas. 

• Target investments. 

• Shape a story for leaders that’s about competitiveness, not averages. 

• Shape a story for employees that’s about them, not the group. 

Why Comp Pros Get Trapped 

So why do comp professionals cling to averages? 

Because averages are easy. They give you a single number that looks definitive and makes a nice metric for the dashboard. 

But here’s the thing: clarity is not accuracy. Averages feel clear. They are rarely accurate in describing reality. 

Comp people also get stuck in the endless debate of compa-ratio vs. position-in-range. Which metric is better? Which should we report? Which tells the “truer” story? 

Answer: neither matters on its own. They’re both tools. Tools that, if used without context, can mislead more than they inform. 

What to Care About Instead 

So if average compa-ratio isn’t the metric that matters, what should you focus on? 

1. Distribution – Look at the spread. Where are the clusters? Where are the outliers? 
2. Hotspots – Identify where pay is consistently high or low compared to market and why. 
3. Critical roles – Pay attention to where you can’t afford to be misaligned. 
4. Trends over time – Track whether gaps are widening or narrowing. 
5. Employee impact – Always tie it back to how employees experience their pay. 

That’s where the real insights come from. 

A Final Word 

Compa-ratio is not evil. It’s a useful tool. But it’s just one piece of the picture—and the average is often the least useful part of it. 

The real work of comp isn’t making the numbers look clean. It’s making the pay experience fair, competitive, and explainable. 

So stop obsessing about whether your average is 0.97 or 1.03. Start focusing on the variances that tell the real story about competitiveness and employee experience. 

Because at the end of the day, nobody cares about your average compa-ratio.