.webp)
Compensation Terms: A to Z
Aging (survey data)
The process of adjusting published compensation survey figures from the survey's effective date forward to the current date, using a projected annual wage growth rate, to reflect current market conditions. Formula: Aged Rate = Survey Rate x (1 + Annual Wage Growth Rate) ^ (Months Since Effective Date / 12).
Base salary
The fixed annual or hourly pay an employee receives, typically paid bi-weekly or semi-monthly, that does not vary based on individual performance or company financial results. Base salary is the most visible compensation component and the one most commonly compared across organizations and job postings.
Compa-ratio
A metric comparing an employee's current base salary to the midpoint of their salary band. Formula: (Employee Salary / Band Midpoint) x 100. A compa-ratio of 90 means the employee is paid at 90 percent of their band midpoint. Below 80 typically signals underpayment and flight risk. Above 120 signals the employee is paid significantly above the band ceiling.
Compensable factors
The criteria used to evaluate a job's relative worth in a point factor job evaluation system. Typically span four dimensions: knowledge and skill, mental complexity and problem-solving demands, accountability and organizational impact, and working conditions. Compensable factors operationalize the Equal Pay Act standard that equal pay must be provided for work requiring equal skill, effort, and responsibility.
Compensation philosophy
A written document that defines an organization's beliefs and principles about how it pays employees, including its market positioning target (which percentile of the market it aims to pay), its commitment to internal equity, its approach to pay transparency, and its governance framework for compensation decisions.
External equity
The degree to which an organization's compensation is competitive relative to the external labor market. High external equity means employees are paid at or above what comparable organizations pay for equivalent work. Market pricing is the primary tool for assessing and maintaining external equity.
Job architecture
A structured framework that organizes every role in an organization into job families, career levels, job grades, and job codes. It creates a consistent language for compensation decisions, career progression, and workforce planning.
Job evaluation
The process of assessing a role's relative internal value by scoring it against a defined set of compensable factors. The total score determines the role's grade placement. Job evaluation makes grade placement objective and defensible rather than based on title seniority or management judgment alone.
Job family
A group of roles that share a common function, professional domain, or type of work. Examples: Engineering, Finance, People Operations, Sales. Job families are the primary organizational unit for survey matching and salary band construction.
Market pricing
The process of determining the competitive pay rate for a specific role by matching it to external salary survey data. Produces a market reference point used to anchor salary bands.
Merit cycle
The structured annual process for planning, approving, and distributing base salary increases. Includes budget setting, merit matrix configuration, manager submission, real-time budget tracking, approval workflow, and cycle close.
Merit increase
A base salary adjustment given to an employee who remains in the same role and grade, awarded based on individual performance during the evaluation period. Determined by the merit matrix combining performance rating and compa-ratio. Separate from a promotional increase.
Merit matrix
A grid combining performance rating and compa-ratio to produce recommended merit increase percentage ranges. Ensures merit budget is directed toward high performers at lower pay positions rather than distributed uniformly regardless of contribution or pay competitiveness.
Pay compression
Occurs when employees with significantly more experience or stronger performance are paid at nearly the same level as less-experienced peers, often caused by market salary increases outpacing internal merit budgets or new hires entering at high positions in the salary band.
Pay positioning strategy
An organization's documented decision about which market percentile to target as the midpoint for salary bands. Common strategies: P50 (market-match), P75 (market-lead), differentiated by job family. Must be documented to make salary bands defensible under pay transparency laws.
Point factor method
A job evaluation technique that assigns numeric scores to each role across defined compensable factors. Total score determines grade. The most defensible formal evaluation method because it produces consistent, documented, auditable results. CompBldr uses the JESAP 15-factor framework.
Salary band
The formal compensation structure for a job grade, including minimum, midpoint, and maximum, along with the job evaluation score, market benchmarking data, and pay positioning strategy that produced those values. All roles in the same grade share the same salary band regardless of job family.
Total compensation
The complete economic value of everything an employee receives: base salary, short-term incentives (bonus or commission), long-term incentives (equity grants), employer-paid benefits, and additional perquisites.
Total rewards
The broader framework encompassing all financial and non-financial elements of the employment value proposition: compensation, benefits, wellbeing programs, career development, flexible work arrangements, and organizational culture. Total rewards is a strategic lens for evaluating employee experience, while total compensation is the specific economic measure of financial value.
Every Term in This Glossary Connects to a CompBldr Module  Job architecture, job evaluation, market benchmarking, salary band builder, merit cycle management, pay equity monitoring, and total rewards statements: CompBldr is the platform where these terms become governed processes rather than concepts. Book a 15-Minute Demo
.webp)
.webp)
.svg)
.svg)
.svg)
