Essential Compensation Metrics for Modern Public-Sector Leaders

Labor costs account for nearly 60% of public-sector budgets, yet many agencies still rely on outdated spreadsheets or static reports to make multimillion-dollar decisions.
In an era defined by talent shortages, pay transparency, and fiscal scrutiny, public agencies need a smarter way to measure and manage compensation.

The right metrics don’t just reveal where you are—they shape how you plan for the future.
Here are five key compensation metrics every HR and Finance leader should be tracking to strengthen pay competitiveness, equity, and long-term sustainability.

Market Competitiveness Ratio (Compa-Ratio)

What it measures: How an employee’s pay compares to the market midpoint for similar roles.

A compa-ratio below 1.0 suggests an employee or position is paid below market, while a ratio above 1.0 may signal overpayment or potential compression issues. Tracking this ratio helps agencies identify pay gaps early and stay competitive with peer jurisdictions—critical in today’s tight labor market.

Why it matters: Ensuring pay competitiveness is the foundation of recruitment and retention. Agencies that fall behind market averages risk losing talent to better-paying neighbors.

How TrueComp helps: TrueComp’s Benchmarking platform calculates compa-ratios across job families, allowing leaders to instantly visualize pay alignment and make adjustments backed by current market data.

Internal Equity Index

What it measures: Pay fairness among employees performing similar roles within the same agency.

Even well-intentioned pay structures can drift out of alignment over time—especially after years of step increases, promotions, and policy changes. The Internal Equity Index helps agencies assess whether compensation remains balanced and defensible.

Why it matters: Internal misalignment undermines morale, increases grievance risks, and erodes trust in leadership. Tracking internal equity ensures that your compensation philosophy is consistent and transparent across departments.

How TrueComp helps: Benchmarking tools within TrueComp visualize internal pay relationships, helping HR and Finance identify inequities and take corrective action before they escalate.

Total Compensation Cost as a percentage of Operating Budget

What it measures: The percentage of your total budget dedicated to wages, benefits, and overtime.

For most public agencies, labor costs are the single largest line item. Tracking this metric reveals how salary adjustments, benefit changes, or new positions affect long-term sustainability.

Why it matters: Without visibility into total labor costs, agencies risk overcommitting funds or underinvesting in critical areas like recruitment and training.

How TrueComp helps: TrueComp’s Labor Costing module allows leaders to model compensation changes in real time—forecasting how new contracts, benefits, or staffing levels impact the bottom line before budgets are finalized.

Vacancy Cost Impact

What it measures: The financial and operational cost of unfilled positions.

Vacancies often create hidden expenses—from overtime for remaining staff to delayed service delivery. Quantifying these costs provides a more accurate picture of workforce efficiency and helps justify proactive hiring strategies.

Why it matters: Tracking vacancy costs ensures that leadership can make data-informed decisions about recruitment priorities and workload management, reducing burnout and turnover in the long run.

How TrueComp helps: With Labor Costing, agencies can simulate how vacancies affect budget performance and model different staffing scenarios to minimize disruption.

Turnover Cost ROI

What it measures: The financial impact of employee turnover compared to the cost of retention programs.

Turnover is expensive. Between recruiting, training, and lost productivity, a single vacancy can cost 50–200% of the departing employee’s salary. Measuring the ROI of retention strategies helps agencies invest where it matters most—keeping top performers and stabilizing workforce costs.

Why it matters: Understanding turnover ROI equips leadership with concrete data to defend retention initiatives and demonstrate fiscal responsibility.

How TrueComp helps: TrueComp’s ROI Calculator converts workforce data into tangible financial insights, helping agencies prove the return on investments in pay adjustments, engagement programs, and professional development.

Turning Metrics Into Meaning

When analyzed together, these five metrics tell a powerful story about your workforce—how competitive, equitable, and sustainable your compensation truly is.
They also provide a foundation for data-driven collaboration between HR and Finance, helping both teams plan with precision and negotiate with confidence.

With TrueComp, agencies can move beyond spreadsheets to see the full financial picture of their workforce—making every compensation decision defensible, transparent, and future-ready.

Learn more about how TrueComp helps public agencies modernize compensation planning here.