Which concept compares the organization's pay range midpoint with the external market rate?

The concept that compares the organization's pay range midpoint with the external market rate is known as the Market Ratio. This ratio is essential for organizations to assess their compensation strategy in relation to the market. By calculating the Market Ratio, HR professionals can determine whether the organization's pay structure is competitive.

A Market Ratio greater than 1 would indicate that the organization's pay midpoint is above the external market rate, suggesting a potentially high compensation strategy, while a ratio less than 1 shows that the organization is positioned below the market average. This comparison helps in making informed decisions about salary adjustments, recruitment efforts, and retention strategies to ensure that the organization attracts and maintains talent effectively.

Other options like Geographical Differential, Salary Differential, and Range Spread refer to different compensation concepts. Geographical Differential relates to variations in pay based on location, Salary Differential represents the difference in pay between two or more roles or groups, and Range Spread addresses the difference between the minimum and maximum pay within a salary range. While these terms are integral to compensation management, they do not specifically compare the organization's pay midpoint to the external market rate, which is why Market Ratio is the most relevant and correct choice in this context.