Percentiles – an easy way to “figure it out”

Percentiles – an easy way to “figure it out”

This Sunday Skills is about percentiles. It is a very useful concept in Compensation & Benefits, yet I have struggled to find an easy-to-understand definition of it and how to easily “calculate” it.

This article in Connexions explains that today there is not an agreed definition of percentile, in the sense that it can be inclusive or exclusive of the value you refer to. Please check it for the conceptual explanations, they are pretty clear and can allow you to define manually percentiles especially on small populations.

Personally I have a definition in “everyday language”, using the example of survey results. And I have a relatively simple way of “finding” a percentile value. It might not be the most accurate mathematically, but for C&B applications on a day-to-day basis it is enough.

Here is my example :

Let’s say that you target to pay at least at the 65th percentile, and 15 companies have given compensation information on 234 employees that are in the same position. It means that you want to pay more than 65% (or two-thirds) of the overall population.

Rank all the survey results from lower to higher amount (if the same result occurs more than once, you will have more than one row), then calculate 65% of 234 = 152,1. The compensation information given as the average between the 152d and the 153rd row will be the one that you can use for saying : “if I pay this amount then I am paying at least at the 65th percentile”. (You take the average between data point number 152 and data point number 153 because the result of 65% * 234 is not a full number). This is it for the wordy explanation. I hope you find it useful. Then again, nowadays with spreadsheets you don’t need to do this manually, and you get a mathematically accurate result 🙂
Related posts :

How to use Concatenate in Excel

How to use Text-to-Columns in Excel

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  1. Ahsan Qureshi says

    Hi Sandrine,
    Excellent stuff. Very easy to read and understand. Great Job………………….., Question for you: In your opinion how do you link performance management in building a performance driven culture in the organization?
    Await your reply.

  2. Epic!

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