Hi!
The above question and the response given create a certain sense of intrigue and interest on this topic.
In the compensation framework, what is being assessed and given value is the "job" or "role" that an employee assumes or performs in an organization. Hence, we talk about job analysis, job evaluation, job classification, & market compensation surveys to be able to determine a job's relative value or worth in a given industry and/ or country.
I think many of us know that there is a big difference between "the job" and "the incumbent" (the employee). Hence, in JE (job evaluation), we make it very clear to employees of a company (from the onset of a JE project) that what will be evaluated are their jobs and not them.
The evaluation of employees is the concern of Performance Management System (PMS). But, again, what is evaluated in a PMS is the performance of the employee vis-a-vis his job targets/ objectives vs actual outputs.
Hence, can the actuarial science, tool, and methodology be an appropriate tool in compensation? I know employee retirement and pension schemes use actuarial methodology in establishing the appropriate amounts needed to be funded for a retirement and pension scheme to be started and make it successful.
But, will it work with salaries? Will employers agree to pay employees based on other factors---- other than the way market forces have currently priced jobs?
Best regards.
Ed Llarena, Jr.
Managing Partner
Emilla International Consulting Services