Value based compensation definitely

I am not an HR guy, but again private equity/ investment banking firms do not usually have separate HR teams and recruitment/compensation decisions are taken by operating people.

In my experience, a compensation is the bare minimum "value" that the individual will bring to the table. When i look to hire people and the level of compensation, the following determine compensation
a) The education (course and university) - "value of his basic skills?"
b) The work experience - "Value of on the job training for my company?"
c) reputation of institutions worked/studied at - "Can he bring me connections and business at the right level?"
d) positioning of my organisations - "What is the value of my organisation to his career?'
e) Market dynamics - "is it a hot job market?"

While none of us would define a value to each of these attributes, we do arrive at a overall number which justifies the above. To that expend I think this is "value based compensation".
A few may argue that this is market determined. But i think a few variables of this is in the individuals control and hence it may not be totally market determined.

let me quote some examples - a) An experienced Ivy league MBA with a top end IB experience, will get a compensation of his choice even in this down market
b) Some individuals with mediocre background/abilities who made it to good positions may loose jobs/ get paid less even in good job markets.

Again this is just a Private equity experience. these firms typically have small teams and each recruitment decision is critical. For a BPO/ IT services company, the above may not be relevant