HUMAN RESOURCE ACCOUNTING
Accounting
Objectives
After going through this unit, the reader should be able to:
l understand and define the concept of Human Resource Accounting, its objectives
and its role in Human Resource Management;
l understand the measurements of Human Resource Costs; and
l understand the measurements of Human Resource Value.
Structure
18.1 Introduction
18.2 What is HRA?
18.3 Why HRA?
18.4 Historical Development of HRA
18.5 Information Management for HRA
18.6 Measurement in HRA: Two Approaches
18.7 The Cost Approach
18.8 The Economic Value Approach: Monetary Value Based Approaches
18.9 The Non-Monetary Value Based Approaches
18.10 Measurements of Group Value
18.11 Summary
18.12 Self-Assessment Questions
18.13 Further Readings
18.1 INTRODUCTION
The past few decades have witnessed a global transition from manufacturing to
service based economies. The fundamental difference between the two lies in the very
nature of their assets. In the former, the physical assets like plant, machinery, material
Human Statue Judges
Institute of Chartered Accountants of Indiaetc. are of utmost importance. In contrast, in the latter, knowledge and attitudes of the
employees assume greater significance. For instance, in the case of an IT firm, the
value of its physical assets is negligible when compared with the value of the
knowledge and skills of its personnel. Similarly, in hospitals, academic institutions,
consulting firms etc., the total worth of the organisation depends mainly on the skills
of its employees and the services they render. Hence, the success of these
organizations is contingent on the quality of their Human Resource- its knowledge,
skills, competence, motivation and understanding of the organisational culture. In
knowledge -driven economies therefore, it is imperative that the humans be recognised
as an integral part of the total worth of an organisation. However, in order to estimate
and project the worth of the human capital, it is necessary that some method of
quantifying the...