Human Resource Accounting

In: Business and Management

Submitted By priyabalaji
Words 1144
Pages 5
Human Resource Accounting
Human Resource Accounting (HRA) means to measure the cost and value of the people (i.e. of employees and managers) in the organisation. It measures the cost incurred to recruit, hire, train and develop employees and managers.
HRA also finds out the present economic value of its employees and managers. After measuring the cost and value of its employees and managers, the organisation prepares a report. This report is called HRA Report. It is shown to the top level management. It can also be shown to the employees, managers and outside investors.
Methods of HRA
There are many different methods of HRA, some of which are:- 1. Actual Cost Method, 2. Replacement Cost Method, 3. Standard Cost method, etc.
Advantages of HRA
Benefits, objectives, advantages of human resource accounting HRA:-
1. Information for manpower planning
HRA provides useful information about the cost and value of human resources. It shows the strengths and weakness of the human resources. All this information helps the managers in planning and making the right decisions about human resources. Thus HRA provides useful information for Manpower Planning and Decision Making.
2. Information for making personnel policies
HRA provides useful information for making suitable personnel policies about promotion, favourable working environment, job satisfaction of employees, etc.
3. Utilisation of human resources
HRA helps the organisation to make the best utilisation of human resources.
4. Proper placements
HRA helps the organisation to place the right man in the right post depending on his skills and abilities.

5. Increases morale and motivation
HRA shows that the organisation cares about the employees and their welfare. This increases their morale and it motivates them to work hard and achieve the objectives of the organisation.
6. Attracts best human…...

Similar Documents

Human Resource Accounting

...HUMAN RESOURCE COSTING AND ACCOUNTING VERSUS THE BALANCED SCORECARD: A LITERATURE SURVEY OF EXPERIENCE WITH THE CONCEPTS1 Ulf Johanson, Gunilla Eklöv, Mikael Holmgren, Maria Mårtensson2 6FKRRO RI %XVLQHVV 6WRFNKROP 8QLYHUVLW\  à Uurà ƒ…r†r‡Ã ƒ…‚wrp‡Ã v†Ã ‚rà ‚sà †r‰r…hyà †ˆiƒ…‚wrp‡†Ã vÃ ‡urà H@SDUVHà Hrh†ˆ…vtà D‡htviyr†Ã ‡‚à Vqr…†‡hqà hq D€ƒ…‚‰rÃD‚‰h‡v‚Ã Hhhtr€r‡à ƒ…‚wrp‡à Uurà hv€Ã ‚sà ‡urà H@SDUVHà ƒ…‚wrp‡Ã v†Ã ‡‚à v‰r†‡vth‡rà ƒ‚††vivyv‡vr†Ã ‡‚à €rh†ˆ…r hqà …rƒ‚…‡Ã v‡htviyr†à 6‡Ã ‡urà ƒ…r†r‡Ã ‡v€rà vrà ˆv‰r…†v‡vr†Ã hqà …r†rh…puà v†‡v‡ˆ‡r†Ã vÃ †v‘à @ˆ…‚ƒrhÃ p‚ˆ‡…vr† 9r€h…xÃAvyhqà A…hprà I‚…h’à TƒhvÃ hqà Trqrà h…rà ƒh…‡vpvƒh‡vtà vÃ ‡urà ƒ…‚wrp‡à 6ƒh…‡Ã s…‚€Ã svhpvhyà †ˆƒƒ‚…‡ s…‚€Ã‡urÃ@ˆ…‚ƒrhÃ8‚€€v††v‚Ãsˆqvt†Ã‚sÇurÃTrqv†uƇˆqvr†Ãh…rÂi‡hvrqÃs…‚€Ã‡urÃP@89ÇurÃTrqv†uÃ8‚ˆpvyÃs‚… X‚…xÃGvsrÃSr†rh…puÃIˆ‡rxÇurÃTrqv†uÃHvv†‡…’ÂsÃU…hqrÃhqÃDqˆ†‡…’ÃhqÇurÃTrqv†uÃQˆiyvpÃSryh‡v‚†Ã6††‚pvh‡v‚ 6Ãs‚…€r…Ér…†v‚Ã‚sÇuv†Ãƒhƒr…Ðh†Ãqryv‰r…rqǂÇurÃP@89ÃvÃ (('  ÃUurÃhˆ‡u‚…†Ãh‡Ã‡‚ÇuhxÃGr†ÃTuhƒ†ÃhqÃHh‡‡vÃTx‚‚tÃs‚…Ævtvsvph‡Ãp‚‡…viˆ‡v‚†Ã‡‚ÇurÅr†r‡Ãƒhƒr… +XPDQ 5HVRXUFH &RVWLQJ DQG $FFRXQWLQJ YV WKH %DODQFHG 6FRUHFDUG $%675$&7 In the present paper conclusions are drawn from literature whose goal was to put information on intangibles into financial and non-financial frameworks. The analysis primarily focuses on two concepts: The human resource management oriented concept called......

Words: 31497 - Pages: 126

Human Resource Accounting

...are providing clients with a comprehensive solution to minimize the risks they face. By addressing the very issues that inhibit a client’s chances of succeeding with microfinance, microfinance can increase its overall efficacy. Focusing on client sustainability instead of institutional sustainability is how the field can ensure that we are not just reaching more individuals, but that we are providing them with the services they really need once we do reach them, and that we accompany them throughout their journey to economic freedom. Second, using microfinance as a platform to offer integrated services increases economies of scope for all the organizations involved in trying to service the same base of clienteles. With leveraged resources – assets, infrastructure, knowledge, distribution channels, etc. – we can increase the capacity of the service offerings to reach more clients and to reach them more effectively. By partnering with other critical social providers and businesses and serving as a platform, microfinance can offer other organizations with a distribution channel to reach individuals in need, share experiences in working in a particular region and community, and offer countless other tangible and intangible products and services. This only makes sense because microfinance is not in the business of maximizing profits but rather of maximizing lives touched and transformed. With that said, we encourage microfinance institutions to follow in the steps......

Words: 1443 - Pages: 6

Human Resources

...35 9.0 CONCLUSION 37 10.0 REFERENCES 38 11.0 APPENDIX 39 1. INTRODUCTION Human resources are comprised of individuals in the workforce of an organization. In the article by Rishma Vedd, and Reza Kouhy. (2001), Management Accounting & Strategic Human Resource Management, Wright & McMahan (1992) had defined human resources as the pool of employees under the firm’s control in a direct employment relationship. In a more simple word, human resources also known as labors, which is one of the four factors of production. An organization’s human resources should be managed to maximize return on investment in the organization’s human capital and minimize financial risk by aligning skilled and qualified individuals to the organization’s ongoing and future business plans. According to article by Rishma Vedd, and Reza Kouhy. (2001), Management Accounting & Strategic Human Resource Management, Human resources management is needed in order to achieve organization’s goals. Since there is no universal agreement on the meaning of Human Resources Management, many definitions are available. Armstrong (1995) had defined Human Resources Management as a strategic and coherent approach to the management of organization’s most valued assets, which is the employees who individually and collectively contribute to the achievement of the objectives of the business. Human Resources Management is a distinctive approach to employment management, which seeks to achieve......

Words: 9610 - Pages: 39

Human Resource

...Master’s in Human Resource. After completing the skills test, I was given options that were; Chief Executives, Education Administrators, Medical and Health Services Managers, Financial Examiners, or Program Directors. The job I chose to do is Human Resource Manager this is what interest me the most. A Human Resource Manager has a lot of tasks to do during the day. A few tasks that a Human Resource Manager does are to administer compensation, benefits and performance management systems, and safety and recreation programs. A HR Manager also recruits people, interview and selects applicants. Human Resource Manager provides current and prospective employees with information about policies, job duties, working conditions, wages, and opportunities for promotion and employee benefits. The Human Resource Manager also performs difficult staffing duties including areas with understaffing, refereeing disputes, firing employees, and administering disciplinary procedures. The Human Resource Manager has to advise managers on organizational policy that matters such as equal employment opportunity and sexual harassment, and recommend needed changes. The work activities for a HR Manager are interacting with computers and computer systems such as hardware and software program, entering data, or processing information. Human Resource Managers work context are electronic mail, telephone, public speaking, time pressure, and letters and memos. There are tools that a Human Resource Manager......

Words: 854 - Pages: 4

Human Resource Accounting

...Human Resource Accounting Human Resource Accounting Literatur Review To measure human value as a part of the goodwill, HRA was introduced in the accounting literature in the 1960s (Flamholtz, 1985). In 1968 Brummet, Flamholtz & Pyle used the term “human resource accounting” for the first time. In 1973 the American Accounting Association’s Committee on Human Resource Accounting defined HRA as “the process of identifying and measuring data about human resources and communicating this information to interested parties. It provides information about human resource costs and values, serves to facilitate to decision making, and motivates decision makers to adopt a human resource perspective (Sackmann et al., 1989,). Research to examine the way in which human resource variables affect the efficiency of firms could be performed in a number of ways including analyzing the association between different aspects of human resources and firm performance (Bassi & McMurrer, 1998; Boudreau & Ramstad, 1997; Grojer, 1998). Looking at different proposals (Conner, 1991), the resource theory considers human resources in a more explicit way. This theory considers that the competitive position of a firm depends on its specific and not duplicated assets. The most specific (and not duplicated) asset that an enterprise has is its personnel. It takes advantage of their interdependent knowledge. That would explain why some firms are more productive than others. With the same technology, a solid......

Words: 4792 - Pages: 20

Organizational Departments: Accounting, Human Resource, and Management

...There are several important organizational departments involved in running a business. Three of which are accounting, human resources (HR), and management and they are all important and beneficial to businesses. These organizational departments help in handling the company's needs and assist in allowing them to run efficiently. Each one of these departments is considered an individual business unit with each one being of vital importance to a business’s overall success. Each unit or department has key functions that assist and advice businesses to help them maintain efficient operations. Accounting is a department that is considered to be the backbone of businesses. There are two areas of accounting. One area is called financial accounting which has financial information that businesses make available for the use of the general public, such as customers, creditors, stockholders, and suppliers. Secondly, there is managerial accounting of which provides financial information to managers, supervisors, and department heads so that they can make important business decisions. The accounting department sets up, audits, and maintains financial information for businesses that determines the businesses economic conditions and stability levels (College, 2010). The human resources (HR) department is responsible for overseeing the hiring, performance, and termination of employees (Pay Scale, 2010). This department plans, analyzes, assists, and reviews job related issues...

Words: 482 - Pages: 2

Human Resource Accounting

...–H4020 Human Resource Accounting HUMAN RESOURCE ACCOUNTING UNIT – I The Non accounting of human resources and the change occurring therein, of an organization may provide a poor picture of the profits and profitability of the organization. Likert Objectives of the Study: This unit aims to provide a basis for the conceptual framework of Human Resource Accounting. An attempt is made to highlight the following aspects. Development of the Concept of HRA An Historical Score Card Meaning and Definition of HRA Importance Objectives of Human Resource Accounting Limitations of Human Resource Accounting HRA for managers & HR Professionals Investment in Human Resources Quality of Work Force and Organizations’ Performance Efficient use of Human Resource Enumerating the Assets Calculating the Market Value of Assets Human Capital. 1 MBA –H4020 Human Resource Accounting INTRODUCTION To ensure growth and development of any orgnisation, the efficiency of people must be augmented in the right perspective. Without human resources, the other resources cannot be operationally effective. The original health of the organization is indicated by the human behaviour variables, like group loyalty, skill, motivation and capacity for effective interaction, communication and decision making. Men, materials, machines, money and methods are the resources required for an organization. These resources are broadly classified into two categories, viz., animate and inanimate (human and......

Words: 55189 - Pages: 221

Human Resource

... Human Resource Strategy in Organizations Human resource is an important department in any organization. This department if effectively run can enable an organization to implement organizational strategies successfully by managing the organization’s most vital resource- its employees. With the realization of this fact, there has been a slight shift in the operation of Human Resources in the corporate world whereby HR acts as strategic partner of the organization (Mejia 5). This essay will attempt to explain the importance of having HR as strategic partner in the organization, how HR strategies relate to the overall business strategy in an organization and the career path of a senior HR executive. In the past a line was drawn between business strategy and human resource strategy. The traditional belief was that the sole role of human resource was personnel administration and this had nothing to do with the overall business strategy. This belief has changed considerably over the past couple of years with human resource departments playing strategic roles within organizations (Holbeche 34). Business executives have come to realize that human resource strategies go hand in hand with the company’s business strategy. Success in a business can be easily achieved if management realizes the connection between human resource strategy and business strategy. Human resource departments develop human capital which in turn enables......

Words: 1180 - Pages: 5

Human Resources

...documented and provide a lot of details for the applicant. Background information about the company was provided, position summary, functions of the position, education and training requirements, and other responsibilities. The advertisement could have been improved had it indicated the salary compensation information. The Finance Department Positions 1 – Accounting Manager – job advertisement listed in great detail the responsibilities and requirements of the job. Salary was indicated in the job advertisement as well as the industry (consumer packaged goods), and incumbents could apply right away. Job type (F/T) was also indicated Position 2 – General Accountant – Responsibilities and requirements were listed however responsibilities was brief. Salary information was posted for incumbents as well as industry and job location. Yes I believe different types of recruits would respond to the advertisements and sites. The Finance Department Ltd (TFDL) is a recruiting firm which is specifically tailored to meet the needs of accountants. The recruiting site only posts job advertisements related to the accounting field and is geared towards professionally designated accountants. TFDL also has different offices in various cities so that applicants can contact the office which specializes in recruiting for positions in their area. For example TFDL has a Mississauga division which basically focuses on vacancies in the Mississauga area. Workopolis on the......

Words: 1842 - Pages: 8

Accounting vs. Human Resources Research, Comparison, and Recommendation

...ACCOUNTING vs. HUMAN RESOURCES Research, Comparison, and Recommendation Irina Mashevsky DeVry University Contents Introduction 1 The purpose of the report 1 Report organization 1 Sources and methods 1 Job overview 2 Accounting 2 Job description 2 Working environment and hours 2 Human Resources 2 Job description 2 Working environment and hours 2 Job requirements 3 Accounting 3 Skills and personality traits 3 Education/Training 3 Human Resources 3 Skills and personality traits 3 Education/Training 3 Employment outlook 4 Accounting 4 Current statistics 4 Salary 4 Future predictions 4 Related occupations 4 Human Resources 5 Current statistics 5 Salary 5 Future predictions 5 Related occupations 5 Job satisfaction 6 Conclusion 6 Summary 7 References 8 Introduction On average people spend 40-50 years and even longer in the work force, which makes the choice of the career path one of the most important in our lives. A satisfying career can be a source of financial security, benefits, and gives a great sense of accomplishment. This decision requires a lot of thought and research. To make the best choice possible it is important to choose a career that is compatible with an individual’s personality, capability, and background, has the opportunity for professional growth, and requires a practical amount of education and training. The purpose of the report The purpose of this report is to present, analyze, and evaluate two career......

Words: 3083 - Pages: 13

Human Resource Accounting

...HUMAN RESOURCE ACCOUNTING Definition Assigning, budgeting, and reporting the cost of human resources incurred in an organization, including wages and salaries and training expenses. Measurement in HRA The biggest challenge in HRA is that of assigning monetary values to different dimensions of HR costs, investments and the worth of employees. The two main approaches usually employed for this are: 1. The cost approach which involves methods based on the costs incurred by the company, with regard to an employee. 2. The economic value approach which includes methods based on the economic value of the human resources and their contribution to the company’s gains. This approach looks at human resources as assets and tries to identify the stream of benefits flowing from the asset. The methods for calculating the economic value of individuals may be classified into monetary and non-monetary methods. Monetary Measures for assessing Individual Value a) Flamholtz’s model of determinants of Individual Value to Formal Organizations According to Flamholtz, the value of an individual is the present worth of the services that he is likely to render to the organization in future. As an individual moves from one position to another, at the same level or at different levels, the profile of the services provided by him is likely to change. The present......

Words: 1913 - Pages: 8

Human Resource Accounting

...also needs to consider government restrictions other than the ones described above. For example, would the government issue visas for staff from Rosinante and would the government allow repatriation of funds as easily from a joint venture as from PMU’s own investment? PMU would need to meet with government officials or seek legal advice to clarify situations such as these. PMU needs to ensure that cultural differences between expatriate staff from Rosinante and local staff in Kantaka are minimised and they all share common corporate values. The two organisational cultures may be very different. It would require time and resources to get a common ground between the two organisations and a shared identity. Strategies need to be developed and enacted to ensure that this happens, perhaps through implementation of staff exchange programmes and secondments. Human resources need to develop techniques to help expatriate staff settle into the country. The costs related to all these need to be compared with PMU setting up its own site. Managers’ actions may be restricted in the case of joint ventures because the opinions of both the partners need to be taken into account. Managers of the joint venture may feel that they are not being listened to by the management at PMU. And the managers at PMU may feel that the actions of the managers at the partner are incongruent with aims of PMU. Clear guidelines need to be developed and communicated to limit dysfunctional behaviour between the......

Words: 5895 - Pages: 24

Human Resources vs Human resources It is not equivalent * Personnel management: Refers to the administrative tasks, dealing with payroll, complying with employment law, unions, and handling related tasks. * Human resources: Refers to the responsibility of managing the workforce as one of the main resources of the organization and a key element to its success. Personal Management | Human Resources | Administrative | Strategic | Reactive | Proactive | Independent function | Across of the organization | Short term | Long term | Employee compliance rules | Employee commitment | Motivation: | Motivation: | * Bonuses, rewards… | * Employee satisfaction | 1.1 HR function in the company Main function: To facilitate the organization performance (within the strategic objectives), through the contribution of the human factor. Objectives: * Generate, maintain and develop the human resources: numbers and competences. * To Create the conditions for the application, development, satisfaction and achievement of each individual. As a consequence achieve optimum levels of efficiency with the available HR Keeping the knowledge operative within the company It is a Strategic dimension: - Global firm deployment (all kind eventual, externals) - It is an independent section in the overall corporate plan. - Training workforce (people) has to support the strategic decisions - Desirability of establishing relations with the trade unions. - Human resources accounting......

Words: 578 - Pages: 3

Human Resource

...Human resources From Wikipedia, the free encyclopedia For other uses, see Human resources (disambiguation). "Manpower" redirects here. For other uses, see Manpower (disambiguation). Human Resources | Occupation | Occupation type | Department of a Company | Activity sectors | Economy and Business | Description | Competencies | Staffing (Recruitments, Dismissals, Managing Labour Law, Employment Standards, Administration and Employee benefits) and bring out the best Work Ethic | Related jobs | Workforce, Human Capital, Manpower, Talent, Labour, Personnel, People | Business administration | | * Company * Business * Conglomerate | Business organization[show] | Business entity[show] | Corporate governance[show] | Corporate titles[show] | Economy[show] | Corporate law[show] | Finance[show] | Accounting[show] | Trade[show] | Organization[show] | Society[show] | Types of management[show] | * v * t * e | Human resources are the people who make up the workforce of an organization, business sector, or economy. "Human capital" is sometimes used synonymously with "human resources", although human capital typically refers to a more narrow view (i.e., the knowledge the individuals embody and economic growth). Likewise, other terms sometimes used include "manpower", "talent", "labour", "personnel", or simply "people". A human resources department (HR department) of a company performs human resource management, overseeing various aspects of employment,......

Words: 1325 - Pages: 6

Human Resource Accounting

...Human resource accounting Human Resource Accounting is a method to measure the effectiveness of personnel management activities and the use of people in an organization. Historical cost approach This approach is developed by Brummet, Flamholtz and Pyle but the first attempt towards employee valuation made by R. G. Barry Corporation of Columbus, Ohio in the year 1967. This method measures the organization’s investment in employees using the five parameters: recruiting, acquisition; formal training and, familiarization; informal training, Informal familiarization; experience; and development. The costs were amortized over the expected working lives of individuals and unamortized costs (for example, when an individual left the firm) were written off. Limitations * The valuation method is based on false assumption that the dollar is stable. * Since the assets cannot be sold there is no independent check of valuation. * This method measures only the costs to the organization but ignores completely any measure of the value of the employee to the organization (Cascio 3). Replacement Cost approach This approach measures the cost of replacing an employee. According to Likert (1985) replacement cost include recruitment, selection, compensation, and training cost (including the income foregone during the training period). The data derived from this method could be useful in deciding whether to dismiss or replace the staff. Limitations * Substitution of......

Words: 5106 - Pages: 21