Description
This is a presentation about accounting in Human Resource.
HUMAN RESOURCE ACCOUNTING
HR ACCOUNTING
• Human resource accounting is the process of identifying and measuring data about human resources and communicating this information to the interested parties. • The measurement and reporting of the cost and value of people in organizational resources”.
• HRA deals with cost of and contribution of human resource in an organisation. Cost of employee includes recruiting costs, selection, placement, etc. Employees contribution is the money value of the employee’s service.
NEED FOR HRA
• For taking decisions about acquiring, allocating, developing, and maintaining human resources in order to attain cost-effectiveness. • It allows management personnel to monitor effectively the use of human resources. • It provides a sound and effective basis of human asset control, that is, whether the asset is appreciated, depleted or conserved. • It helps in the development of management principles by classifying the financial consequences of various practices.
SIGNIFICANCE
• Assess the efficiency of human resources in obtaining productivity and profitability. • Deciding the transfers, promotion, training and retrenchment of human resources. • It provides a basis for planning of physical assets vis-a-vis human resources. • A management tool which is designed to assist senior management in understanding the long term cost and benefit implications of their HR decisions so that better business decisions can be taken.
TECHNIQUES IN HRA
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.
COST APPROACH
Two types of costs are of special importance in HRA
1. Original or Historical cost 2. Replacement cost
• • • The historical cost of human resources is the sacrifice that was made to acquire and develop the resource. Direct cost Indirect cost
The replacement cost of human resources is the cost that would have to be incurred if present employees are to be replaced. Such costs have two dimensions• Positional Replacement Costs or the costs incurred to replace the services rendered by an employee only to a particular position.
• Personal Replacement Cost or the cost incurred to replace all the services expected to be rendered by the employee at the various positions that he might have occupied during his work life in the organisation.
ECONOMIC VALUE APPROACH
• The economic value of human resources is the present worth of the services that they are likely to render in future.
• 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 • The value of an individual is the present worth of the services that he is likely to render to the organization in future. The present cumulative value of all the possible services that may be rendered by him during his/her association with the organization is the value of the individual.
•
b) Flamholtz’s Stochastic Rewards Valuation Model • The Stochastic Rewards Model is a direct way of measuring a person’s expected conditional value and expected realizable value. It is based on the assumption that an individual generates value as he occupies and moves along organizational roles, and renders service to the organization.
•
Non- monetary methods for determining value
1) The skills or capability inventory is a simple listing of the education, knowledge, experience and skills of the firm’s human resources. Performance evaluation measures used in HRA include ratings, and rankings. Assessment of potential determines a person’s capacity for promotion and development. It usually employs a trait approach in which the traits essential for a position are identified. Attitude measurements are used to assess employees’ attitudes towards their job, pay, working conditions, etc, in order to determine their job satisfaction and dissatisfaction.
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THANK YOU !!
doc_677908287.ppt
This is a presentation about accounting in Human Resource.
HUMAN RESOURCE ACCOUNTING
HR ACCOUNTING
• Human resource accounting is the process of identifying and measuring data about human resources and communicating this information to the interested parties. • The measurement and reporting of the cost and value of people in organizational resources”.
• HRA deals with cost of and contribution of human resource in an organisation. Cost of employee includes recruiting costs, selection, placement, etc. Employees contribution is the money value of the employee’s service.
NEED FOR HRA
• For taking decisions about acquiring, allocating, developing, and maintaining human resources in order to attain cost-effectiveness. • It allows management personnel to monitor effectively the use of human resources. • It provides a sound and effective basis of human asset control, that is, whether the asset is appreciated, depleted or conserved. • It helps in the development of management principles by classifying the financial consequences of various practices.
SIGNIFICANCE
• Assess the efficiency of human resources in obtaining productivity and profitability. • Deciding the transfers, promotion, training and retrenchment of human resources. • It provides a basis for planning of physical assets vis-a-vis human resources. • A management tool which is designed to assist senior management in understanding the long term cost and benefit implications of their HR decisions so that better business decisions can be taken.
TECHNIQUES IN HRA
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.
COST APPROACH
Two types of costs are of special importance in HRA
1. Original or Historical cost 2. Replacement cost
• • • The historical cost of human resources is the sacrifice that was made to acquire and develop the resource. Direct cost Indirect cost
The replacement cost of human resources is the cost that would have to be incurred if present employees are to be replaced. Such costs have two dimensions• Positional Replacement Costs or the costs incurred to replace the services rendered by an employee only to a particular position.
• Personal Replacement Cost or the cost incurred to replace all the services expected to be rendered by the employee at the various positions that he might have occupied during his work life in the organisation.
ECONOMIC VALUE APPROACH
• The economic value of human resources is the present worth of the services that they are likely to render in future.
• 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 • The value of an individual is the present worth of the services that he is likely to render to the organization in future. The present cumulative value of all the possible services that may be rendered by him during his/her association with the organization is the value of the individual.
•
b) Flamholtz’s Stochastic Rewards Valuation Model • The Stochastic Rewards Model is a direct way of measuring a person’s expected conditional value and expected realizable value. It is based on the assumption that an individual generates value as he occupies and moves along organizational roles, and renders service to the organization.
•
Non- monetary methods for determining value
1) The skills or capability inventory is a simple listing of the education, knowledge, experience and skills of the firm’s human resources. Performance evaluation measures used in HRA include ratings, and rankings. Assessment of potential determines a person’s capacity for promotion and development. It usually employs a trait approach in which the traits essential for a position are identified. Attitude measurements are used to assess employees’ attitudes towards their job, pay, working conditions, etc, in order to determine their job satisfaction and dissatisfaction.
2)
3)
4)
THANK YOU !!
doc_677908287.ppt