HUMAN RESOURCE ACCOUNTING

IT IS A MANAGEMENT TOPIC

1. SUBMITTED BY:- KANIKA RANA SUBMITTED TO:- HUMAN RESOURCE ACCOUNTING

2. DEFINITION OF HRA Management consultant Stephen Knauf has defined HRA as: Human resource is the measurement and quantification of organizational input such as recruiting, training experience and commitment. The American Accounting Society Committee on HRA defines it as: HRA is the process of identifying and measuring data about human resources and communicating this information to interested parties.

3. OBJECTIVES OF HRA Improve management by analyzing investment in HR Provides cost value information. Consider people as its asset. Attract and retain qualified people. Enable management of the organization to effectively monitor the use of human resources. To aid in the development of management principles and proper decision making for the future.

4. ADVANTAGES OF HRA Helps in the employment, locating and utilization of human resources. Helps in deciding the transfers, promotion, training and retrenchment Provides valuable information to person in making long term investment. Helps in identifying improper utilization oh human resource. Helps in identifying the causes of high labor turnover.

5. DISADVANTAGES OF HRA The valuation of human assets is based on assumptions The HRA may leads to dehumanization. No standards of HRA Employee with a comparatively low value may feel discouraged.

6. METHODS OF HRA Historical Cost Method. Replacement Cost Method. Opportunity Cost Method. Return On Efforts Employed Method. Reward Valuation Method.

7. I. HISTORICAL COST METHOD This method developed by Brummet , Flamholtz and Pyle. This method the actual cost incurred on recruiting, selecting, placing & developing.

8. II. REPLACEMENT COST METHOD This method was developed by Renis Likert and Eric G. Falmholtz . In this method cost of recruiting, selecting, training etc. of new employees to reach the level of competence of existing employees are measured.

9. III.OPPORTUNITY COST METHOD To overcome the limitations of replacement cost method, Hekimian and Jones Suggested the use of opportunity cost method which determine the value of human resource on the basis of an employee’s value in alternative use. The value of an employee would be high if he has several alternative uses for employment in the various division of an enterprise.

10. IV. RETURN ON EFFORTS EMPLOYED METHOD This method measures the value of firms human resources on the basis of efforts made by the individual for organizational benefits. Depends upon the position of employee, degree of excellence and experience.

11. V. REWARD VALUATION METHOD This model is developed by Flamholtz , this method seeks to measure the value of human resources on the basis of an employees value to an organization at various states (roles). Employees value involves following steps:- Estimation of employees service life. Identification of set of service states (roles) Estimation of employees service state (roles) at specified future times.

12. COST OF HUMAN RESOURCES Acquisition Cost Training and Development Cost Welfare Cost Other Cost

13. 1. ACQUSITION COST It refers to the cost incurred in acquiring the right man for the right job at the right time in a right quantity. Recruitment Cost:- ex: cost of recruiting material, administrative expenses, advertising costs, agency fees, recruiters salary and travel and outside cost. b) Selection Cost:- ex: cost of application banks, administrative cost of processing applications, conducting tests and interviews, medical examinations and salaries. Placement Cost: ex: depends upon the placement, individuals ability and attitude.

14. 2. TRAINING & DEVELOPMENT COST It refers to the sacrifice that must be made to train a person either to provide expected level of performance or to enrich individuals skills. Formal Training Cost: refers to the cost incurred in conventional training for the orientation of an individual. On the Job Training Cost: once the employee is placed on the job, he must be trained to do job efficiently and effectively.

15. 2. TRAINING & DEVELOPMENT COST C) Special Training Cost: To achieve the performance standards sometimes special training programmers may be devised. d) Development Programmers: Employees may be allowed to participate in development programs may range from ordinary lectures to international conferences and seminars. Involves cost such as delegated fees, travel cost, loss output etc.

16. 3. WELFARE COST A vital function of an employer to provide an atmosphere to the employees to perform their work in healthy, congenial climate conducive to good health and high morale. Welfare Amenities Within The Organization: ex: creches , rest shelters and canteens, latrines and urinals, washing and bathing facilities, drinking water and occupational safety etc. Welfare Outside The Organization: ex: Social insurance measures, maternity benefits, medical facilities, educational facilities, housing, holiday homes and leave , travel facilities etc.

17. 4. OTHER COSTS In India, Factories Act 1948 has made statutory provisions wit regard to employees health, safety and welfare as follows: Health Of Workers: Cleanliness, disposal of waste and effluents Ventilation and temperature Dust and fumes Over crowding Lighting Drinking water Latrines and urinals

18. 4. OTHER COSTS Safety Of The Workers: Fencing of machinary Hoist and lifts Pressure plant Precaution against danger fumes. Welfare of Workers: Washing facilities Facilities for storing and drying clothing First aid appliances Canteens Welfare officers