HUMAN RESOURCE ACCOUNTING.pptx

HRA is the systematic process of identifying, measuring & communicating data about human resources.
According to Flamhoitz HRA involves measuring the costs incurred by business firms & other organizations to recruit, select, hire, train & develop human assets.
HRA therefore, shows how the organization makes investment in its people & how the value of the people change over time. Value of the employees increases by training (the core HRD activity ) & experience over a time period.
With the help of HRIS (personal profile, career profile, benefits profile ) organizations collect basic information while doing HRA.
Personal profile – name, age, gender, address, phone number, service date.
Career profile – education, training, certificate, license, degrees, skills, hobbies, requisite training etc.
Benefits profile – insurance coverage, disability provisions, pension, profit sharing, vacation, holidays, sick leave etc.
HRIS consists of
Number of employees
Categories
Grades
Total value of HRs
Value per employee
Number of employees acquired during the year
Cost of acquisition
Levels for which they were acquired
HR development
HR maintenance
Cost related to HR maintenance
HR separation
Cost related to HR separation
Detail of benefits provided to the employee
Methods of evaluation can be non-monetary & monetary
Non- monetary measures – It involves the classification of human resources in terms of skills, performance evaluation, potentiality for development & promotion, attitude surveys & subjective values
Skill is coordinated series of actions to attain some goal. Skills are defined widely as overt responses & controlled stimulation.
Overt responses may either be verbal, motor or perceptual.
Verbal responses typically stress on speaking.
Motor responses stress on movements of limbs & body.
Perceptual responses stress on understanding of sensory responses.
Controlled stimulation are energy inputs to the workers which we express in units of frequency, length, time & weight.
Monetary measures are
Capitalization of historical costs method
Replacement cost method
Opportunity cost method
Economic value method
Present value method
Historical cost method was developed by Likert.
It capitalizes all costs of recruitment, hiring, training & other initial costs involved in the development of HRs.
The amount which is capitalized is written off over the period of an employee remains with the organization.
If he leaves before the expected service period, the amount remaining as an asset is written off in the year of leaving.
Replacement cost method measures the cost to replace an organization’s existing human resources.

It indicates what it would cost the concern to recruit, hire, train & develop human resources to match the present level of efficiency.
Under opportunity cost method, the value of HRs is determined on the basis of the value of an individual employee in an alternative use.
If an employee can be hired externally, there is no opportunity cost for him.

1. HUMAN RESOURCE ACCOUNTING

2. HRA is the systematic process of identifying, measuring & communicating data about human resources. According to Flamhoitz HRA involves measuring the costs incurred by business firms & other organizations to recruit, select, hire, train & develop human assets. HRA therefore, shows how the organization makes investment in its people & how the value of the people change over time. Value of the employees increases by training (the core HRD activity ) & experience over a time period. HRA

3. With the help of HRIS (personal profile, career profile, benefits profile ) organizations collect basic information while doing HRA. Personal profile – name, age, gender, address, phone number, service date. Career profile – education, training, certificate, license, degrees, skills, hobbies, requisite training etc. Benefits profile – insurance coverage, disability provisions, pension, profit sharing, vacation, holidays, sick leave etc. . INFORMATIONS ABOUT HRs

4. Number of employees Categories Grades Total value of HRs Value per employee Number of employees acquired during the year Cost of acquisition Levels for which they were acquired HR development HR maintenance Cost related to HR maintenance HR separation Cost related to HR separation Detail of benefits provided to the employee BASIC INFORMATION ABOUT HRs

5. Non- monetary measures – It involves the classification of human resources in terms of skills, performance evaluation, potentiality for development & promotion, attitude surveys & subjective values Skill is coordinated series of actions to attain some goal. Skills are defined widely as overt responses & controlled stimulation. Overt responses may either be verbal, motor or perceptual. Verbal responses typically stress on speaking. Motor responses stress on movements of limbs & body. Perceptual responses stress on understanding of sensory responses. Controlled stimulations are energy inputs to the workers which we express in units of frequency, length, time & weight. METHODS FOR VALUATION OF HRs (Non-monetary & Monetary)

6. Capitalization of historical costs method Replacement cost method Opportunity cost method Economic value method Present value method MONETARY MEASURES

7. This method was developed by Likert. It capitalizes all costs of recruitment, hiring, training & other initial costs involved in the development of HRs. The amount which is capitalized is written off over the period of an employee remains with the organization. If he leaves before the expected service period, the amount remaining as an asset is written off in the year of leaving. CAPITALIZATION OF HISTORICAL COST METHOD

8. It measures the cost to replace an organization’s existing human resources. It indicates what it would cost the concern to recruit, hire, train & develop human resources to match the present level of efficiency. REPLACEMENT COST METHOD

9. Under this method, the value of HRs is determined on the basis of the value of an individual employee in an alternative use. If an employee can be hired externally, there is no opportunity cost for him. OPPORTUNITY COST METHOD

10. Under this method HRs are valued on the basis of the contribution they are likely to make to the organization during the period of their employment. The remuneration to be paid to an employee is estimated & discounted appropriately to arrive at the current estimated value. ECONOMIC VALUE METHOD

11. This method measures HRs by attributing an employee’s value to the organization as an equivalent to the present value of his remaining earnings. Organizations like, ONGC, BHEL,ACC etc. have already adopted this concept. PRESENT VALUE METHOD