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HRA
- 1. HUMAN RESOURCE ACCOUNTING JINI.P.J MBA IMT (THRISSUR)
- 2. Introduction Human resourceaccounting is the process of assigning , budgeting ,and reporting the cost of human resource incurred in an organization, including wages and salaries and training expenses.
- 7. Cost based approach: Value of investment made by the organization. • Historical cost • Replacement cost • Opportunity cost Historical cost: • The historical cost of human resources is the sacrifice that was made to acquire and develop the resource.It is introduced by Brummet, Flamholtz, pyle.Cost may be of two types: Acquisition cost Learning cost
- 8. Replacement cost: Replacementcost is the cost incurred in the replacement of present employees.It was developed by Rensis Likert and Eric G. Flamholtz. Opportunity cost: It determines the value of human resource on the basis of employee’s value in alternative uses It was developed by Hekimian and Jones in order to overcome the limitations of replacement cost method.
- 9. Value based approach: Difference in present and future earning of the firm. monetary value based approach Non monetary value based approach
- 10. monetary value basedapproach: • present value of future earnings method(Lev & Schwartz model)(1971) • reward valuation method(Eric Flamholtz model)(1971) • net benefit model(Morse model)(1973) Non monetary value based approach: • Likert model(1960) • Ogan model( cirtainity equivalent net benefit model)(1976)
- 11. 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 of human resource. • Helps in identifying the causes of high labour turnover.
- 12. Disadvantages of HRA • The valuation of human assets is based on assumptions. • No specific procedure for finding cost & value of human resource of an organization. • No standards of HRA. • Employee with a comparatively low value may feel discouraged. • HR is full of measurement problem.