Human Resource Accounting Practices Adopted in Indian Industries

ASBM Journal of ManagementVol. 2 Nbr. 2, July 2009

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Summary


Human Resource Accounting (HRA) means accounting for people as original resources. It is the measurement of cost and value of people for an organisation. It is also a way of thinking about the management of people in formal organisations. Knowledge workers are important resources for the typical modern business firms. With the growing complexities of business organisations, the need and importance of competent people is increasing continuously. Yet financial reporting ignores such resources. This paper throws light on the concepts of human resource accounting. It includes an introduction to the concept of human resource accounting, various human resource accounting models, which have been adopted by a number of Indian enterprises to give information about human resource in their balance sheets, steps involved in calculation of human value using Lev and Schwartz model and its critical aspects, and lastly, concludes with suggestions for improvement in the field.

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Extract


Human Resource Accounting Practices Adopted in Indian Industries

Introduction

To ensure growth and development of any organisation, 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 organisation is indicated by the human behavior 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 organisation. These resources are broadly classified into two categories, viz., animate and inanimate (human and physical) resources. Men, otherwise known as the human resources, are considered to be animate resources. Others, namely, materials, machines, money and methods are considered to be inanimate or physical resources.

The success of an organisation depends on how best the scarce physical resources are utilised by the human resource. Therefore, the efficient and effective utilisation of inanimate resources depends largely on the quality, calibre, skills, perception and character of the people, t...

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