ASSIGNMENT:
1. Identify a company which had valued its employees and shown in the balance sheet and analyse that in terms of the following:
• Method used for valuing human resources
• How cost of hiring and training dealt with
• Benefits the company has derived from this exercise
HUMAN RESOURCE ACCOUNTING
“Human Resource Accounting is an attempt to identify and report investments made in human resources of an organization that are presently not accounted for in conventional accounting practice. Basically it is an information system that tells the management what changes over time are occurring to the human resource in the business.” - Woodruff “Human resource accounting is the measurement of the cost and value of the people for the organization.”
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Infosys, has started showing human resource as an asset in its balance sheet, and has subsequently been reaping high market valuations. Human Resources accounting, which also known as Human Asset Accounting, involves identifying, measuring, capturing, tracking and analyzing the potential of the human resources of a company and communicating the resultant information to the stakeholders of the company. It is a method by which a cost was assigned to every employee during recruitment, and the value that the employee would generate in the future. Human Resource accounting reflects the potential of the human resources of an organization in monetary terms, in its financial statement. The Value of Human Resource will be shown on the Assets side of the balance sheet under Intangible Assets along with the Brand value. The very same amount will be balanced by opening the capital reserve A/c and transferring the whole value of Intangible Assets to that a/c. Comparison with the Traditional Balance Sheet: The only difference between the Traditional Balance Sheet and the one in which the Intangible assets are included, is that intangible assets will be included in the later . The amount of Intangibles will be transferred to Capital a/c just in order to show the balancing effect because valuation of Human Resource in done by way of Lev and Schwartz Model which takes into account the present value of future earning of its employees until they retire. However no such fund is maintained, the valuation is done in order to get the valuation of Human Resource. The current year’s amount of intangibles may be treated in the P/L a/c and the remaining amount in unabsorbed reserve will be shown under capital reserve. Infosys used the Lev and Schwartz method to value Human Resource .According to this model the present
In conclusion, Human Resources department plays a significant role in the organization providing a wide range of valuable services to employees in various functional areas such as recruiting and training people, developing public relations, performance appraisals, maintaining workplace atmosphere, employee relations, benefits administration and much more. More than likely, HR essentially contributes to organization’s strategies and objectives through promotion of leadership activities, building friendly workplace environment and ensuring an efficient management of talented employees overall. As a strategic asset of a company, HR improves the human capital utilization and establishes the competitive workforce based on business and market demand.
There are many functions of Human Resource Management, one of the most integral parts revolves around the process of acquiring human capital and the methods used to retain, motivate, and compensate employees. There are many factors involved in the overall process, to include the following: a job analysis, recruitment and selection, hiring the best candidate, evaluating and compensating them appropriately. Each part of the process affects the other, from ensuring that you have an accurate job description to determining the appropriate level of compensation.
The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine a selling price and/or to identify possible investment opportunities. Although the principal aim or function of cost accounting is to help the business administration with their decision making and business planning process, the cost accounting data
Organizations’ other resources can be hired, retained and discarded at any time but human resources needs special treatment. It needs to be carefully hired, deserve an extra effort to retain it and requires training & development to upgrade and improve its capabilities. Other resources depreciate with the passage of time but when the human resource gains more and more experience, it becomes more beneficial for the organizations. These characteristics have brought human resources to be the central element for the success of an organization. (Mohammed, Bhatti, Jariko, and Zehri, 2013, pg. 129, para. 2)
Torrington, D. Hall, L. & Taylor, S. (2005) Human Resource Management. Harlow: Financial Times Prentice Hall
Employee benefits coordinator play a significant role in Human Resource Management. Employee Benefits coordinators are responsible for assisting with employee benefits, maintaining employee data base, managing all insurance billings and maintain employee files, sick pay, vacation and retirement. This study explores the importance of employee benefits to corporations, government agencies and non profit organizations. This paper also researches the effects on the management team and on individual employees’.
Human Resource Management The primary function of human resource management is to increase the effectiveness and contribution of employees in the attainment of organizational goals and objectives. An organization's success increasingly depends on the knowledge, skills, and abilities of its employees. Without out them they would surely fail. Particularly, how a company is run and how they treat their employees and customers help set the core competencies, which distinguish one organization from its competitors. This paper is intended to give an overall view of how important Human Resources re to a organization, by looking at the people involved, the laws that effect, and the methods used in Human resource management.
However you define the activities of management, and whatever the organisational processes are, an essential part of the process of management is that proper attention be given to the Human Resource function. The human element provides a major part in the overall success of the organisation. Therefore there must be an effective human resource function. In the past, most organisations viewed Human Resource Management (HRM) as an element function, that is an activity that is supportive of the task functions and does not normally have any accountability for the performance of a specific end task. Because of the emphasis on analysis and precision there is a tendency for strategists to concentrate on economic data and ignore the way in which human elements and values can influence the implementation of a strategy. 'Economic analysis of strategy fails to recognise the complex role which people play in the evolution of strategy - strategy is also a product of what people want an organisation to do or what they feel the organisation should be like.?(1).
An organizational human resources department utilizes the hiring and firing process to meet the organization’s personnel needs. Organizational human resource departments are charged with the oversight of an organizations administration department. The practice of hiring and firing people is a process employer’s conducts on a daily basis. This process has to be done in a proper manner and not in haste. The implication that can occur from the improper hiring and firing process could and can have a positive or negative impact on an organization. Therefore, employers must carefully evaluate their decision to hire/fire individuals and its impact on the organizations’ workplace environment and others employees. Human Resource Management is important for an effective organization. In today’s organization, HRM is valuable to the organization because of increase legal complexities and its known for improvement in productivity. However, management should realize that poor human resource management could result in an outburst of hiring process followed by firing or layoffs. According to (Satterlee 2013, p. 194), “Hiring the best candidate who is also a good fit for the organization is crucial for the success of an organization, because a poor hiring decision will have repercussions across the entire organization”. Satterlee made a valid point because poor hiring could have an impact on the bottom line performance of the firm. In other words, HRM is the contributing factor to the success of the organization including motivating and maintain the staffs. The purpose to the motivation is to ensure that all employees grow to a full potential. According to (Sims 2006, p. 5), “HRM efforts are planned, systematic approaches to increasing organizati...
It represents the Strategic human resource management (SHRM) core function like “work analysis, Job design and job analysis” defines its importance in strategies implementation in any organization. This assignment will also discuss the aspect of Human Resource department that why they are giving more edge to other functions like Recruitment and selection, Performance appraisal and Occupational health and safety. This report will also presents the today’s critical business challenges and the with coming new responsibilities for HR and why they have started to give more weightage to Job analysis and design in order to get the better output and efficiency of the organization. Moreover, Human capital is a vital factor for any department in any organization. “Hiring smart” is becoming a fashion trend for companies for their effectiveness, productivity and employee motivation as the more investment will be done in employees by the firms. It continues with the recommendations on the need of analysis and design of work and how to make employees motivated in the company.
Human resource is the most valuable and unique asset of an organization. The successful management of an organization’s human resource is an exciting, dynamic and challenging task , especially at a time when the world has become a global village and economies are in a state of flux. The lack of talented resource and the growing expectation of the modern day employee has further increased the difficulty of the human resource function.
Human resource management is the strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business. The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations. Human Resource management is evolving rapidly. Human resource management is both an academic theory and a business practice that addresses the theoretical and practical techniques of managing a workforce. (1)
Human resources have become the politically correct way of addressing Earth’s most valuable resource… the human being. There is a long history of attempts to achieve an understanding of human behavior at the work place. From the early 1890, academicians and practitioners developed theories and practices in order to explain and influence the behavior of employees at the work. The Human Resource Glossary by William R. Tracey defines Human Resources as: “The people that staff and operate an organization”. The people that work within an organization are subject of common analysis for political economics, economics, corporate business and psychology. In political economics and economics, the employees are taken into consideration as one of the four production factors: Labor, while in the corporate world they are known as Human Resource or Human Capital and it is not referring to the people within an organization as physical matter, but what those people bring and contribute to organizational success. Sometimes it is called intellectual capital when it reflects creativity, knowledge, skills and motivation. The authority level that deals with it, it’s called Human Resource Management.(SITE1) The original term, Personnel Management was used to describe “the specialist management function which determines and implements policies and procedures which affects the stages of the employment cycle” (BOOK). It first appeared in the early years of the 20th Century and it had an administrative nature, dealing mostly with payroll, employment law and handling related tasks. The term of Human Resource Management is the result of the famous Hawthorne experiment of Elton Mayo of the Harvard School of Business Administration. This experiment was meant to demonstrate the connection between theory and practice of Personnel Management with Psychology. The term began to be used in the 1950s, to designate the expansion of traditional personnel management to include modern psychology. (Site 2) The term defines a managerial perspective which argues the need to establish an integrated series of personnel policies to support the organizational strategy (Buchannan, 2004). A number of authors stress the difficulties of identifying clear differences between personnel management and HRM, and maintain that the most obvious change is a “re-labeling process” (Legge, 1989) Some experts, such as Lowry (1990) and Fowler (1987), argue that there is no major difference between human resources and personnel management going further by suggesting that “HRM is the continuing process of personnel management”.
In accordance with the duties assigned by Finance and Administration Manager, Payroll Specialist performs payroll accounting including setting up payroll account codes such as salary, advance payment etc. Moreover, Payroll Specialist prepares payrolls in addition to conducting transactions with official institutions such as Social Security Institution (SGK), Ministry of Labor, etc. as well as the follow up the vacations of the personnel and side benefits.
In the past, the company performance was measured by asking ‘how much money the company makes?’ To a certain extent, they are right because gross revenue, profitability, return on capital, etc. are the results that companies must bring to survive. Unfortunately, in today business if the management focuses only on the financial health of the company, numerous unwanted consequences may arise.