MEASURING AND REPORTING HUMAN ASSETS

Measuring and Reporting Human Assets

Measuring and Reporting Human Assets

Introduction

Human Asset Management (HCM) is critical in order to create a high-performing work environment. Companies need to manage HC through all the phases of an employee's work life - from recruitment to development to retention. HCM involves getting the right people, with the right skills, in the right position, at the right time, rewarding them with the right incentives to perform the right function in the right environment, to most effectively perform the work of the organization. It also involves training/developing the asset, improving their output/productivity. It is to maximize the organization's HC (i.e. the accumulation of all the individual HC in the organization). Strategic HCM is the transformation of how we employ, deploy, develop and evaluate the workforce. It focuses on results, not processes. This essay will cover the

Measuring and Reporting Human Asset.

Discussion

The term asset is used figuratively to refer to what might probably be better described as "quality of labour". The term was coined as an analogy between investing resources to increase the stock of ordinary physical asset (e.g. computers) in order to increase the productivity of labour and "investing" in the education or training of the labour force as an alternative means of accomplishing the same general objective of higher productivity(Wyatt 2002 pp 4-6). In both sorts of "investment," investors incur costs in the present in the expectation of deriving extra benefits over a long period of time in the future.



What is HRA?

The American Accounting Association's Committee on Human Resource Accounting (1973) has defined Human Resource Accounting as “the process of identifying and measuring data about human resources and communicating this information to interested parties”. HRA, thus, not only involves measurement of all the costs/investments associated with the recruitment, placement, training and development of employees, but also the quantification of the economic value of the people in an organisation (Aldisert 2004 pp 56-100).

Why HRA?

According to Likert (1971), HRA serves the following purposes in an organizational It furnishes cost/value information for making management decisions about acquiring, allocating, developing, and maintaining human resources in order to attain cost-effectiveness; It allows management personnel to monitor effectively the use of human resources; It provides a sound and effective basis of human asset control, that is, whether the asset is appreciated, depleted or conserved; It helps in the development of management principles by classifying the financial consequences of various practices.

HRA also provides the HR professionals and management with information for managing the human resources efficiently and effectively. Such information is Human Resource Accounting essential for performing the critical HR functions of acquiring, developing, allocating, conserving, utilizing, evaluating and rewarding in a proper way. These functions are the key transformational processes that convert human resources from 'raw' inputs(in the form of individuals (Aldisert 2004 pp 56-100), groups and the total human organization) to outputs in the form of goods and services. HRA indicates whether these processes are adding value or enhancing unnecessary ...