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Human Resource Accounting

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Updating the book since its last publication in 1985, this new  edition of the landmark work on human resource accounting has been  substantially revised to reflect the current state of the field  through the late 1990s. The economies of many nations are increasingly  dominated by knowledge- or information-based sectors driven by highly  trained and specialized personnel. Whereas physical capital was of the  utmost economic importance in the past, the distinctive feature of the  emerging post-industrial economies is an increasing reliance on human  and intellectual capital. The growing importance of human capital as a  determinant of economic success at both the macroeconomic and  microeconomic levels dictates that firms need to adjust to this new  economic reality. Specifically, if human capital is a key determinant  for organizational success, then investment in the training and  development of employees to improve performance is a critical  component of this success. This broad socioeconomic shift underscores a growing need for  measuring and analyzing human capital when making managerial and  financial decisions.  Yet important human resource decisions involving  hiring, training, compensation, productivity and other matters are  often made in the absence of specific information about the different costs and benefits of these particular choices. Human resource  accounting is a managerial tool that can be used to gain this valuable  information by measuring the costs of recruiting, hiring, compensating  and training employees. It can be used to evaluate employee training  programs, increase productivity, and improve managerial  decision-making regarding promotions, transfers, layoffs, replacement  and turnover. Case studies illustrate, for example: How an insurance company evaluated a training program for claims  adjusters and found that it would return two dollars for every one  dollar spent. How a human resources accounting study revealed  that an electronics firm's losses from employee turnover equalled one  year's new income, and how the company initiated a program to reduce  turnovers.  The third edition presents the current state of the art of human  resource accounting by (1) examining the concepts and methods of  accounting for people as human resources; (2) explaining the present  and potential uses of human resource accounting for human resource  managers, line managers and investors; (3) describing the research,  experiments and applications of human resource accounting in  organizations; (4) considering the steps involved in developing a  human resource accounting system; and (5) discussing some of the  remaining aspects of human resource accounting that require further  research.