Dimensions Of Human Resource Accounting

The success of an organization depends on how best the scare physical resources are utilized by the human resource. The important thing here is that the physical resources are being activated as the physical resources by the human resources cannot act on their own. Therefore, the efficient and effective utilization of inanimate resources largely depends on the quality, skills, character and perception of the people that is the human resources working on it.

The term human resource at macro level indicates the total sum of the components such as creative abilities, skills, innovative thinking, intuition, imagination, experience processed and knowledge by all the people. An organization possessed with abundant physical resources may sometimes

Continuing this example of the layoff decision, professionals of human resource can use their expertise to quantify the costs of t layoff including the estimated replacement cost that will be incurred because of the need to replace the lost workforce. Here the central point is not that companies should adopt a policy of no layoffs but rather that management ought to consider all the costs and benefits of such practices. Thus one role of the measurement aspect of HRA is to provide numerical information as an input to management decisions.

However, there is another effect of the measurement dimension of human resource accounting-in-brief, the very act of monitoring and quantifying the costs and value of people from a human resource perspective. According to the traditional way of thinking about people in organizations, they represent an

• It helps in deciding the transfers, promotion, training and retrenchment of human resources. c) It provides a basis for planning of physical assets through human resources.

• It assists in the process of evaluating the expenditure that is incurred for imparting further education and training in employees in terms of the benefits derived by the firm.

• It helps to identify the causes of high labour turnover at various levels and taking preventive measures to contain it.

• It helps in locating the real cause for low return on investment, like under-utilization or improper use of physical assets or human resource or both.

• It helps in understanding and assessing the inner strength of an organization and helps the management to steer the company well through most adverse circumstances.

• It provides information that is valuable for persons interested in making long-term investment in the