Human Resource Accounting HRA - Meaning
Human Resource Accounting (HRA) agency to stair out the toll in addition to value of the people (i.e. of employees in addition to managers) inwards the organisation. It measures the toll incurred to recruit, hire, educate in addition to develop employees in addition to managers.
HRA besides finds out the introduce economical value of its employees in addition to managers. After measurement the toll in addition to value of its employees in addition to managers, the arrangement prepares a report. This study is called HRA Report. It is shown to the blogspot.com//search?q=levels-of-management-top-middle-and">top marking management. It tin shipping away besides endure shown to the employees, managers in addition to exterior investors.
Image credits © Genbug.
There are many dissimilar methods of HRA, roughly of which are:-
- Actual Cost Method,
- Replacement Cost Method,
- Standard Cost method, etc.
Definition of HRA
According to American Accounting Association,
"HRA is the procedure of identifying in addition to measurement information near human resources in addition to communicating this information to interested parties."
Advantages of HRA
Benefits, objectives, advantages of human resources accounting HRA:-
1. Information for manpower planning
HRA provides useful information near the toll in addition to value of human resources. It shows the strengths in addition to weakness of the human resources. All this information helps the managers inwards planning in addition to making the right decisions near human resources. Thus, it provides useful information for Manpower Planning in addition to blogspot.com//search?q=levels-of-management-top-middle-and">Decision Making.
2. Information for making personnel policies
HRA provides useful information for making suitable personnel policies near promotion, favorable working environment, chore satisfaction of employees, etc.
3. Utilization of human resources
HRA helps the arrangement to brand the best utilization of human resources.
4. Proper placements
HRA helps the arrangement to house the right human being inwards the right postal service depending on his skills in addition to abilities.
5. Increases morale in addition to motivation
HRA shows that the arrangement cares near the employees in addition to their welfare. This increases their morale in addition to it motivates them to travel difficult in addition to accomplish the objectives of the organisation.
6. Attracts best human resources
Only reputed organisations comport HRA. So, competent in addition to capable people desire to bring together these organisations. Therefore, it attracts the best employees in addition to managers to the organisation.
7. Designing preparation in addition to evolution programs
HRA helps the arrangement to blueprint (make) a suitable preparation in addition to evolution computer program for its employees in addition to managers.
8. Valuable information to investors
HRA provides valuable information to introduce in addition to hereafter investors. They tin shipping away purpose this information to ask the best fellowship for investing their money.
Limitations of HRA
Criticism, disadvantages, limitations of human resources accounting HRA:-
- The valuation of human assets is based on the supposition that the employees are going to stay amongst the arrangement for a specified period. However, this supposition is incorrect because employee mobility is real high.
- The human resources accounting may Pb to the dehumanization inwards the organisation. If the valuation is non done correctly or the results of the valuation are non used properly.
- In the illustration of blogspot.com/">financial accounting, in that location are for sure specified accounting standards which every arrangement must follow. However, in that location are no standards for HRA. Each arrangement has its ain standards for it. So, in that location are no uniform standards for it. Therefore, the HRA of 2 organisations cannot endure compared.
- There are no specific in addition to clear cutting guidelines for 'cost' in addition to 'value' of human resources of an organisation. The introduce valuation systems convey many limitations.
- The life of a human beingness is uncertain. So its value is besides uncertain.
Position of HRA inwards India
In India, real few companies purpose HRA. It is non compulsory inwards India. Infosys Technologies in addition to BPL are the leading companies inwards India, which purpose HRA. HRA reports hand useful information to the fellowship management, employees in addition to investors.
Comments