The term ” human resource accounting ” is usually defined as an information system based on informing management of the changes that occur over time in the human resources of the company.
This type of accounting includes identifying and measuring data and calculating expenses related to human resources as assets. It is also concerned with calculating the costs incurred by organizations. To employ, select, and train these assets, in addition to measuring the economic value of individuals for the organization, human resource accounting is considered one of the most important and latest concepts adopted by a few companies.
As this concept was invented after realizing the importance of human resources and the importance of developing these resources to take the action necessary in evaluating and raising their performance, which drives all of this to achieve the goals of organizations and enhance the efficiency of their production.
What are the reasons for the emergence of human resource accounting?
The goal of establishing the concept of human resource accounting is not only to recognize the value of all the resources used by the organization, but also to include the management of these resources, which will eventually enhance the quantity and quality of goods and products that you provide and thus increase the opportunity to achieve the goals in the required manner. The objectives and reasons for the emergence of resource accounting can be summarized as follows:
- Provide information about the value of the cost that is calculated to make appropriate and effective administrative decisions regarding obtaining, allocating, and developing human resources for organizational goals.
- Monitoring the effective use of human resources by management.
- Obtaining an analysis of human assets, i.e., whether these assets are preserved, depleted, or valued.
- Assisting in developing management principles and making appropriate decisions for the future by classifying the financial results of various practices.
- Facilitate the process of evaluating human resources, recording this evaluation in the books of accounts, and disclosing information in the financial statement.
- Assisting the organization in making decisions in each of the areas of direct employment through promotion, transfer in exchange for employee retention, influencing budgetary controls for human relations and organizational behavior, and many other similar areas.
- Providing the organization with information about manpower planning and the optimal ways to utilize their energies efficiently and effectively.
- Facilitate the creation of personnel policies and the text of laws.
- Determine the best ways to increase and motivate the loyalty of the employees of the organization.
Benefits of using human resource accounting
There are many benefits to using human resource accounting, including the following:
- Assistance in making decisions.
- Help identify the strengths and weaknesses of the workforce.
- Measuring the effectiveness of human resource policies.
- Safe return on investment.
- Help investors judge the company.
- Provide a foundation for balancing physical and human assets.
- Amending the company’s proposed plans for expansion, growth, and changes if they are not appropriate.
- Enabling the organization to avoid uncertainty and change by selecting the right person in the right place.
- Helping to ensure that human resources do not waste the company’s capabilities and are able to generate high returns for the organization.
Read also: The most important human resources management jobs
