Human Resource Accounting

Employees are the most important and valuable assets for any kind of organization. And organization’s balance sheet will never reflect these assets. Humans are not considered as assets of one’s own unlike physical assets. Human resources therefore will not be considered amendable to financial reports. Human resource accounting is a subject that refers a process of identifying existing human resources, measuring and communicating information relating those human assets in terms of financial aids to help human resource planning and control.
For improvement of quality most of the organizations spend a lot of time, efforts and money and human resources play key role in to maintaining that. Organizations do this by various means like training, development, counseling, career planning, performance appraisal and various employee benefits. These investments made on human resources used to based on faith, philosophy or compulsion earlier.
Human resource systems now are changed with the support of rapid growth in technology and also able to easily rate the employee’s performance. Cost conscious also started spreading to human resource applications too. These changes in human resource values indicate changes in trends of employee turnover. Such changes prompt organization to reanalyze to optimize the costs made over the human resources. Human resource accounting has become very essential in human resource management in order to maintain those valuable human assets most cost effective.