Hi I am Lakshmi an MBA student. I need some help on understanding "Human Resource Accounting". Would anyone please give suggestions on this statement “Human resource is not an incremental cost but an investment”? Can we regard Human resource as an asset? It will be really helpful for me if I can get the inevitable ideas and suggestions.
From India, Kochi
2From India, Kochi
HR ACCOUNTING.
LISTED BELOW IS AN USEFUL ARTICLE.
Human Resources Accounting
--------------------------------------------------------------------------------
The desire to quantify the benefit of the human resources function has been a constant theme in the HR literature. Unfortunately, the bewildering variety of proposals on how to accomplish this has led to confusion and inaction.
This explanation should help.
In the late 60s and early 70s, a number of writers proposed that the capital nature of certain human resource costs be recognized as investments rather than as expenses, which collectively became known as Human Resources Accounting. While the underlying concept was simple and straightforward, academics observed that capitalization and amortization of applicable Human Resources Accounting costs had no measurement of "value" or worth of the HR investment.
Accordingly, proposals were developed to take the basic information and add the dimension of "value" of individuals and the whole organization. Since accounting measures "cost," not "value" or "worth,” the proposed improvements in Human Resource Accounting took it out of the realm of acceptable accounting practice.
Recent literature has focused on a broader measurement, namely that of "intellectual capital." Despite those who consider intellectual capital a new approach, it is really an extension of HR accounting since without the underlying concept of HR investment there can be no intellectual capital development.
Advocates of intellectual capital cannot agree on which HR variables to measure, so they propose letting the user pick and choose. Management consulting firms have picked up on intellectual capital in a big way and various firms have developed indices that purport to relate specific intellectual capital variables. The end result measures revenue growth and profit.
The focus on intellectual capital has resulted in HR accounting being shifted to the sidelines, even though the HR accounting concept is far simpler and much easier to implement.
Generally accepted accounting principles and HR accounting
It is helpful to review how the generally accepted accounting principles relate to HR accounting, because the ultimate goal of the HR function is to have its performance measured "on the books" in the basic accounting system. This is complete with measures of profit contribution; return on investment and other measures that conventional accounting produces for the operating departments.
While "off the book" indices and statistics have a place, the ability to "show me the money" (to quote a line from a recent movie), ranks far higher in prestige and in determining bonuses and incentive compensation.
The basic HR accounting model parallels the acquisition of tangible assets. Any acquisition, whether HR related or not, has to be recorded as an asset, an expense, or a loss. An asset is defined as an expenditure producing future benefit, and recording an asset is known as capitalizing. Expenses and losses expire within the current period.
As noted above, "value" and "worth" are not measured in generally accepted accounting principles unless there is an actual monetary transaction. So HR measurement based on "value" is not part of generally accepted accounting principles, at least as now defined.
Capitalizing versus expensing the HR accounting model
What kinds of HR costs could be considered capital because of their incurrence to generate future benefits? The companies that have implemented HR measurement either fully or partially have included such costs as:
Recruitment, including agency fees, headhunters, etc
Hiring and testing
Tuition reimbursement
Seminar costs
Formal training
Informal training
The same decisions on capitalizing versus expensing apply to both HR and non-HR acquisitions, namely are those costs maintenance, betterment, or improvement. "Maintenance," including normal salary costs and perhaps such extras as EAP programs and concierge services, are clearly expenses.
On the other hand, costs such as those listed above, are clearly capital in nature and should be classified as assets or investments.
Where and how should HR accounting be reported?
There are three areas to consider:
For taxation, all HR costs would be expensed, as in current treatment. However, there are issues as to whether certain training associated with start up projects has to be deferred until the projects are operational.
For external reporting purposes to shareholders, etc, HR accounting must conform to Generally Accepted Accounting Principles (GAAP) to be included in external statements.
For internal reporting to management, there are no GAAP restrictions. Companies have implemented HR accounting systems for portions of their personnel operations as part of their budgeting and performance measurement system.
What about the use of HR accounting in external reporting?
Prior to the release of Accounting Principles Board Opinion No. 17, there are examples of full or partial HR accounting disclosure in external statements. For example, the Atlanta Braves were a publicly held sports franchise whose president decided to capitalize the costs of running the team's farm club operations and then amortize that cost to expense over five years.
He justified that treatment as his industry's version of research and development.
The financial statements also include the costs of player contracts, which were also being amortized. One could argue that the contract costs warrant capitalization because of the existence of legal documents tying the players to the team. However, with the modern era of free agency and arbitration, even the players are not "owned" in the same way tangible assets would be.
Electronic Data Systems (EDS) decided to capitalize the cost of training its computer consultants, and to amortize that cost to expense over a three-year period. It chose a method of amortization (reverse sum of years digits) that would write off larger amounts of training costs as the consultants became more productive.
Some air carriers capitalized the cost of flight training as new equipment was purchased and put into service, and included those costs in subsequent equipment depreciation.
The R.G. Barry Corporation issued a comprehensive financial statement, but it chose to provide its "total" (conventional and HR) statement as a supplemental disclosure, not its primary certified financial statements.
Even so, the first R.G. Barry statement presented in 1969 attracted wide attention in the business press, including the possibilities for income manipulation. The company included a disclosure notice to remind statement users that the "total" approach was not acceptable in conventional accounting practice. In retrospect, since Accounting Principles Board Opinion No. 17 had not yet been released, the decision to capitalize certain personnel costs was no different than what the Braves did in its primary certified statements.
Unfortunately, R.G. Barry included more than actual outlay costs in its "total approach" so that it could not use the primary statements for disclosing this information. While an HR accounting system, once adopted, would have to be applied consistently, the greatest benefit would occur in knowledge or skills-based companies, where employees represent the greatest income producing asset, and where such abilities are not recognized in current accounting principles.
Again, R.G. Barry was not such a company because it made ladies garments and accessories. It was decidedly "low tech" sewing and assembly operation. In addition, it would be fair to assume that in a "high tech" company, the amount invested in employee training and development would be a much greater percentage of total assets, so that the roughly $1 million in HR costs reported in 1969 would be much larger in a knowledge based company of equivalent size.
Whatever the limits of the costs reported in the R.G. Barry financial statements are, the company demonstrated that capitalizing appropriate personnel related costs was feasible, and it also developed a model for predicting "expected service life" as the basis for amortizing such costs.
The 1970 "total approach" statements produced a lower income than conventional reporting, because the overall investment in HR had declined faster from amortization of prior costs versus new investments. The company provided such statements through the mid-70s.
With the release of the accounting board opinion, any attempts to continue such disclosure in primary statements were eliminated. It was ruled that internally generated intangibles, such as employee training, must be expensed as incurred.
Accounting board's reasoning:
The accounting board's reasoning was as follows:
Capitalization of internal intangibles was subjective and did not meet the objectivity standard required in generally accepted accounting principles.
Even if objectivity could be achieved, the period of future benefit during which capitalized costs would be amortized was uncertain. Employees were not "owned" like tangible assets, and could leave prematurely.
As the successor to the Accounting Principles Board, the Financial Accounting Standards Board (FASB), is aware of the glaring omission of such intangibles in knowledge based companies. For example, a software company where the market value of the company equity is many times greater than the underlying recorded assets. Here, the most important asset, the accumulated skills of the staff, is not reported at all.
Not to delve too deeply into the accounting process, but when such a company is acquired, and money or securities change hands, those unrecorded assets wind up being recorded in a "catch all" account called "goodwill."
FASB is about to release a new rule on business combinations and accounting for goodwill. This is where HR accounting comes into consideration. The focus is on identifying as many "hidden assets" as possible, and recording them in their own right. If the acquired company had established an HR accounting system, that would facilitate the process.
Aside from the goodwill issue, both FASB and the SEC are concerned about the lack of information being provided investors in knowledge-based companies that relate to human resource based "intellectual capital." For example, as an investor, I would surely be interested in knowing that turnover had reached excessive levels and that key engineering and scientific personnel had left the firm. Such information is not now shown in financial statements, leaving investors in the dark until a news source reports the defections.
Despite the accounting board opinion, which may be revised as part of the "goodwill" treatment, the underlying reasons for denying capital status to HR-related costs has no basis in fact.
If limited to actual outlay costs, and not measurement of "value" or "worth," capitalization of the HR costs listed above is as objective as recording an invoice for the acquisition of a physical asset.
With regard to the amortization period, companies with defined benefit pension plans base their pension expenses on actuarial estimates of service life, final compensation, etc. There is no legitimate reason that those same estimates could not be used for amortization of deferred HR costs. If an employee leaves prematurely, any un-amortized cost is written off as a loss and removed from use prematurely.
The larger issue is the practical use of generating information that is limited to actual cost and amortization and not to advance "off the book" measures of "value."
Value of an "on the book" system
An “on the books” system such as that used by R.G. Barry, for all its shortcomings, still provides invaluable information for investors and management.
First and foremost, capitalization of appropriate HR costs provides meaning to HR expenditures as an investment. Calling it such and then expensing those costs, as currently done, surely does not instill confidence that these outlays are indeed intended for long-term benefit.
Second, the rate of increase and decrease of the HR investment accounts over time (that is, either new investment exceeds amortization and write off, or amortization exceeds new investment) provides a clear indicator as to the level of personnel resources. It equates such changes to additional income or provides the basis for an HR bottom line, and for ROI calculations.
Third, even if the accounts are established for internal reporting to management only management can finally have accurate answers to such questions as to what the costs of turnover really are. Dumping such costs into current expense makes it impossible to come up with an "on the books" dollar amount for HR costs written off when employees depart prematurely. In the same situation, when it comes time to downsize, the amount of "investment" should be one factor in making personnel decisions.
I recall a presentation to a group of banks in South Florida, whose managers acknowledged a problem with high turnover of part-time tellers, but were assured of a constant supply of replacements. They did not recognize that while the costs per employee of the three-week new teller program were about $3000 each. Some 4,000 such turnovers per year led to a hefty expense.
Had those costs been capitalized and amortized, a premature departure would cause management (and if included in external statements, shareholders) to be more proactive in protecting their investment by developing better retention policies.
Yes, amortized cost surely does not equate to "value" nor is it supposed to in an “on the book” measure. However, to ignore the benefits of an "on the books" measurement of HR investment and consumption for some index seems to me that the creation of an HR financial measurement system will never be developed.
It may very well be that the eventual resolution of the intangible reporting issue by FASB and/or the SEC will set the pace for the implementation of a workable HR reporting system.
[ FASB is an accounting body and SEC is an STOCK EXCHANGE body]
Postscript
Since the submission of the above, FASB has finalized the business combinations revised rules, which are due to go into effect on June 30. In addition, FASB has added to its research agenda a stand-alone project on reporting of internally generated intangible assets, and is gathering input from the public.
Readers interested in reading the initial proposals, and submitting their own opinions should go to www.fasb.org.
The issues raised do not require a technical knowledge of accounting. The initial comments preclude the possible recognition of such costs as training and development as assets, on the premise that the organization incurring the costs lacks "control" over such assets.
(The author believes that this control argument is archaic and is not in accord with economic reality, in that the employer would not incur such costs if it did not expect some kind of future benefit.)
However, the initial comments are also directed to the nature of supplemental disclosures in financial statements (the footnotes) and to the development of a framework for such disclosures. It is in this category that the greatest promise exists for finally giving the HR function an "on the books" presence and a direct way to appraise shareholders of the effectiveness of HR policies and practices.
--------------------------------------------------------------------------------
Marvin Weiss is a professor of accounting (retired), NY Institute of Technology and Adjunct Professor of Accounting, Graduate School of Business, Fordham University.
Hope this is useful to you
REGARDS
LEO LINGHAM
From India, Mumbai
LISTED BELOW IS AN USEFUL ARTICLE.
Human Resources Accounting
--------------------------------------------------------------------------------
The desire to quantify the benefit of the human resources function has been a constant theme in the HR literature. Unfortunately, the bewildering variety of proposals on how to accomplish this has led to confusion and inaction.
This explanation should help.
In the late 60s and early 70s, a number of writers proposed that the capital nature of certain human resource costs be recognized as investments rather than as expenses, which collectively became known as Human Resources Accounting. While the underlying concept was simple and straightforward, academics observed that capitalization and amortization of applicable Human Resources Accounting costs had no measurement of "value" or worth of the HR investment.
Accordingly, proposals were developed to take the basic information and add the dimension of "value" of individuals and the whole organization. Since accounting measures "cost," not "value" or "worth,” the proposed improvements in Human Resource Accounting took it out of the realm of acceptable accounting practice.
Recent literature has focused on a broader measurement, namely that of "intellectual capital." Despite those who consider intellectual capital a new approach, it is really an extension of HR accounting since without the underlying concept of HR investment there can be no intellectual capital development.
Advocates of intellectual capital cannot agree on which HR variables to measure, so they propose letting the user pick and choose. Management consulting firms have picked up on intellectual capital in a big way and various firms have developed indices that purport to relate specific intellectual capital variables. The end result measures revenue growth and profit.
The focus on intellectual capital has resulted in HR accounting being shifted to the sidelines, even though the HR accounting concept is far simpler and much easier to implement.
Generally accepted accounting principles and HR accounting
It is helpful to review how the generally accepted accounting principles relate to HR accounting, because the ultimate goal of the HR function is to have its performance measured "on the books" in the basic accounting system. This is complete with measures of profit contribution; return on investment and other measures that conventional accounting produces for the operating departments.
While "off the book" indices and statistics have a place, the ability to "show me the money" (to quote a line from a recent movie), ranks far higher in prestige and in determining bonuses and incentive compensation.
The basic HR accounting model parallels the acquisition of tangible assets. Any acquisition, whether HR related or not, has to be recorded as an asset, an expense, or a loss. An asset is defined as an expenditure producing future benefit, and recording an asset is known as capitalizing. Expenses and losses expire within the current period.
As noted above, "value" and "worth" are not measured in generally accepted accounting principles unless there is an actual monetary transaction. So HR measurement based on "value" is not part of generally accepted accounting principles, at least as now defined.
Capitalizing versus expensing the HR accounting model
What kinds of HR costs could be considered capital because of their incurrence to generate future benefits? The companies that have implemented HR measurement either fully or partially have included such costs as:
Recruitment, including agency fees, headhunters, etc
Hiring and testing
Tuition reimbursement
Seminar costs
Formal training
Informal training
The same decisions on capitalizing versus expensing apply to both HR and non-HR acquisitions, namely are those costs maintenance, betterment, or improvement. "Maintenance," including normal salary costs and perhaps such extras as EAP programs and concierge services, are clearly expenses.
On the other hand, costs such as those listed above, are clearly capital in nature and should be classified as assets or investments.
Where and how should HR accounting be reported?
There are three areas to consider:
For taxation, all HR costs would be expensed, as in current treatment. However, there are issues as to whether certain training associated with start up projects has to be deferred until the projects are operational.
For external reporting purposes to shareholders, etc, HR accounting must conform to Generally Accepted Accounting Principles (GAAP) to be included in external statements.
For internal reporting to management, there are no GAAP restrictions. Companies have implemented HR accounting systems for portions of their personnel operations as part of their budgeting and performance measurement system.
What about the use of HR accounting in external reporting?
Prior to the release of Accounting Principles Board Opinion No. 17, there are examples of full or partial HR accounting disclosure in external statements. For example, the Atlanta Braves were a publicly held sports franchise whose president decided to capitalize the costs of running the team's farm club operations and then amortize that cost to expense over five years.
He justified that treatment as his industry's version of research and development.
The financial statements also include the costs of player contracts, which were also being amortized. One could argue that the contract costs warrant capitalization because of the existence of legal documents tying the players to the team. However, with the modern era of free agency and arbitration, even the players are not "owned" in the same way tangible assets would be.
Electronic Data Systems (EDS) decided to capitalize the cost of training its computer consultants, and to amortize that cost to expense over a three-year period. It chose a method of amortization (reverse sum of years digits) that would write off larger amounts of training costs as the consultants became more productive.
Some air carriers capitalized the cost of flight training as new equipment was purchased and put into service, and included those costs in subsequent equipment depreciation.
The R.G. Barry Corporation issued a comprehensive financial statement, but it chose to provide its "total" (conventional and HR) statement as a supplemental disclosure, not its primary certified financial statements.
Even so, the first R.G. Barry statement presented in 1969 attracted wide attention in the business press, including the possibilities for income manipulation. The company included a disclosure notice to remind statement users that the "total" approach was not acceptable in conventional accounting practice. In retrospect, since Accounting Principles Board Opinion No. 17 had not yet been released, the decision to capitalize certain personnel costs was no different than what the Braves did in its primary certified statements.
Unfortunately, R.G. Barry included more than actual outlay costs in its "total approach" so that it could not use the primary statements for disclosing this information. While an HR accounting system, once adopted, would have to be applied consistently, the greatest benefit would occur in knowledge or skills-based companies, where employees represent the greatest income producing asset, and where such abilities are not recognized in current accounting principles.
Again, R.G. Barry was not such a company because it made ladies garments and accessories. It was decidedly "low tech" sewing and assembly operation. In addition, it would be fair to assume that in a "high tech" company, the amount invested in employee training and development would be a much greater percentage of total assets, so that the roughly $1 million in HR costs reported in 1969 would be much larger in a knowledge based company of equivalent size.
Whatever the limits of the costs reported in the R.G. Barry financial statements are, the company demonstrated that capitalizing appropriate personnel related costs was feasible, and it also developed a model for predicting "expected service life" as the basis for amortizing such costs.
The 1970 "total approach" statements produced a lower income than conventional reporting, because the overall investment in HR had declined faster from amortization of prior costs versus new investments. The company provided such statements through the mid-70s.
With the release of the accounting board opinion, any attempts to continue such disclosure in primary statements were eliminated. It was ruled that internally generated intangibles, such as employee training, must be expensed as incurred.
Accounting board's reasoning:
The accounting board's reasoning was as follows:
Capitalization of internal intangibles was subjective and did not meet the objectivity standard required in generally accepted accounting principles.
Even if objectivity could be achieved, the period of future benefit during which capitalized costs would be amortized was uncertain. Employees were not "owned" like tangible assets, and could leave prematurely.
As the successor to the Accounting Principles Board, the Financial Accounting Standards Board (FASB), is aware of the glaring omission of such intangibles in knowledge based companies. For example, a software company where the market value of the company equity is many times greater than the underlying recorded assets. Here, the most important asset, the accumulated skills of the staff, is not reported at all.
Not to delve too deeply into the accounting process, but when such a company is acquired, and money or securities change hands, those unrecorded assets wind up being recorded in a "catch all" account called "goodwill."
FASB is about to release a new rule on business combinations and accounting for goodwill. This is where HR accounting comes into consideration. The focus is on identifying as many "hidden assets" as possible, and recording them in their own right. If the acquired company had established an HR accounting system, that would facilitate the process.
Aside from the goodwill issue, both FASB and the SEC are concerned about the lack of information being provided investors in knowledge-based companies that relate to human resource based "intellectual capital." For example, as an investor, I would surely be interested in knowing that turnover had reached excessive levels and that key engineering and scientific personnel had left the firm. Such information is not now shown in financial statements, leaving investors in the dark until a news source reports the defections.
Despite the accounting board opinion, which may be revised as part of the "goodwill" treatment, the underlying reasons for denying capital status to HR-related costs has no basis in fact.
If limited to actual outlay costs, and not measurement of "value" or "worth," capitalization of the HR costs listed above is as objective as recording an invoice for the acquisition of a physical asset.
With regard to the amortization period, companies with defined benefit pension plans base their pension expenses on actuarial estimates of service life, final compensation, etc. There is no legitimate reason that those same estimates could not be used for amortization of deferred HR costs. If an employee leaves prematurely, any un-amortized cost is written off as a loss and removed from use prematurely.
The larger issue is the practical use of generating information that is limited to actual cost and amortization and not to advance "off the book" measures of "value."
Value of an "on the book" system
An “on the books” system such as that used by R.G. Barry, for all its shortcomings, still provides invaluable information for investors and management.
First and foremost, capitalization of appropriate HR costs provides meaning to HR expenditures as an investment. Calling it such and then expensing those costs, as currently done, surely does not instill confidence that these outlays are indeed intended for long-term benefit.
Second, the rate of increase and decrease of the HR investment accounts over time (that is, either new investment exceeds amortization and write off, or amortization exceeds new investment) provides a clear indicator as to the level of personnel resources. It equates such changes to additional income or provides the basis for an HR bottom line, and for ROI calculations.
Third, even if the accounts are established for internal reporting to management only management can finally have accurate answers to such questions as to what the costs of turnover really are. Dumping such costs into current expense makes it impossible to come up with an "on the books" dollar amount for HR costs written off when employees depart prematurely. In the same situation, when it comes time to downsize, the amount of "investment" should be one factor in making personnel decisions.
I recall a presentation to a group of banks in South Florida, whose managers acknowledged a problem with high turnover of part-time tellers, but were assured of a constant supply of replacements. They did not recognize that while the costs per employee of the three-week new teller program were about $3000 each. Some 4,000 such turnovers per year led to a hefty expense.
Had those costs been capitalized and amortized, a premature departure would cause management (and if included in external statements, shareholders) to be more proactive in protecting their investment by developing better retention policies.
Yes, amortized cost surely does not equate to "value" nor is it supposed to in an “on the book” measure. However, to ignore the benefits of an "on the books" measurement of HR investment and consumption for some index seems to me that the creation of an HR financial measurement system will never be developed.
It may very well be that the eventual resolution of the intangible reporting issue by FASB and/or the SEC will set the pace for the implementation of a workable HR reporting system.
[ FASB is an accounting body and SEC is an STOCK EXCHANGE body]
Postscript
Since the submission of the above, FASB has finalized the business combinations revised rules, which are due to go into effect on June 30. In addition, FASB has added to its research agenda a stand-alone project on reporting of internally generated intangible assets, and is gathering input from the public.
Readers interested in reading the initial proposals, and submitting their own opinions should go to www.fasb.org.
The issues raised do not require a technical knowledge of accounting. The initial comments preclude the possible recognition of such costs as training and development as assets, on the premise that the organization incurring the costs lacks "control" over such assets.
(The author believes that this control argument is archaic and is not in accord with economic reality, in that the employer would not incur such costs if it did not expect some kind of future benefit.)
However, the initial comments are also directed to the nature of supplemental disclosures in financial statements (the footnotes) and to the development of a framework for such disclosures. It is in this category that the greatest promise exists for finally giving the HR function an "on the books" presence and a direct way to appraise shareholders of the effectiveness of HR policies and practices.
--------------------------------------------------------------------------------
Marvin Weiss is a professor of accounting (retired), NY Institute of Technology and Adjunct Professor of Accounting, Graduate School of Business, Fordham University.
Hope this is useful to you
REGARDS
LEO LINGHAM
From India, Mumbai
It is often said that "people are our greatest asset" and there have been many attempts to account for them on the balance sheet of companies.
My understanding of the term "asset" is that it is "something you own" and in financial circles, has a ready dollar value.
In these respects the workforce cannot be seen as a financial asset - it is neither owned by the organisation, nor is it readily convertable to a useful and useable dollar value. True, an organisation may have paid for the development of the workforce, but that changes nothing, and in this regard the workforce can only be seen as a cost.
It may be dangerous to think of the workforce as an asset in the context of mergers and acquisitions - so few M&A actually add to shareholder value in the end, and people who make up the workforce frequently react adversely to the way M&As are executed. To acquire an organisation or merge with it in order to take advantage of characteristics of its workforce may seem like a laudable goal, but its implementation is so often 'botched' that the M&A often destroys the very essence of what it is trying to replicate. It's like affluent people moving from the cities that are overcrowded to the idyll of rural living, chasing a dream of a reality that has perhaps not existed for decades - as more of these people flood in to rural villages, the very essence that made these places desirable is forced out as the people who made it this way in the first place move out.
It may be more practical to think about the workforce in terms of what it actually does, and what the consequences would be if it didn't do these tasks, or did them less efficiently or effectively?
Success with financial results ultimately depend upon satisfied customers paying on time and in full. For satisfaction to be delivered requires processes that are effective and efficient, and remain so, even as customer requirements change. I know of no processes that are capable of effective and efficient operation, maintenance of self and improvement of self without the intervention of people. So people, more than process and equipment perhaps, are the key to service delivery, satisfied customers and financial results. Perhaps this should be taken as a 'given' so we can turn our attentions to more useful tasks than trying to attach a value to something that is so fundamental?
Kind regards
Martin
From United Kingdom,
My understanding of the term "asset" is that it is "something you own" and in financial circles, has a ready dollar value.
In these respects the workforce cannot be seen as a financial asset - it is neither owned by the organisation, nor is it readily convertable to a useful and useable dollar value. True, an organisation may have paid for the development of the workforce, but that changes nothing, and in this regard the workforce can only be seen as a cost.
It may be dangerous to think of the workforce as an asset in the context of mergers and acquisitions - so few M&A actually add to shareholder value in the end, and people who make up the workforce frequently react adversely to the way M&As are executed. To acquire an organisation or merge with it in order to take advantage of characteristics of its workforce may seem like a laudable goal, but its implementation is so often 'botched' that the M&A often destroys the very essence of what it is trying to replicate. It's like affluent people moving from the cities that are overcrowded to the idyll of rural living, chasing a dream of a reality that has perhaps not existed for decades - as more of these people flood in to rural villages, the very essence that made these places desirable is forced out as the people who made it this way in the first place move out.
It may be more practical to think about the workforce in terms of what it actually does, and what the consequences would be if it didn't do these tasks, or did them less efficiently or effectively?
Success with financial results ultimately depend upon satisfied customers paying on time and in full. For satisfaction to be delivered requires processes that are effective and efficient, and remain so, even as customer requirements change. I know of no processes that are capable of effective and efficient operation, maintenance of self and improvement of self without the intervention of people. So people, more than process and equipment perhaps, are the key to service delivery, satisfied customers and financial results. Perhaps this should be taken as a 'given' so we can turn our attentions to more useful tasks than trying to attach a value to something that is so fundamental?
Kind regards
Martin
From United Kingdom,
RESPECTED SIR,
ME ALSO AN MBA HR STUDENT, YOUR POST IS REALLY VALUABLE, BUT I WISH A LITTLE BIT MORE.... WHERE I CAN GET A REAL EXAMPLE OF HUMAN RESOURCE ACCOUNTING FOR A COMPANY, ANY WEBLINK, ARCHIVE ETC...
IT CAN HELP ME A LOT AS I AM THINKING OF DOING A PROJECT ON THIS TOPIC.
WITH ALL MY REGARDS,
PURNNEDU
From India, Pune
ME ALSO AN MBA HR STUDENT, YOUR POST IS REALLY VALUABLE, BUT I WISH A LITTLE BIT MORE.... WHERE I CAN GET A REAL EXAMPLE OF HUMAN RESOURCE ACCOUNTING FOR A COMPANY, ANY WEBLINK, ARCHIVE ETC...
IT CAN HELP ME A LOT AS I AM THINKING OF DOING A PROJECT ON THIS TOPIC.
WITH ALL MY REGARDS,
PURNNEDU
From India, Pune
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