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CHAPTER 01INTRODUCTION

MHC761 HUMAN RESOURCE COSTING1stDraft : 2011

2ndDraft: 2015

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Pre!de

It "s #"de$ re%&'n"(ed t)at )!*an res&!r%es are n& esser"*+&rtant t)an an$ &t)er +r&d!%t",e res&!r%es He,er- t)e re%&'n"t"&n &f "*+&rtan%e &f +e&+e "n &r'an"(at"&ns as

+r&d!%t",e res&!r%es .$ t)e a%%&!ntants "s a re%ent &r"'"n

It #as "n ate 1/60s t)at t)e .e)a,"&ra s%"ent"sts +&"nted &!tt)at t)e fa"!re &f a%%&!ntants t& ,a!e )!*an res&!r%es #asa ser"&!s )and"%a+ f&r ee%t",e *ana'e*ent As a %&nse!en%e- ,a!at"&n &f )!*an res&!r%es )as re%e",ed

#"des+read re%&'n"t"&n In t)e %&!rse &f t"*e- a n!*.er &f a%%&!nt"n' *&des )a,e .een

de,e&+ed t& ,a!e and re+&rt )!*an res&!r%es &f an &r'an"(at"&n In t)e *ana'e*ent ter*"n&&'$- t)"s "s %aed as H!*an Res&!r%es

A%%&!nt"n' 3HRA4

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Intr&d!%t"&n

T)e area &fHR C&st"n' A%%&!nt"n'

3HRCA4

"n,&,esa%%&!nt"n'

f&r t)e%&*+an$s

*ana'e*ente*+&$eesas )!*an

%a+"ta &rassets t)at

+r&,"def!t!re

.ene8ts

Trad"t"&na a%%&!nt"n' )as treated %&stsreated t& a %&*+an$s )!*an res&!r%esas e9+enses &n t)e "n%&*e state*entt)at red!%e +r&8t- rat)er t)an assets &nt)e .aan%e s)eet t)at )a,e f!t!re ,a!ef&r t)e %&*+an$ "t) e%&n&*"% s)"ft fr&* +)$s"%a;.ased t&

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C&n%e+t &f H!*an Res&!r%es A%%&!nt"n'

A%%&rd"n' t& A*er"%an A%%&!nt"n' Ass&%"at"&n-HRA "s a +r&%ess &f "dent"f$"n' and *eas!r"n'data a.&!t )!*an res&!r%es and %&**!n"%at"n't)"s "nf&r*at"&n t& "nterested +art"es

HRA "s t)e *eas!re*ent &f %&st ,a!e &f +e&+e f&r&r'an"(at"&n

HRA "s t)e s$ste*at"% re%&rd"n' &f t)e transa%t"&nsreat"n' t)e ,a!e &f t)e )!*an res&!r%es

T)e +r&d!%t","t$ &f a %&*+an$s "n,est*ent "s

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C&n%e+t &f H!*an Res&!r%es A%%&!nt"n'

H!*an res&!r%es )a,e %erta"n d"st"n%t%)ara%ter"st"%s fr&* &t)er +)$s"%a assets "

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>as"% Pre*"ses &f HRA

T)e .as"% +re*"ses !nder$"n' t)e t)e&r$ &f HRAare: People are valuable resources o an enterprise

The useulness o manpower as an organizational

resource is determined by way in which it ismanaged, and

Inormation on investment and the value ohuman resource is useul decision making in theenterprise

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Reas&ns t& Meas!re H!*an Res&!r%es

T)e f&!r *&st "*+&rtant reas&ns f&r *eas!r"n')!*an res&!r%es are? The human resource unction should be

accountable, just like any other unction

The knowledge and skills o their people are theirmost important sources o sustained competitiveadvantage

Measurement o human resources givesmanagement needed inormation about thepeople resources in the organization and i theresources are there to support business strategies

Measurement helps with strategic planning

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O.@e%t",es &f HRA

HRA )e+s "n de,e&+"n' 8nan%"a assess*ents f&rt)e +e&+e #"t)"n t)e &r'an"(at"&n

He,er- t)e s+e%"8% &.@e%t",es &f HRA *a$ .e&!t"ned as !nder? T& ass"st t)e *ana'e*ent "n ta

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O.@e%t",es &f HRA

It "s an atte*+t t& "dent"f$ and re+&rt"n,est*ents *ade "n t)e )!*an res&!r%es &f t)e&r'an"(at"&n t)at are n&t +resent$ a%%&!nted f&r!nder %&n,ent"&na a%%&!nt"n' +ra%t"%e

>as"%a$- "t "s an "nf&r*at"&n s$ste* t)at test)e *ana'e*ent #)at %)an'es &,er t"*e are&%%!rr"n' t& t)e )!*an res&!r%es &f t)e .!s"ness

In a n!ts)e- HRA "n,&,es? Measurement valuation o human resources

!ommunicating the inormation so generatedor internal e"ternal decision makers

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>ene8ts &f HRA

HRA )e+s t)e %&*+an$ as%erta"n ) *!%)"n,est*ent "t )as *ade &n "ts e*+&$ees and )*!%) ret!rn "t %an e9+e%t fr&* t)"s "n,est*ent

T)e rat"& &f )!*an %a+"ta t& n&n;)!*an %a+"ta%&*+!ted as +er t)e HRA %&n%e+t "nd"%ates t)ede'ree &f a.&r "ntens"t$ &f an &r'an"(at"&n

HRA +r&,"des a .as"s f&r +ann"n' &f +)$s"%aassets ,"s;;,"s )!*an res&!r%es

HRA +r&,"des ,a!a.e "nf&r*at"&n t& "n,est&rs"nterested "n *a

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S"'n"8%an%e &f HRA

HRA as a *ana'er"a t&& %an .e !sed f&r ee%t",e*ana'e*ent &f )!*an res&!r%es

In t)e 8ed &f *ana'er"a de%"s"&n;*a

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S"'n"8%an%e &f HRA

S!%) "nf&r*at"&n %an .e &f !t*&st )e+ f&r*a

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Ear$ HRCA Resear%) On E9ternaDe%"s"&n Ma

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Ear$ HRCA Resear%) On InternaDe%"s"&n Ma

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Ee%ts &f HRCA Meas!re*ent Pr&%ess "nDe%"s"&n Ma

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Pr&.e*s Us"n' HRCA In E9terna "nan%"aRe+&rt"n'

HRCA )as"*+"%at"&ns f&r .&t)e9terna8nan%"a

re+&rt"n'

"nterna*ana'er"are+&rt"n'

It "s re%&'n"(ed t)at t)ere are +r&.e*s#"t) re+&rt"n' )!*an assets &n t)e.aan%e s)eet f&r e9terna 8nan%"are+&rt"n' #ome people have objected to $%!& as it

implied ownership o human beings

&ccounting rules '(&&P) do not allow orthese intangible assets to be reported asassets

*ensen '+-) ound that the most severebarriers to measuring intangiblesincluded lack o concrete tools, time resources and lack o recognizedvaluation approach

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HRCA "n Mana'er"a Re+&rt"n' De%"s"&nMa!en H!a 32004 f&!nd t)at e*+&$ees+art"%"+at"&n "n *ana'e*ent de,e&+*ent +r&'ra*

"n%reased t)e ,a!e &f t)e "nd","d!as t& t)e 8r* HRCA *eas!res +r&,"ded !++er e,e *ana'e*ent #"t) an

aternat",e a%%&!nt"n' s$ste* t& *eas!re t)e %&st ,a!e&f t)e +e&+e t& t)e &r'an"(at"&n

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HRCA Pra%t"%es "n USA

Ana$s"s &ft)e100ar'est

+!."%$traded "n

t)e Un"tedStates

re,eaedd"s*a

state &f)!*an%a+"ta

re+&rt"n'320064

At)&!') 8r*s s+end 6 &f t)e"rre,en!es &n )!*an %a+"ta- fe# tet)e"r s)are)&ders a.&!t ) t)at

*&ne$ "s s+ent On$ a.&!t 20 d"s%!ss )!*an

%a+"ta "ts %&ntr".!t"&n t& .!s"nesss!%%ess "n t)e"r ann!a re+&rts

R&!')$ 25 +r&,"de &n$ "*"tedreferen%es t& t)e #&r

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HRCA Pra%t"%es "n Maa$s"a

T)e%&n%e+t &f

HRCA "sst" at"nfantsta'e

a*&n'

)!*anres&!r%e*ana'ers"n Maa$s"a

St!d$ &n T&+ 100 %&*+an"es &n >!rsaMaa$s"a 3200=4 D"s%&s!re +ra%t"%es &f Maa$s"an t&+

%&*+an"es are reat",e$ Des%r"+t",e "nf&r*at"&n &n tra"n"n'

de,e&+*ent #as d"s%&sed .!t n&re+&rts &n reated tra"n"n' .ene8ts

Jer$ fe# %&*+an"es d"s%&sed )!*an

%a+"ta stat"st"%s 3rat"&s &r "nd"%at&rs4 M!%) e&rt need t& .e +!t "n t& ed!%ate

)!*an res&!r%e *ana'ers &n ) t&%a%!ate )!*an res&!r%e %&sts- ,a!es-ROIs "ts &!t%&*es

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K"*"tat"&ns f&r Mana'e*entt& Intr&d!%e HRA

T)ere "s n& +r&+er %ear;%!t and s+e%"8% +r&%ed!re &r '!"de"nesf&r 8nd"n' %&st and ,a!e &f )!*an res&!r%es &f an &r'an"(at"&n;; t)e s$ste*s #)"%) are .e"n' ad&+ted )a,e %erta"n dra#.a%

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K"*"tat"&ns f&r Mana'e*entt& Intr&d!%e HRA

As )!*an res&!r%es are n&t %a+a.e &f .e"n' ned- reta"nedand !t""(ed- !n"

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HRCA G&as !t!re

I*+r&,e t)e*ana'e*ent &f )!*an

res&!r%es fr&* an&r'an"(at"&na+ers+e%t",e .$"n%reas"n' t)e

trans+aren%$ &f HR%&sts- "n,est*ents &!t%&*es "n t)e

*ana'e*enta%%&!nt"n' r"t!as- s!%)

as +r&8t &ssa%%&!nts- .aan%e

s)eets "n,est*ents%a%!at"&ns

- + .

Atte*+ts t& "*+r&,e

t)e .ases f&r"n,est&rs %&*+an$;

,a!at"&n

As+"rat"&ns fr&*)!*an res&!r%es+e%"a"sts- a.&r

!n"&ns- et% t& !se*&netar$ar'!*ents #)en

s!''est"n'"n,est*ents "n

)!*an res&!r%es

T)e f!t!re &f HRCA *a$ #e .e t& "n