An insight on new paradigm shift and changing trend in the era of globalization- Human resource accounting
Prasad B Roodagi
Today one of the most vital parts of any organization is human resource, as it makes sure that there exists a symbiosis between physical and all other financial resources towards the achievement of organizational goals and objectives. Conventionally, financial assets are certainly accounted in the books of accounts as per the general principles of accounting, but it does not count the human asset. Although, many efforts have been made by many of the thinkers in this arena, a proper/appropriate and a fully validated model of performance based on Human accounting in the Indian context is not yet completely available. The past few decades have witnessed a global transition from manufacturing to service based economies. Human resource accounting (HRA) started gaining popularity in India recently, even though it was introduced way back in 1980’s. In order to project and estimate the worth of the human capital, it is very much necessary that some method of quantifying the worth of the knowledge, skills, motivation and contribution of the human elements as well as that of the organizational processes like recruitment, selection, training etc which are used to support and build these human aspects is properly developed and nurtured. In this aspect HRA denotes this process of quantification/measurement of Human resources. Major physical assets like building, land, plant and machinery are recorded in the books of accounts at their purchase price. Now, depreciation of these particular assets is considered as the cost incurred for the particular year and debited to profit and loss accounts and the remaining balance is shown in the form of balance sheet as written down value of the assets. Hence, on similar lines the human resources should also be recorded, evaluated in the books, operated as well as disclosed in the financial statements. The paper tries to elaborately discuss about the objectives and process of HRA in the Indian context. The major basic objective of this particular paper is to study the Human Resources Accounting principles and practices, to identify the major issues and challenges, to examine the issues and challenges and lastly to give effective suggestions based on the findings of the study conducted.