28-1 EXCEL BOOKS

Chapter

28

HUMAN RESOURCE
ACCOUNTING AND
INFORMATION SYSTEM
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ANNOTATED OUTLINE

INTRODUCTION
Human resource account is accounting for people as an
organisational resource. It involves measuring the costs incurred by
organisations to recruit, select, hire, train and develop human assets.
It also involves measuring the economic value of people to the
organisation.

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Advantages

 Throws light on the strengths and weaknesses of the existing

workforce in an organisation. This, in turn, helps management in
recruitment planning.
 Offers valuable feedback to managers regarding the
effectiveness of HR policies and practices.
 Helps potential investors judge a company better on the strength
of the human assets utilised therein
 Helps management in taking proper decisions regarding the use
of human assets in an organisation.

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Limitations

 Not easy to value human resources in an organisation

 Full of measurement problems
 Employee and unions do not like the idea
 Empirical evidence does not support the idea

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Approaches To Human Resource

Accounting
Monetary measures
 Historical cost method
 Replacement cost method
 Opportunity cost method
 Economic value method
 Asset multiplier method
 Discounted present value of future earnings method
Non-monetary measures
 Expected realisable value method
 Discounted net present value of future earnings

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Approaches to analyse and control

manpower
Some of the widely used approaches to analyse and control
manpower costs may be listed thus;
 Management by objectives
 Ratio analysis
 Cost of recruitment
 Recruitment cycle time
 Cost of turnover
 Cost of training
 Personnel productivity
 Personnel reports, budgets and audit

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Human Resource Information System

The human resource information system is a method by which an

organisation collects analyses and reports information about people
and jobs. HRIS is designed, basically, to meet the following
objectives:
 Offer adequate, comprehensive and on going information system
about people and jobs
 Supply up-to-date information at a reasonable cost

 Offer data security and personnel privacy.

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Benefits of HRIS

HRIS can process, store and retrieve enormous quantities of data in an economical
way.
 The records can be updated quickly.
 There is improved accuracy.
 HRIS can greatly reduce fragmentation and duplication of data.
 Information can be readily manipulated, merged and disaggregated in
response to special and complex demands and presented promptly.

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Important uses of a Human Resource

Information System
Labour relations HR planning and analysis
 Job posting
 Organisation charts  Internal job matching
 Union negotiation rewards
 Staffing needs  Job description tracking
 Attitude survey results
 Skills inventories  Workforce utiliz
utilization
 Eeit interview analysis
 Turnover analysis  Availability analysis
 Employee work history
 Absenteeism analysis HR Development

 Employee training profits

 Trainings needs
assessment
 Succession planning
Health,
Health, Safety
Safety and
and Security
 Career interests and
 Safety train in g HRIS experience
 Accident rewards
Staffing
 Employee health record
 Compliance with various  Recruiting Sources
acts  Application tracking
Per
Performance Appraisal  Job offer refused analysis

Compensation and Benefits

 Employee competency
data  Pay structures
 Matching a ctual  Wa r e/salary administration
performanc e with  Benefit plans and usage
standards analysis
 Vacation usage
 Implementing legal
stip ulations

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Setting up Human Resource

Information System
HRIS can be set up through a four step process
 Identifying the needs of a firm
 Organising the flow of information
 Implementing the plan
 Evaluating the whole exercise to find gaps and to rectify them

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Human Resource Information System

Computerised HRIS
A computerised HRIS is designed to monitor, control and influence
movement of people from the time they join the organisation till the
time they decide to leave the organisation.
 Recruitment information
 Personnel administration information
 Manpower planning information
 Training information
 Health information
 Appraisal information
 Payroll information
 Personnel research information

Human Resource Accounting And Information System