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Human Resource Accounting: Meaning, Concept, Features and Objectives

What is Human Resource Accounting(HRA) ?

Human Resource Accounting (HRA) is a branch of accounting that involves the identification, measurement, and reporting of the value of human resources as an organizational asset. It is based on the premise that human resources are valuable assets of an organization that contribute to its growth and success. It is a method used by organizations to measure the value of their human resources in financial terms. It involves quantifying the cost and value of the employees, their skills, knowledge, experience, and abilities, and presenting it in the organization’s financial statements. HRA considers human resources as an investment that can generate future benefits for the organization. It uses various techniques to measure the value of human resources, such as the cost of recruitment and training, the value of experience and expertise, and the potential for future growth. 



Concept of Human Resource Accounting (HRA)

The concept of Human Resource Accounting (HRA) is based on the idea that human resources are valuable assets of an organization and should be treated as one. HRA involves quantifying the value of human resources in financial terms, which can be used to make informed decisions regarding investments in the workforce, talent retention, and talent development. It recognizes that the value of human resources is not only based on the cost of hiring and training but also their knowledge, skills, abilities, and experience. These intangible assets of human resources are often the key factors that contribute to an organization’s success. HRA involves a systematic approach to measure the value of human resources, which includes identifying the relevant costs and benefits associated with human resources, estimating the value of human resources, and presenting this information in a way that can be used to make informed decisions. 



HRA is often used in conjunction with other performance metrics to gain a comprehensive understanding of an organization’s performance. The concept of HRA has gained popularity in recent years as organizations recognize the importance of human resources in achieving their strategic goals. By quantifying the value of human resources, organizations can better allocate their resources, make informed decisions, and drive long-term success. It is not just about measuring the current value of human resources, but also their potential future value. By investing in employee training and development, organizations can improve the quality of their human resources, leading to greater future value.

Features of Human Resource Accounting (HRA)

The features of Human Resource Accounting (HRA) are as follows:

Objectives of Human Resource Accounting (HRA)

The main objectives of human resource accounting (HRA) are as follows:

In conclusion, human resource accounting (HRA) is a technique that assigns a monetary value to an organization’s human resources and tracks the costs associated with managing them. HRA can provide valuable information to support decision-making about human resource management practices, such as recruitment, training, compensation, and performance evaluation. By analyzing this information, organizations can identify areas where they can improve the efficiency and effectiveness of their human resource management practices and better allocate resources to achieve their organizational goals. HRA can also help organizations comply with legal and regulatory requirements related to human resource management and mitigate potential risks associated with workforce management. Overall, HRA is a valuable tool for organizations that want to better understand and manage their human resources to achieve long-term success.


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