Human resource accounting: A theoretical note on its origin and growth

Abstract

Human resources represents the potential and abilities of individuals to contribute to the production of goods and services in an organization. Companies make huge investments in developing their human resources to enhance their knowledge, skills, and efficiency. The significance of human resources as a driving force for sustained and rapid company growth is unquestionable. Therefore, the need of the hour is to measure value of human resources and put these in company reports. This practice of valuation and reporting of human resources is called human resource accounting (HRA), which highlights the true worth of an organization's human capital and communicates it to stakeholders. The objective of the present paper is to highlight the importance of HRA, examine growth and development of human resource accounting as an academic field. The study is descriptive in nature. The study has revealed that over the years, human resource accounting has grown from being a standalone statement to a tool in the hands of the management to add value to the organisation. The thought to give human resources their place in books of accounts has now transformed into a technique to improve managerial decisions resulting in improved performance and better image of company in market.