The Role of Human Resource Accounting
Human Resource refers to the composition of the workforce of an organisation. The importance of human resource is that it is the parent to human capital which makes an organisation and ensures success in the long run. To be specific, human resource accounting is a very critical area of the human resource department. Whenever the human resource is involved in certain forms of investments, it is the human resource accounting department that is responsible for identifying and reporting the returns obtained. Human resource accounting is an extension of standard accounting. Organisations tend to give attention the human resource accounting to measure the value of the workforce employed. The evidence presented by several scholars support the choice of the accounting department. The performance of a company is based on the strength of its human resource accounting department since it entails giving directions on the proper employment of available resources.
The human resource accounting department gives the value of workforce that an organisation holds. In the event the organisation invests in human resource, the returns and performance of the investments are identified and reported by the human resource accounting rather than the standard accounting department. The choice of human resource accounting is motivated by the sensitivity of the area in the decision-making process of any organisation. According to (Aviso, K. B., Mayol, A. P., Promentilla, M. A. B., Santos, J. R., Tan, R. R., Ubando, A. T., & Yu, K. , 2018), the correct functioning of an organization depends greatly on the right determination of the number of individuals to assign on each department. The number of workforces to be attached to a given task can only be decided properly if the activities of the said department are well documented and return from the department assessed. It would be uneconomic to assign more workforces to department playing lesser roles in the profitability of an organisation. Don't use plagiarised sources.Get your custom essay just from $11/page
Literature Review
Several studies have been done regarding human resource accounting. The conclusions and recommendations from such studies should prove important in the maintenance of a strong human resource accounting department. (Schmidt, J. A., Willness, C. R., Jones, D. A., & Bourdage, J., 2018) , did a study to assess the relationship between the rates of employer quitting and human resource practices. The research was done both full time and part-time employees. The step by step analysis of data from over 200 Canadian premises was done to ascertain the claim that over-expectation by the human resource management in terms of time and returns expected influenced the decision by employers to quit their jobs. The observation was that many employers who resigned employment made decisions based on the anticipated weeks on work and not necessarily on the hours worked per day. The study thus recommended that the human resource department should expect a certain number of working hours from employees and not weeks in a bid to reduce the rate of employment quitting.
A different study was done on human resource management by (Madanat, H. G., & Khasawneh, A., 2018). The study assessed the effectiveness of a social resource management programme and its impact on the satisfaction of employees as per the proposed working standards. For human resource management to successfully achieve its mandate, the accounting arm should be vigilant so that decisions are made based on real-time statistics rather than opinions. Upon analysing data on five hundred and forty employees from the banking sector, the researchers found enough evidence to conclude that there was a positive relationship between the effectiveness of a human resource management department and employee satisfaction. The recommendation that the compensation by the banking system should be increased to improve customer satisfaction required the input of a strong human resource accounting department. The human resource management practices that were found to have a significant impact on employee satisfaction included human resource planning, staffing, training as well as development and performance appraisal.
(Lucianetti, L., Jabbour, C. J. C., Gunasekaran, A., & Latan, H., 2018), researched to check contingency factors and complementary effects of adopting advanced manufacturing tools and managerial practices: Effects on organisational measurement systems and company’s performance. The main objective of the study was to check the impact of managerial practices on a company’s performance. The study was done on over two hundred Italian manufacturing companies, and the researchers concluded that there was not enough evidence to hypothesis the need for advanced managerial practices to foster the company’s performance. Attention should instead be shifted to strengthening individual managerial departments so that the overall result is a success for the company. The lack of enough evidence led to the recommendation that there was a need for further intensive research to be done in a bid to clear the air concerning the need for advanced managerial practices as a way of improving a company’s performance.
The studies on the literature above are all aimed at assessing the relationship between human resource management and performance of a company. Human resource accounting comes in all the studies as an aid in the decision-making process. The first study recommends that the human resource accounting department should be engaged in making decisions on the number of the workforce to assign to different departments. The other studies recommend that attention should be directed towards strengthening specific managerial departments rather than treating the managerial department as a unit. Also, it is recommended that work time should be measured in weeks to reduce the rate at which employees quit employment. The recommendations and conclusions from the studies can, however, be said to be conservative. It would not serve fairly for employees, for example, to count working time in hours rather than weeks. The only issue of concern for companies should be finding ways of perfecting the operations of the human resource accounting department which will aid in objective decision making.
Business Report
The energy sector faces stiff competition, and the success of any company involved in the gas business will be determined by exemplary strategic planning. The British Gas, for example, will require working on the human resource department to improve on the profits. According to the research done in the first part of this paper, human resource accounting is a critical field in the performance of every firm. The tasks to assign to the human resource accounting depend on the business carried out by the company. For example, the employers of a firm require proper motivation to increase the return from the investment on the human capital. Employer motivation involves understanding and ensuring human resource practices that lead to employer satisfaction. The human resource accounting department aids in making decisions that benefit both the company while maintaining the satisfaction of the employers. There is always a need to compensate employers on a regular basis in case of unexpected occurrences. The working time for employers should be wisely chosen to avoid misunderstandings or even lose productive employees, a situation that exposes the company to additional expenses in replacing employees. A healthy relationship between employees and the human resource department is critical for the success of any business company.
The research is based on internet sources. The main concern is on the human resource accounting department which was selected as the area of interest. It is recommended that the human resource accounting department should be engaged in making decisions on the number of workforces to assign to different departments. Also, attention should be directed towards strengthening specific managerial departments rather than treating the managerial department as a unit. Also, the amount of time assigned to an employer should be measured in weeks to reduce the rate at which employees quit employment. It would not serve fairly for employees, for example, to count working time in hours rather than weeks. Several findings from the study show that deciding to strengthen a human resource accounting department is as good as deciding to improve the profitability of this the company. Objective decision making will be aided by knowing the right avenues to direct resources. For example, the human resource accounting department can know the employees who have good customer reputation in the gas business depending on the returns obtained from specific departments. Customer reputation goes hand in hand with improved performance and thus performing employees should be encouraged through rewarding.
As in several research methods, issues were encountered during the study period. Depending on internet sources may pose a risk that the authenticity of the information cannot be ascertained. For example, data used in the studies may contain errors which would have affected the results of the reviews. Several researchers make conclusions and recommendations without comparing their research with previously done research on their area of interest. In the event an error affects the results used, then conclusions drawn from the results will give unreliable information. The study was also done on secondary data which poses the risk that errors could have been included deliberately for personal gains or maybe to create unnecessary impressions. For example, in the academic field, students could interfere with datasets in a bid to meet a particular institution requirement. The published works will in most cases not undergo sufficient screening and errors will be mistaken for inventions. The several issues led to the conclusion that the recommendations and findings from the studies were conservative. It would not serve fairly for employees to be assigned working hours and not working weeks. The weakness in the studies necessitated making recommendations based on the combination of the study materials rather than making different recommendations based on specific studies. An additional study that strengthened the recommendations is summarised on the table below.
| Serial number of the company | Name of company | Number of employees | Value of human resource in cores allocation | ||
| 1 | Oil & Natural Gas Corporation Ltd. (ONGC)
|
| 10. 3 | ||
| 2 | Hindustan Petroleum Corporation Ltd. (HPCL)
|
| 42. 3
| ||
| 3 | Cement Corporation of India Ltd. (CCI )
|
|
| ||
| 4 | Oil India Ltd. (OIL) |
|
|
The table shows a brief representation of how different companies assess the relationship between human resource application and employer performance. It is evident that a company with fewer employees could face difficulties in maintaining the value of human resources while one with a large workforce can maintain a higher human resource value with fewer challenges.
Recommendations
There is a direct relationship between human resource accounting and employee performance. It is recommended that the decisions concerning the number of the workforce to assign to different departments should be made by the human resource accounting department. The accounting department is at a better position of rating the performance of the other departments in the company. The decision-making process should however not be left entirely on the accounting department. Different stakeholders from respective departments should be chosen to work hand in hand with the accounting department for an inclusive decision-making process. In a bid to avoid conflict of interest, the company should make clear the specific goals and the extent of risk acceptance so that the decisions made are favorable. Also, the human resource department should consider opinions from the employees to enhance inclusivity.
Also, attention should be directed towards strengthening specific managerial departments rather than treating the administrative department as a unit. If the company decides to engage the whole executive department as a unit, the chances are that critical issues affecting specific departments will be overlooked. Generally, problems concerning the managerial department will be given excess attention at the expense of the issues in the departments. If the mandate is given to the human resource accounting department to oversee the performance of the other department, then it is sure that the company will be subject to improved performance. The proposed arrangement is that human resource accounting should be preparing reports concerning the individual performance of the workforce. The Chief Executive Officer will then receive the report and recommendations from the accounting department and give way forward. Also, the amount of time assigned to an employer should be measured in weeks to reduce the rate at which employees quit employment.
Conclusion
Concerning the research carried out, and that formed the basis for this report, human resource accounting is the best department to depend on for decision-making. The main recommendation is that the human resource accounting department should be engaged in making decisions on the number of the workforce to assign to different departments. Also, it is essential to consider the recommendation that attention should be directed towards strengthening specific managerial departments rather than treating the administrative department as a unit. The decisions made should only be for the benefit of the company and its employees and not for an individual gain.
References
Aviso, K. B., Mayol, A. P., Promentilla, M. A. B., Santos, J. R., Tan, R. R., Ubando, A. T., & Yu, K. . (2018). Allocating human resources in organizations operating under crisis conditions: A fuzzy input-output optimization modeling framework. Resources, Conservation and Recycling, . 128, 250-258.
Lucianetti, L., Jabbour, C. J. C., Gunasekaran, A., & Latan, H. (2018). Contingency factors and complementary effects of adopting advanced manufacturing tools and managerial practices: Effects on organizational measurement systems and companys’ performance. . International Journal of Production Economics,. , 200, 318-328.
Madanat, H. G., & Khasawneh, A. (2018). LEVEL OF EFFECTIVENESS OF HUMAN RESOURCE MANAGEMENT PRACTICES AND ITS IMPACT ON EMPLOYEES’SATISFACTION IN THE BANKING SECTOR. Journal of Organizational Culture, Communications and Conflict,. 22(1), 1-19.
Schmidt, J. A., Willness, C. R., Jones, D. A., & Bourdage, J. (2018). Human resource management practices and voluntary turnover: a study of internal workforce and external labor market contingencies. The International Journal of Human Resource Management,. pp.29(3), 571-594.