 Competency in people

 Commitment in people
 Culture in the organization
 Acquire or sharpen capabilities required for
present & future
 Develop general capabilities as individuals &
discover & exploit their own inner potential
for their own & organizational development
purpose
 Develop organizational culture in which
superior-subordinate relationships, team
work & collaboration among sub units are
strong & contribute to professional well
being , motivation & pride of employees.
 Develop human resource
 Provide opportunity
 Prepare to perform
 contribute towards the excellence of
technical and management education.
 Assist the existing and potential customers
 Promote a culture of creativity, innovation,
human development, respect and dignity.
 Achieve excellence
 Create conducive environment
 HRD is a system:
 involves the development of competencies at
the individual level, interpersonal level,
group level and organizational level:
 Planned & systematic approach
 Continuous process
 Inter disciplinary approach
 Both micro & macro aspects
 a way of improving the quality of working life
 • Manpower planning
• Recruitment
Career system • Career planning
• Succession planning
• Retention

• Role analysis
• Role efficacy
• Performance plan
• Performance feedback and guidance
Work system • Performance appraisal
• Promotion
• Job rotation
• Reward
• Induction
• Training
Development • Job enrichment
• Self-learning mechanisms
system • Potential appraisal
• Succession Development
• Counseling
• Mentor system
 Self- • Survey
• Action research

renewal • Organizational Development

interventions
• Organizational Retreats
system
• Vision, Mission and Goal

Culture • Values
• Communication

system
• Get-togethers and celebrations
• Task forces
• Small Groups
 Introduced in mid 60s
 The American Accounting Association's (AAA)
(1973) has defined Human Resource
Accounting as "the process of identifying and
measuring data about human resources and
communicating this information to interested
parties".
 Flamhoitzdefines HRA as ‘accounting for
people as an organizational resource. It
involves measuring the costs incurred by
organizations to recruit, select, hire, train,
and develop human assets. It also involves
measuring the economic value of people to
the organization’.
 Measuring the expertise
 True value of the assets and liabilities hold
by the organization
 Applying a strong monitoring process
 Basis for controlling the human resource
 Provide the investors of the organization,
shareholders and debt holders, accurate
information for better decision making.
 True picture of the future prospects
 How much value addition is done by the
organization to country's human resource
 i) The Lev and Schwartz Model
 ii) The Eric Flamholtz Model
 Iii)Hermanson’s Model
 Human resource of a company is the
summation of value of all the Net present
value (NPV) of future earnings of employees
 Classification
 Construction of average earning stream for
each group
 Discounting the average earnings at a
predetermined rate in order to get present
value of human resource's of each group.
 Aggregation of the present value of different
groups
 It ignores the output i.e. productivity of
employees
 Service state of each individual employee is not
considered.
 The training expenses incurred by the company
on its employees are not considered.
 The attrition rate in organization is also
ignored.
 Factors responsible for higher earning
potentiality of each individual employees
like seniority, bargaining capacity, skill,
experience etc causing differential salary
structure are also ignore.
 This
is an improvement on ‘present value of future
earnings model’
 It takes into consideration the possibility of an
employee’s movement from one role to another and
 His leaving the firm earlier, that his death or retirement.
 Fivesteps approach for assessing the value of an
individual
 Forecasting the period of his expected service life;
 Identifying the services states,
 Estimation of the probability of occupying each possible
mutually exclusive state at specified future times; and
 Estimating the value derived by the organisation when
he occupies the positions for specified time periods;
 Discounting the value at a predetermined rate to get the
present value of human resources.
 According to Hermanson, the unpurchased
goodwill notion is based on the premise that
‘the best available evidence of the present
existence of un-owned resources is the fact
that a given firm earned a higher than
normal rate of return for the most recent
year.

 Firmsincome / normal rate of income in

industry
 He suggests the adjustment of future wage
stream by an efficiency factor.
 To calculate Efficiency Ratio, he makes use
of weighted average of firm’s net income
during the past five years.
 Estimation is done about annual salaries for
next 5 years
 Present value of wages is calculated by
multiplying wages with discount factor

 Calculate efficiency ratio with formula

 Present value of wages and salaries are
multiplied with efficiency ratio
 RF – Companies earning
 RE – Economies earning

 Value of HR = Present value of future payments X

Efficiency ratio