Human Resource Accounting Policies and Practices: A Case Study of the Nigerian Banking Sector - Research Proposal Example

The increasing importance and evolving role of HR is due to the changing views and structure of post-modern organisation. Traditionally, the business owner used to perceive the employees as a cost to business; whereas, now, they believe that costs to employees are very significant investment. In recent times, a number of theories and concepts have been developed for the betterment of human resources in order to increase the productivity, efficiency and effectiveness of the organisation for a success in the long run.

Understanding and Importance of Human Resource Accounting Human resource accounting (HRA) is one of the most evolving and useful concept in the human resources management. HRA can also be termed as a method for assessing the performance of human resource management. This concept has been derived on the basis of financial accounting where the focus is on the management of financial capital. In case of HRA, the theoretical basis is the human capital that “refers to the stock or value of the future goods and services that are to accrue from the human components of an organisation” (Cleverley, p.172). In case of financial accounting, most of the recorded and assessed inputs and outputs are tangible in nature apart from the intangible assets like goodwill, intellectual property.

The goodwill is the asset that generated automatically if a company is able to maintain higher employee productively, better personnel management, satisfied customer services etc. HRA is the method and process that helps a company to achieve higher goodwill by implementing the optimal human resource policies. Flamholtz has defined that “a major purpose of human resource accounting is to help managers to use and organisation’s human resource effectively and efficiently” and it also offers very important information for acquiring, developing, allocating, conserving, utilizing, evaluating and rewarding human resources” (Flamholtz, p.24). The objective of HRA can compared with the objective of financial accounting.

Like the objective of financial account i.e. to offer information to the users (investors) of financial report, the HRA offers information to the managers regarding the human resource asset and capital (Riahi-Belkaoui, p.281). This information is necessary for multiple tasks relating to HR management like decision making, promotion, training & development etc. In the managing the HRA and policies, the managerial role plays an instrumental role. In HRA, the prime role of HR managers is to transform the human resource capital or inputs into productive outputs.

This can be described using the following model. Figure 1: Raw Human Transformed into Valuable Human Output (Source: Vijayakumar, p.8.2) As per the above figure, the inputs are employees and other human capital which are transformed through a process for multiple tasks, and finally overall effectiveness and efficiency increased. Brief Overview of Nigeria and its Banking Sector In spite of constant political and other types of country risk in Nigeria, its banking sectors has been able to survive and serve the financial activities of the nation.

Due to these higher level of