In every business organization, human plays a vital role because there is nothing beyond a human being. Every business concern requires land, building, Plant & Machinery etc. but the important thing is that without human these are useless.
According to Alfered Marshall the most important asset in any business is human. Just like other resources, human also is a resource. This is considered one of the valuable resources in business because success of business enterprise depends on capable person.
HRA is a accounting for human resources by which cost can be determined.
HRA is the process of identifying and measuring data about human resources and communication to interested parties.
Objectives of HRA:-
- To determine cost of recruitment, training & development etc. of human resources.
- To enable management to monitor and assess efficiency of human resources.
- To assist in developing effective management practices.
- To provide information about human resources to investors for decision purpose.
- To evaluate the return on investment in human resources.
- To provide qualitative information about human resources.
- To find out whether human resources have been used properly or not.
- To analyze human assets whether these assets are to conserved, depleted and appreciated.
- To help in better control.
Importance:-
Human resources provide useful information to the management, financial analysts and employees etc.
- To assist company in identifying investment on employees and expected return on inestment.
- To provide useful information about cost and value of human resources.
- To give base for planning for physical assets and human resources.
- To help in making personnel policies. For example recruitment, selection, promotion and retrenchment etc.
- To provide useful information to investors and other interested users.
- To assist management in best utilization of human resources.
- To motivate employees.
- To resolve industrial disputes.
- To identify the causes of high labor turnover ratio and suggest for preventive measures.