Impact of Human Resource Accounting on Growth Aspects of the Selected Companies in India

The success of an organization depends on how best the scarce physical resources are utilized by the Human Resources. Therefore, the efficient and effective utilization of inanimate resources depends largely on the quality, calibre, skills, perception and character of Human Resource. The term Human Resource at macro level indicates the sum of all the components such as skills, creative abilities, innovative thinking, intuition, imagination, knowledge and experience possessed by all employees. An organization possessing abundant physical resources may sometimes miserably fail due to lack of right people i.e., Human Resources, to manage its affairs. Thus, the importance of Human Resources cannot be ignored. Like all physical and intangible assets, these also should be accounted. Unfortunately, till now no generally accepted system of accounting for this important asset, viz., the Human Resource has been evolved. Also, there is no provision inserted in Companies Act 2013, regarding Human Resource Accounting. Therefore, it is not mandatorily adopted by the companies in India. Only few companies have been constantly accounting and valuing human resources in their financial statement for several years. Most of the companies use Lev and Schwartz model to value human resources which is based on the present value of the future earnings of the employees. This article seeks to show the impact of investment in employees on growth aspects of the selected companies.