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The purpose of this article is to report the results of a field experiment designed to assess the impact of human resource accounting (HRA) information on layoff decisions made by managers. The study is a partial replication and extension of studies by Tomassini and Oliver and Flamholtz. The findings of this study are similar to the earlier studies; human resource accounting information does make a difference in personnel layoff decisions and enables managers to increase their level of confidence regarding decisions of this sort.

This article builds on and extends previous research in the area of Human Resource Accounting (HRA). Its purpose is to present a study involving the development and application of a model for measuring the replacement cost of people. Specifically, the study involved the development and application of a human resource replacement cost model for Industrial Engineers in the US Navy.

A recent paper by Flamholtz and Wollman described the conceptualisation, development, and implementa‐tion of the stochastic rewards model for human resource valuation (SRVM) in a human capital intensive firm. An essential prerequisite before such models can actually be implemented in organisations (and used in personnel management in the ways described by Flamholtz and Wollman) is to assess the empirical validity of the numbers generated as measurements of human resource value. The purpose of the study reported in this paper, therefore, is to investigate the “convergent and discriminant validity” of the SRVM in the context of a human capital intensive firm. Our intent is to contribute to the development of human resource accounting by going beyond the theoretical justification of the previously proposed SRVM and present some empirical evidence on the validity of the numbers generated by the model.

‘Human resource accounting’ (HRA) is a term of relatively recent origin: research on HRA only began during the 1960s. Initially, the objective was to improve corporate financial reporting by accounting for ‘human assets’ and, in turn, to increase the representational validity of income and asset numbers. A related purpose was to prevent prevailing accounting conventions from motivating suboptimal treatment of people — specifically, to reduce the likelihood that liquidation of human resources would not be revealed in financial reports because of the failure to account for investments in people as assets.

The relationship between human resource accounting and human resource management is examined. Can HRA be used by personnel specialists to enhance the importance of the HRM function? Should this opportunity be grasped by such specialists, actively engaging in the development of systems of HRA within their organisations? Or is HRA the vehicle which may bring forward the take over of HRM by the accountancy profession?

In a critical article in the last issue of Personnel Review the two major approaches to Human Resource Accounting (HRA) were examined and the salient criticisms arrayed. The present short comment seeks to amplify further some of these debates and to enlarge the compass of the concept. Two further approaches will be examined briefly; that of competitive bidding as a means of human valuation, and systems simulation as a means of operationalizing a conceptual framework which involves HRA.

Since the time of Adam Smith, economists have grappled with the concept of human capital whilst more recently attempts have been made to assess the rate of return made on the investment in education and training. In the last few years considerable interest has been aroused by attempts to include people in the assets of a company, applying to them accounting conventions and assigning some value to the organization's employees. In the United States, William Pyle and his associates at the University of Michigan, backed by a growing Human Resource Accounting Association, have pioneered a particular method. The publication of the joint working party of the ACMA and IPM favoured a different approach. It is the intention of this paper to review the two approaches, highlighting their similarities and differences and to examine the criticisms that have been levelled against both. Finally, a possible solution will be suggested to the identified shortcomings.

The broad objective of the study was to develop assumptions and guide‐lines by which the cost approach to Human Resource Accounting could be implemented. The research was specifically aimed at determining the sensitivity of the cost approach for identifying significant differences in the investments made over two years in two comparable groups (16 subjects to a group) and how these differences could contribute towards more effective decision‐making in evaluating the relevant aspects of company policy. Statistically significant differences were obtained at the 5% level for total investments, academic development investments and orientation investments. The latter could not be regarded as material in absolute terms and the difference in total investments could therefore be ascribed mainly to academic development. The extent of investments in training suggests the necessity to optimize training from a cost/benefit point of view. During the initial months of the study, investments accrued at a proportionally higher rate than in subsequent months, eg 75.1% of the total investments were made during the first three months of service. It can therefore be said that relatively high labour turnover during the early months of service would carry a substantial loss potential, especially where there was no evidence of material investments in the orientation of personnel.