Page 91 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting

Notes 7.2.2 Non-monetary Methods for Determining Value

The non-monetary methods for assessing the economic value of human resources also measure
human resources, but not in dollar or money terms. Rather, they rely on various indices or
ratings and rankings. These methods may be used as surrogates of monetary methods and also
have a predictive value. The non-monetary methods may refer to a simple inventory of skills
and capabilities of people within an organization or to the application of some behavioural
measurement technique to assess the benefits gained from the human resource of an organisation.
1. The skills or capability inventory is a simple listing of the education, knowledge, experience
and skills of the firm’s human resources.
2. Performance evaluation measures used in HRA include ratings, and rankings. Ratings
reflect a person’s performance in relation to a set of scales. They are scores assigned to
characteristics possessed by the individual. These characteristics include skills, judgment,
knowledge, interpersonal skills, intelligence, etc. Ranking is an ordinal form of rating in
which the superiors rank their subordinates on one or more dimensions, mentioned
above.
3. Assessment of potential determines a person’s capacity for promotion and development.
It usually employs a trait approach in which the traits essential for a position are identified.
The extent to which the person possesses these traits is then assessed.
4. Attitude measurements are used to assess employees’ attitudes towards their job, pay,
working conditions, etc., in order to determine their job satisfaction and dissatisfaction.

Self Assessment

Fill in the blanks:
7. The methods for calculating the …………of individuals may be classified into monetary
and non-monetary methods.
8. The …………methods may refer to a simple inventory of skills and capabilities of people
within an organization or to the application of some behavioural measurement technique
to assess the benefits gained from the human resource of an organisation.
9. The ………………is a simple listing of the education, knowledge, experience and skills of
the firm’s human resources.
10. Assessment of …………… determines a person’s capacity for promotion and development.

7.3 Measurement of Group Values

Likert and Bowers propose causal, intervening, and end-result variables, which determine the
group’s value to an organization. Causal variables are those that can be controlled by the
organization. These variables include managerial behaviour and organisational structure.
Intervening variables reflect organizational capabilities and involve group processes, peer
leadership, organization climate, and the subordinates’ satisfaction. Both the causal and the
intervening variables determine the end result variables of the causal and intervening variables.
The end-result dependent variables reflect the achievements of the organization or the total
productive efficiency in terms of sales, costs, earnings, market performance, etc. They are dependent
on the causal and the intervening variables.

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