Human Resource Accounting: Why The Delay?

Abstract

Human Resource Accounting (HRA) is a concept which held the promise of being a valuable tool for management and accounting. Yet for all its potential, the implementation of HRA on a broad scale seems to have been slow in coming. It is the purpose of this paper to examine some conceptual aspects of HRA and to summarize some of the experiences of companies implementing it with the purpose of arriving at some tentative conclusions about the factors that might have caused the delay in implementation. Among the questions discussed are: 1. Was HRA a weak concept? Discussed here are the myriad advantages that HRA's proponents claim for it. 2. Are the technical implementation problems insurmountable? 3. What costs should be considered in capitalizing humans? Related questions involve accumulation of costs, choice of amortization method, and disposition of unamortized costs. 4. What has been the experience of companies such as American Telephone and Telegraph and the R. G. Barry Corporation who have implemented HRA? 5. Has implementation of HRA been slowed by an "intramural" struggle between behavioral theorists and financial specialists? The paper concludes with some recommendations for hastening the widespread use of HRA. Among these are: more cautious implementation of HRA systems, use of HRA for internal purposes, and a general toning down of the rhetoric about HRA's promise from its proponents.