Question

With reference to an organisation job of your choice, develop a worked example of the cost of Employment approach to the valuation of human capital.

Answer 1

SOFT TECH SOLUTIONS : Every organization need skilled employees in order to deliver the best productivity and quality of work. There are so many ways an employer/organization can recruit the employees like from contractors,vendors and consultancies.Mostly the biger companies instead of recruiting the employees under their pay roll.They are asigning to some other recruting consultancies and vendors to make this job done for them.

Organization is not ready to take the manpower on their head in order to monitor the structure of payments and other cost of recruitments.

Recruiting an employee and training and turining that employee as an asset to produce the work to an organization takes lot of human time.

Every organization oly goal is to get mutual benifit between employee and the employer in order to continue their relation for long run business.

Companies spend lot of time and experts estimate the human value to an organization.There are so many things that needs to be considred before recruiting an employee.

COST OF EMPLOYEMET APPROACH TO THE VALUATION OF HUMAN CAPITAL: There are so many things that are considered by the human resource team to estimate the value of human capital there are few sources that provide the deatils of loss and gain to the organization.

HISTORICAL HUMAN RESOURCE COST : The actual cost involved in recruiting,selecting ,training and developing the human resources of the organization.It cannot be estimated as there are so much cos involved in following the process of making an employee useful to an organization.The cost of acquisition through recruitment,placement both and development costs of personnel are capitalized and written off over their effective service to the organization.After completing the process of recruitment and if any employee leaves the organization after placement again leading a great loss to the organization.

We cannot estimate the employee service to the organization as it's very difficult to judge the human resource that provide to the organization.

Its cost can be replaced if an employee service can be utilized and his experience and efficiency is added to the organization.

REPLACEMENT HUMAN RESOURCE COST: As there is a selecting,recruiting,training and placing an employee in historical cost incurred.But if an employee is replaced again its a cost to the organization.As organization loses the trained,experienced and efficient employee.

Its very difficult to estimate the cost of replacing an employee to the existing human resource.As we cannot replace the same skilled and efficient employee in the place of an old employee.

OPPORTUNITY HUMAN RESOURCE COST: When an organization gain the opportunity to use the employee in multiple ways its called using an employee based on opportunity cost that is purely linked with scarcity.The vale of an employee can only determined when he/she is alternatively used. Employee contribution is more and under this method human asset is only valued on the basis of the contribution they are usually do to the organization