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The use of strategic human resource management in the management of knowledge can provide organisations with a significant competitive advantage. Strategic human resource management refers to the process of incorporating human resource management systems and processes into the strategic management of an organisation (Wright, Dunford, & Snell, 2001). It is through the use of such strategies that organisations can foster innovation and competitive advantage (Kazmi & Ahmad, 2001). However in order to harness the capabilities of organisational knowledge, it is necessary to strategically manage that knowledge.

There is no simple definition of knowledge. The meaning of knowledge depends on both the organisation and context (Alvesson, 1993). Knowledge extends beyond information, into the realm of human thinking. With information, humans are able to think, process and share knowledge (Ardichvili & Seung Won, 2009; McDermott, 1999). Without such a human aspect, knowledge would be merely information. Knowledge management, therefore, is the development and implementation of strategies to create, maintain and share knowledge, in order to achieve organisational goals (Edvardsson, 2008). Knowledge management is not a new concept, having been discussed at least 30 years ago (Henry, 1975). Early research conducted into knowledge management focused on the use of information technology concepts, designed to assist knowledge creation, capture and sharing (Edvardsson, 2008; McDermott, 1999; Petersen & Poulfelt, 2002). As time has passed, an increasing amount of research has focused on the human element of knowledge management. This paper focuses on progress of that human element, particularly theoretical and empirical literature related to the link between strategic human resource management and knowledge management.

Most knowledge management systems focus on using information technology to capture, store, distribute and make available information; this does little to improve organisational knowledge. Information systems focus on a singular aspect of knowledge, information, failing to address the fact that knowledge, being the result of human thinking, goes beyond mere information or data. McDermott (1999, p. 104) suggested that the use of information systems was “the great trap in knowledge management”. Rather than solely information systems, human resource systems and information systems need to be combined to manage knowledge. The best use of knowledge can be made by focusing on the human aspect of knowledge, rather than the specific knowledge content itself. Developing communities in which knowledge if effectively and efficiently shared drives innovation, resulting in increased competitive advantage. McDermott further suggests that through planning the organisational structure and culture with knowledge management in mind, knowledge could be created, shared and leveraged. A large amount of modern literature agrees that human elements are at least as important as information systems to knowledge management (Ardichvili & Seung Won, 2009; Edvardsson, 2008; Lopez-Cabrales, Prez-Luo, & Cabrera, 2009).

Although the human factor in knowledge management is generally accepted, there are many alternative thoughts on integrating human resource management systems into knowledge management. Robertson and Hammersley (2000) conducted exploratory research into human resources practices and knowledge management within a single organisation. The organisation studied used few formal human resource management practices, and it was found that the employees were still motivated to share their knowledge. The organisation was also still highly competitive in the marketplace, despite the lack of traditional human resource practices. The results of their research suggest that, in some knowledge intensive organisations, regular human resources strategies are inadequate or ineffective. Hislop (2003) posited that the reason the organisation studied by Robertson and Hammersley had succeeded in knowledge management was the commitment of employees to the organisation. Where employees are highly dedicated to their job and organisation, knowledge is shared organically without further managerial processes. In some cases, it is necessary to treat employees who work in knowledge intensive organisations differently to regular workers, possibly as they expect a deeper level of autonomy and independence in their work (Robertson & Hammersley, 2000). Rejecting regular human resource management practices and processes in favour of informal, unofficial and subjective approaches to human resource management could lead to improved performance. Edvardsson (2008) also found that regular human resource management processes may need to be modified in knowledge intensive organisations, because those organisations are by nature complex and irregular. Rigid processes such as recruitment, performance management and reward programs can limit knowledge sharing, stifling creativity, with a negative effect on competitive advantage.

Petersen and Poulfelt (2002) agree that different strategies are required, depending on the type of workers and organisational culture. Whilst the study was primarily focused on factors external to human resource strategies, it was also concluded that performance management and incentive programs contribute considerably to the success of knowledge management. For strategies to create and store knowledge to be successful, incentives and rewards must be used to encourage both the creation and sharing of knowledge. For example, incentives for documenting systems and processes should be used in conjunction with incentives for actually sharing information with other workers. This concept has since been agreed by a number of other theorists and researchers (Edvardsson, 2008).

Hislop (2003) suggests that knowledge management has not fully employed human resource management strategies and concepts. He further suggests that the level of commitment of employees to the organisation contributes directly to the effectiveness of knowledge management, and that this may be attributable to human resource management policies and processes. Strategic management incorporating techniques to motivate employees may contribute to commitment, ultimately driving competitive advantage. While much literature focuses on the storage and sharing of knowledge, Hislop contends that the attraction and retention of employees may be just as important as knowledge sharing in the use of knowledge management in fostering innovation. As modern organisations employ larger numbers of higher skilled workers, they are at risk of losing those workers to other organisations, or even being unable to recruit those skilled workers at all. As such, it is vital that organisations develop strategies to manage human resources with knowledge in mind. This includes strategies to manage recruitment and selection to find and hire new skilled workers, who will bring valuable new knowledge. Without such strategies, even a small turnover rate can quickly lead to a loss of organisational knowledge.

Attempting to integrate strategic human resource management with knowledge management, Edvardsson (2008) makes a clear delineation between technical strategies and human based strategies, referring to them as codification and personalisation. Codification strategies focus on structuring of knowledge systems such as databases to store and distribute information within an organisation. Critics of codification strategies note that the information stored lacks context, leading to “information junkyards”, where the stored information is never used (McDermott, 1999, p. 104). Personalisation refers to those strategies that recognize that knowledge has a human aspect, focusing on recruiting and retaining knowledgeable staff, and fostering communication. While both strategies try to effectively control organisational knowledge, codification tends to focus on getting information out of employees and into databases, whilst personalisation focuses on getting and keeping key knowledgeable employees. Human resource strategies to influence knowledge management vary depending on the knowledge management strategy chosen. For example, in performance management, codification strategies call for short-term goals related to the amounts of information documented or stored (Edvardsson, 2008). In contrast, with personalisation strategies, goals are developmental rather than results based, more long term, focusing on creativity and innovation. In reality, a combination of both strategies is usually required (Petersen & Poulfelt, 2002). A prime example of differences in these strategies is the difference in recruitment strategies. With codification, recruitment tends to be very formal, based on written job descriptions, with a focus on testing and evaluating candidates (Edvardsson, 2008). Conversely, a personalisation strategy involves a less formal, more subject approach to recruitment, where the focus is more on determining whether candidates fit within the knowledge sharing culture of the organisation. These theories tend to align with the research of Robertson and Hammersley (2000).

Recent empirical research has further determined that the strategic human resource management of knowledge can improve the knowledge within organisations (Lopez-Cabrales, et al., 2009). Specifically, human resource systems allow organisations to develop and improve on employee knowledge, as well as provide direction to employees to ensure the knowledge is utilised to achieve organisational goals. The use of a human resource strategy to manage knowledge contributes to the creation of unique knowledge; however Lopez-Cabrales, et al. suggest that there is no best practice for the use of human resource processes to manage knowledge. In some ways this research follows on from Wright, Dunford, & Snell (2001), who suggest that any competitive advantage does not stem from the human resource systems, but that the human resource systems provide a framework to store and communicate knowledge. They propose expanding the usual concepts in human resources management processes to also encompass the organisational knowledge, through allowing human resources more input into a wide range of work processes.

However, it has been argued that perhaps regular human resource practices are not relevant in modern knowledge based organisations (Chasserio & Legault, 2009; Minbaeva, Foss, & Snell, 2009; Robertson & Hammersley, 2000). Chasserio & Legault (2009) go so far as to suggest that strategic human resource management may be entirely irrelevant in some modrn, high technology companies. In studies of a variety of knowledge intensive organisations they discovered that few human resource management strategies and policies were in place. Human resources is instead relegated to operational procedures, such as ensuring compliance with industrial relations instruments. In organisations in which this occurs, there is very little in the way of human input into strategy. This lack of strategy opposes research by Petersen and Poufelt (2002), who found that Knowledge management is most effective in organisations where the knowledge management strategy is precise and supported by the organisational structure, culture and general business strategies. Chasserio & Legault speculate that the concepts of commitment, such as those argued by Hislop (2003) and others, require further analysis, particular with regard to highly skilled workers.

The use of strategic human resource management to manage knowledge is a newly established practice. A large amount of existing literature is theoretical in nature, and much empirical research is based on statistically insignificant samples or anecdotes. With the current level of research the link between strategic human resource management and knowledge management is largely context dependent. There are many areas within the field that would benefit from further longitudinal research. The impact of human resource management systems and processes on knowledge management will be better understood through research into aspects such as the influence of job design, organisational culture, career opportunities, and appraisal and reward systems. Additional research into employee commitment will ensure that human resource strategies focus on the areas where most gains can be made, and have a minimal footprint where they are of little benefit. What is clear from the research is that effective knowledge management can and does deliver significant competitive advantage. Where organisations are able to direct their knowledge toward innovation, competitive advantage will follow.

References

Alvesson, M. (1993). Organisations as rhetoric: knowledge-intensive firms and the struggle with ambiguity. Journal of Management Studies, 30(6), 997-1015.
Ardichvili, A., & Seung Won, Y. (2009). Designing integrative knowledge management systems: theoretical considerations and practical applications. Advances in Developing Human Resources, 11(3), 307-319.
Chasserio, S., & Legault, M.-J. (2009). Strategic human resources management is irrelevant when it comes to highly skilled professionals in the Canadian new economy. International Journal of Human Resource Management, 20(5), 1113-1131.
Edvardsson, I. R. (2008). HRM and knowledge management. Employee Relations, 30(5), 553-561.
Henry, N. (1975). Knowledge management: bureaucracy, technology, and knowledge management. Public Administration Review, 35(6), 572-578.
Hislop, D. (2003). Linking human resource management and knowledge management via commitment. Employee Relations, 25(2), 182-202.
Kazmi, A., & Ahmad, F. (2001). Differening Approaches to Strategic Human Resource Management. Journal of Management Research, 1(3), 133.
Lopez-Cabrales, A., Prez-Luo, A., & Cabrera, R. V. (2009). Knowledge as a mediator between HRM practices and innovative activity. Human Resource Management, 48(4), 485-503.
McDermott, R. (1999). Why Information Technology Inspired But Cannot Deliver Knowledge Management. California Management Review, 41(4), 103-117.
Minbaeva, D., Foss, N., & Snell, S. (2009). Bringing the knowledge perspective into HRM. Human Resource Management, 48(4), 477-483.
Petersen, N. J., & Poulfelt, F. (2002). Knowledge management in action: A study of knowledge management in management consultancies. In A. F. Buono (Ed.), Developing Knowledge and Value in Management Consulting (Volume 2): Research in Management Consulting. Greenwich: Information Age Publishing.
Robertson, M., & Hammersley, G. O. M. (2000). Knowledge management practices within a knowledge-intensive firm: the significance of the people management dimension. Journal of European Industrial Training, 24(2-4), 241.
Wright, P. M., Dunford, B. B., & Snell, S. A. (2001). Human resources and the resource based view of the firm. Journal of Management, 27(6), 701.

7 Golden Rules of Customer Service: Lessons from a Country Store

or, Lessons from Miss Dots Grocery

By: Davis M. Woodruff, PE, CMC

Management Methods, Inc., Decatur, AL

Tel: 256-355-3896; email: davisw@managementmethods.com

Customer service was a priority in the old fashioned country store where customers could buy anything from chicken feed to meat to clothes to gasoline and customer service must be a top priority for successful businesses today. Our family owned and operated a country store in rural south Alabama (Rt. 1, Hayneville, AL). Seven (7) essential customer service lessons can be learned from this family operation known as Miss Dots Grocery that can be applied to retail, hospitality, service and other businesses today.

The Seven Golden Rules of Customer Service are:

Be there when your customers need you Know your customers Never Let Your Business Systems Dictate How you do Business Treat your customers like they are important because they are Quality counts in the product and the service your provide Value is what the customer wants, not just price Appreciate your customers

These common sense customer service principles were drilled into me years ago in that original C-store the Country Store. These principles or golden rules, while simple, were very clear to all of us working in that store, and later formed the foundation for my consulting work with companies in the convenience store and retail sectors. The 7 Golden Rules are applicable to any business because every business has customers to serve.

To illustrate several of these lessons, l will begin with an example about a few specific customers we had. There were certain customers who bought only two items, corn and sugar. (Yes, some of you remember how these two raw materials were used.) These customers had certain times of day to make their purchases and it wasnt during normal business hours. We knew the customers and their needs, so we were available when they needed to make purchases, even if it was late at night. This simple example illustrates several of the golden rules of customer service.

While these are timeless lessons, each lesson can be illustrated with actual events that occurred in our store operation. The reader will be able to draw analogies for todays fast-paced society that can help them offer more personal and timely service to customers today that should translate into improved profitability.

#1: Be there when your customers need you.

The hours of operation of Miss Dots Grocery were from around sunrise to about an hour after dark, depending on the season of the year. Of course, these hours were adjusted somewhat on weekends. We generally stayed open later on Friday and Saturday evenings when folks were getting paid; and opened a bit later on Sunday mornings, usually around 7 a.m. Yes, we were open 7 days a week, everyday of the year.

Operating hours were flexible enough to be available for our customers. For example, many nights when I would be locking the doors, Dad would say, dont lock up yet, that car coming down the road may stop. How does that relate today when in most retail establishments they begin making announcements that the store will be closing in 15 minutes or worse yet begin checking out the registers before closing time.

We would even open up late at night if a customer had a need. In fact, we had a few customers who usually bought only corn and sugar as mentioned earlier. These customers would come to our house late in the evening and Dad would say, Son, go down and let them have what they need. Now, do we have that same attitude of availability for our customers today?

When you consider your business, whatever it is, think first about your customers and when they need you as opposed to what hours youd prefer to open. Heed the lesson. Be there when your customers need you, whatever your business happens to be.

#2: Know your customers.

In todays high tech and impersonal society, it is essential that business owners and operators get to know their customers. Think about the situation mentioned above with our late night customers. We knew the customer, their needs and how to serve them. In other cases, we would know the needs that some customers had related to monthly cash flow. This need provided another business opportunity. Customers could bring their electric bills to us, wed collect a number of them, write one check and then add the amount to their credit statement each month with a small service charge. Now, this is probably not too feasible today, but the point is very relevant. Customers like to be known and like to know that you will try to meet their needs.

Several times in our little store, we would learn of needs related to illnesses or deaths and would always send a grocery bag of food to these folks. It resulted in intense customer loyalty and goodwill in the community. Whats the lesson here? Knowledge of your customers coupled with actions that let them know you care can result in an improved bottom line for you due to customer loyalty and goodwill that is spread by your customers.

#3: Never Let Your Business Systems Dictate How You Do Business

Obviously, in a small country store we could not stock huge inventories of every item folks would need or want. However, we could get most anything someone needed or desired given a few days. Everyone in the community knew they could come in and request something and wed attempt to get it. Thats just good business sense and practice.

Sometimes this took an unusual twist. On one occasion I remember a lady from the big city coming in and wanting to buy a pair of stockings. We quoted her the .25 price and she said shed never wear something that cheap. No problem, we just reached into another box and gave her the same thing for .00 and she was a satisfied customer. Is this price gouging or dishonest? Well, Im not real sure about that. The point is the customer was happy and we made the sale that made her happy. Perception is critical in most cases when it comes to satisfying customers.

Another example had to do with shoes. This one got my Dad into trouble at home. My Mother had come in from the big city (Montgomery, AL) with a new pair of shoes and set them on one of the store shelves. A customer came in and saw them. You guessed, it even though we didnt stock shoes, they were sold to the customer!

In todays high-tech bar coded inventory controlled world we probably couldnt do something like that because the computer wouldnt let us. Thats an excuse not a logical reason. The lasting lesson is never let your business systems dictate what you can do for your customers. Figure out what it takes and do it to have what your customers need if you want to be successful.

#4: Treat your customers like they are important because they are.

In todays high tech and fast paced world customers can easily become a distraction, an interruption or an inconvenience if we allow it to be so. We must work to insure that customers are treated with respect and dignity and like they really matter to you. That can be a difficult task for the employee in a retail business today, because sometimes they are thrown out to the public with little or no training or dont have the maturity to understand the importance of the customer. And, sometimes customers can be rude and unreasonable, but that is the exception so lets concentrate on the normal everyday customer. That customer deserves respect and interest when they come into your business, after all, its their money theyre spending with you.

Sometimes in our little store the oldest and seemingly the dirtiest of farmers would come in and buy a few items, but when they wanted to buy big groceries they went to a larger store in the city. Yet, we were expected to treat that person just like the customers who bought nearly everything from us. The lasting lesson is that the customer who enters your business is a guest and should be treated as such. You never know who they might be or who they might influence.

Recently, I had another situation occur that underscores the importance of this lesson. I was renting a car at a large metropolitan airport and the person working the counter was not too interested in her customers. When I approached the counter and asked to change to a different type vehicle, she challenged the request that Id made and essentially said who do you think you are to be asking for a change to a reservation made by your company? Well, I simply responded, Its my company. Ive never rented from that agency again. It probably hasnt impacted their bottom line very much, but every customer counts.

#5: Quality counts in the product and the service you provide.

Have you ever been in a restaurant and had really good food but a bad experience because of the service? Most of us have and it illustrates the importance of both the product and the service quality.

At Miss Dots Grocery we pumped the gas, bagged the groceries and carried them to the car. That was the minimum acceptable level of service. Sometimes, we checked the oil and washed the windshield too. The products sold in most grocery stores are similar; the service provided is what distinguishes one from another unless a person is buying simply on the lowest price no matter what.

The lasting lesson is that the quality of the service you provide can be more important than what you actually sell the customer. In todays world it is a given that you must sell quality products, its the service that can differentiate you from the competition.

#6: Value is what the customer wants, not just price.

One of the things we did for our customers was to pay the utility bills. On the shelf behind the cash drawer we kept a cigar box where folks would put their utility bills. Wed write one check per month to the REA Co-op and (thats Rural Electric Association, for the city folks who dont know about these things) charge the amount on the customers monthly bills. Now, that model has been replaced by on-line banking and bill payment, but in a rural setting a few decades ago it was a valuable service. Of course, we charged a fee for that service, but the value was what the customer wanted not just the price of the utility bill.

Today when customers come into our businesses they are looking at far more than just price in most cases. They are looking at the value of the product to them. For example, time is the critical factor today. So, folks will pay more for a prepared meal that can be micro-waved instead of one that must be prepared from scratch. The food industry is changing to meet this trend with high quality prepared foods, for example. The customer will pay more to have that convenience factor.

The lasting lesson is that price is not the deciding factor in most cases, but rather the value the product or service brings to the customer, or even the perceived value.

#7: Appreciate your customers.

When you go into an establishment and the clerk is talking on the phone and really doesnt acknowledge you except to take your money, how does that make you feel? Probably like I wont be back. How do you build a loyal customer base? Simple. Appreciate your customers. Sincerely appreciate them. How? Well, in Miss Dots Grocery it was through simple acts of kindness in times of need; a small gift at Christmas time (now, thats another story altogether!); an extra cookie in the bag of a dozen; delivering items when needed; you get the picture. One other thing, we were expected to say thank you and come back or come again whenever a customer left whether they bought anything or not. The .15 cheese or bologna customer got the same appreciation as did the large grocery customer or gas customer.

The lasting lesson is that in todays fast-paced world we take customers for granted and the successful business will show appreciation for the customer. The appreciation can simply be a sincere thank you or even a tangible thank you of some kind.

Practicing these seven golden rules of customer service will give you a competitive advantage. Train your employees in these principles and apply the lasting lessons. Youll see the results in your bottom line! A quick review of the lasting lessons:

Be there when your customers need you, whatever your business happens to be.

Knowledge of your customers coupled with actions that let them know you care can result in an improved bottom line for you

Never let your business systems dictate what you can do for your customers.

The customer who enters your business is a guest and should be treated as such.

The quality of the service you provide can be more important than what you actually sell the customer

Price is not the deciding factor in most cases, but rather the value the product or service brings to the customer

In todays fast-paced world we take customers for granted and the successful business will show appreciation for the customer

(Note: You may view a brief video of these principles at Google video by searching for Davis Woodruff.)

First step: identify your niche market

One of the biggest problems that are frequently being seen is that many people try to start creating a website without really understanding how the internet works. A crucial step which is often ignored or overlooked by beginners is market and niche research.

In this article I will be looking at a number of important concepts relating to market and niches. This includes:

What is an online market?
What is a niche and how does it relate to a market?

When you initially begin exploring the online marketing word, you will frequently hear people discussing various online markets. The correct definition of a market is a group of people who have a common interest in a specific topic or activity. To facilitate communication between the members, this group will often use their own specific phrases and terminology.

Markets

The most effective way to “grasp” the concept of a market is to take a look at a concrete example:

The “gardening market” is made up of people who have an interest in things related to gardens. Some examples of the jargon used by members of this market are: pollination, tap root, damping off, drop spreader, fastigiated, etc. Unless you have an interest in this subject these words will not resonate with you.

Once you understand the basic concept that a market is an online community with its own vocabulary and terminology, you will swiftly come to realise that there are hundreds and may be thousands of markets waiting to be discovered.

Niches

Inside each individual market, there are numerous niches. A niche is a distinct segment of a market.

What is the difference between a market and a niche?

To follow up with the previous example, members of the gardening market might be interested in the following:

growing flowers
landscaping
tree surgeon
vegetable gardening
gardening supplies, etc.

Every single one of the above topics is actually a niche that could be a specialized interest to members of the gardening market.

Niche marketing is therefore identifying a segment of a market and then developing a solution for the needs of that segment.

Micro niches

Microniches are niches within niches. For example, within the “vegetable gardening” niche a microniche might be “vegetable gardening without pesticides” or “growing winter flowers” within the “growing flowers” niche.

The key reason why we search for microniches is that they generally tend to have significantly less competition, which in turns makes it easier to obtain better search rankings in Google.

Click the link here to receive more advice and get yourfree Video course: Create Your Own Website – The Entire Process.

Internet marketing business is so hot now a days, cause it is very easy to start if you know what you have to do actually. The interesting thing is you don’t have to invest anything to start an internet marketing business. As there are many shapes of internet marketing business. Like you can have Adsense as an internet marketing business, Affiliate internet marketing business, Email internet marketing business and so on.

Who Can Start An Internet Marketing Business?

Anybody can start an internet marketing business, if he has a little knowledge of computer. I will say everybody who has a job even he/she has to have an internet marketing business as a part time work for an extra earning. Because in this financial cricis situation, it is helping many of the persons to run their families. Even the persons who don’t have jobs, are earning handsome from the comfort of their home with it and are working for their online business for full time. It even don’t require your whole day to work for it, you will be working for few hours a day for your internet marketing business and it will run for you automatically 24 hours and 7 days a week without any rest to produce money for you all time.

How To Start An Internet Marketing Business?

It is so easy to start an internet marketing business. As there are many opportunities to make money online from the comfort of your home. You just need to decide for which internet marketing business you want to work for yourself. Then you need to register a website, which will be running all time to produce money for you. It requires only a few dollar to register your website domain name and a hosting account from where it will be online all time. That’s it.

How Much Money Can Be Made With An Internet Marketing Business?

See, it depdends on you how hard work you do for your internet marketing business. Actually in the start you will need to work hard, because you will be in learning process. So, as soon as you will learn and master it, everything will be easy for you and will be enjoying making money in no time. As people are making millions with their internet marketing business. You will also be able to earn handsome, just learn the depth and apply that knowledge and never ever give up to be successful with your internet marketing business.

Success of corporate undertakings purely depends upon the quality of human resources. It is accentuated that; Human element is the most important input in any corporate enterprise. The investments directed to raise knowledge; skills and aptitudes of the work force of the organization are the investments in human resource. In this context, it is worth while to examine and human resource accounting practices in corporate sector in India.

Human resource accounting is of recent origin and is struggling for acceptance. .It is clearly said that, Human resources accounting is an accounting measurement system and a large body of literature has been published in the last decade setting for the various procedures for measurement. At the same time the theory and underlying concepts of accounting measurement have received sizeable attention from academics and a substantial body of literature has developed. The conventional accountings of human resources are not recognized as physical or financial assets.

Though Human Resources Accounting was introduced way back in the 1980s, it started gaining popularity in India after it was adopted and popularized by NLC. Human Resources accounting, also known as Human Asset Accounting, involved identifying, measuring, capturing, tracking and analyzing the potential of the human resources of a company and communicating the resultant information to the stakeholders of the company. It was a method by which a cost was assigned to every employee when recruited, and the value that the employee would generate in the future. Human Resource accounting reflected the potential of the human resources of an organization in monetary terms, in its financial statements.

Even though the situation prevails, yet, a growing trend towards the measurement and reporting of human resources particularly in public sector is noticeable during the past few years. BHEL, Cement Corporation of India, ONGC, Engineers India Ltd., National Thermal Corporation, Minerals and Metals Trading Corporation, Madras Refineries, Oil India Ltd., Associated Cement Companies, SPIC, Metallurgical and Engineering consultants India Limited, Cochin Refineries Ltd. Etc. are some of the organizations, which have started disclosing some valuable information regarding human resources in their financial statements. It is needless to mention here that, the importance of human resources in business organization as productive resources was by and large ignored by the accountants until two decades ago.

During the early and mid 1980s, behavioral scientists attacked the conventional accounting system for its failure to value the human resources of the organization along with its other material resources. In this changing perspective the accountants were also called upon to play their role by assigning monetary value to the human resources deployed in the organization. Human Resource Accounting involves the dimension of cost incurred by the organization for all the personnel function. Hence the issue is to be addressed is how to measure the economic value of the people to the organization and various cost based measures to be taken for human resources. The two main components of Human Resources Accounting were investment related to employees and the value generated by them. Investment in human capital included all costs incurred in increasing and upgrading the employees skill sets and knowledge of human resources. The output that an organization generated from human resources was regarded as the value of its human resources. Human Resources accounting is used to measure the performance of all the people in the organization, and when this was made available to the stakeholders in the form of a report, it helped them to take critical investment decisions.All the models stressed that human capital was considered an investment for future earnings, and not expenditure.

For valuing human resources, different models have been developed. Some of them are opportunity cost Approach, standard cost approach, current purchasing power Approach, Lev and Schwartz present value of future earnings Model Flam holtzs stochastic rewards valuation Models etc. Of these, the model suggested by Lev and Schwartz has become popular. Under this method, the future earnings of the human resources of the organization until their retirement is aggregated and discounted at the cost of capital to arrive at the present value.

Human resources accounting system consists of two aspects namely:

a) The investment made in human resources

b) The value human resource

Measurement of the investments in human resources will help to evaluate the charges in human resource investment over a period of time. The information generated by the analysis of investment in human resources has many applications for managerial purposes. The organizational human performance can be evaluated with the help of such an analysis. It also helps in guiding the management to frame policies for human resource management. The present performance result will act as input for future planning and the present planning will have its impact on future result. The same relationship is also applicable to the areas of managerial applications in relation to the human resource planning and control.Investment in human resources can be highlighted under two heads, namely,

Investment pattern:

The human resource investment usually consists of the following items:-

1) Expenditure on advertisement for recruitment

2) Cost of selection

3) Training cost

4) On the job training cost

5) Subsistence allowance

6) Contribution to provident Fund

7) Educational tour expenses

8) Medical expenses

9) Ex-gratia payments

10) Employees Welfare Fund

All these items influence directly or indirectly the human resources and the productivity of the organization.

Investment in current costs

After analyzing the investment pattern in the human resources of an organization the current cost of human resources can be ascertained. For this purpose, current cost is defined as the cost incurred with which derives benefit of current nature. These are the costs, which have little bearing on future cost. Thus, the expenses incurred for the maintenance of human resources are termed as current costs. Current cost consists of salary and wages, Dearness allowance, overtime wages, bonus, house rent allowance, special pay and personal pay.

Amidst this background, it issignificant to mention that the importance and value of human assets were recognized in the early 1990s when there was a major increase in employment in firms in service, technology and other knowledge-based sectors. In the firms in these sectors, the intangible assets, especially human resources, contributed significantly to the building of shareholder value. The critical success factor for any knowledge-based company was its highly skilled and intellectual workforce.Soon after, the manufacturing industry also seemed to realize the importance of people and started perceiving its employees as strategic assets. For instance, if two manufacturing companies had similar capital and used similar technology, then it was only their employees who were the major differentiating factor. Due to the above development, the need for valuing human assets besides traditional accounting of tangible assets was increasingly experienced.

From the above discussions, it is felt that, Human resource accounting provides quantitative information about the value of human asset, which helps the top management to take decisions regarding the adequacy of human resources. Hence, It is Concluded that, the Human Resources are an indispensable but often neglected element is thus to be fore grounded into the industrial area for the betterment of the economy.

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