Application of a human resource value model: A field study

Ogan, Pekin

doi:10.1016/0361-3682(76)90023-4

Cited by 16 publications

(9 citation statements)

References 10 publications

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“…The first category attempts to formulate different methods for measuring and reporting HR value. Various techniques have been evolved by researchers using cost, value and other components of HR as basis (Hermanson, 1964; Flamholtz, 1971; Likert, 1967; Hekimian and Jones, 1967; Watson, 1978; Lev and Schwartz, 1971; Morse, 1973; Jaggi and Lau, 1974; Ogan, 1976a, b). However these methods have got little acceptance due to the subjectivity involved in the process of HR accounting except for Lev and Schwartz (1971) which is followed by most companies for HR valuation with some modification to suit their case.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of corporate characteristics on human resource disclosures

Kaur

Raman

Singhania

2016

ARA

101

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Purpose Human resource (HR) disclosures are voluntary in nature in most countries including India. The voluntary nature of HR disclosures results in discrepancy in the HR disclosure practices across companies and industries. The purpose of this paper is to examine the extent of HR disclosures in annual reports of Indian listed companies and to identify their determinants in a three stage analysis. Design/methodology/approach In the first stage a 16 item human resource disclosure index (HRDI) has been constructed for the set of CNX 200 companies listed on National Stock Exchange. Thereafter the effect of various independent variables on HRDI is analysed descriptively. Finally in the third stage HRDI has been regressed against the independent variables using regression analysis technique to identify key determinants of HRDI. Findings The research reveals that there is high variation among sample companies as regard HRDI. The results of descriptive analysis, correlation analysis and multivariate regression analysis establish that government’s participation in ownership and market capitalisation has positive significant effect on HRDI at 1 per cent, presence of separate HR directors committee, presence of more independent directors on board at 5 per cent and cross-list America and profit after tax at 10 per cent level. Implicitly HRDI is positively affected by size of company as measured by market capitalisation. Though contrary to expectations, other variables leverage, number of employees, assets, ownership concentration, type of auditor, age, complexity of business structure, employee expense to total operating expense ratio, industry affiliation, foreign investment and proportion of non-executive directors on board are found to have moderate though insignificant influence on HRDI. Research limitations/implications Cross-sectional design, dependence on annual reports as a primary document for disclosure and subjectivity in HRDI construction are the main limitations of the research. A longitudinal study may be carried to study the pattern of HR disclosures in future. Weighted ranking of different items of disclosures may be studied to improve the understanding of extent of disclosures. Practical implications The HRDI as constructed in the research may be used as a benchmark by companies to improve their HR disclosures. It can also be used by accounting bodies and company regulators while deciding about standards regarding HR disclosures. Investors can also use HR disclosures made by a company as a basis to understand its financial standing and future potentials. Originality/value The study adds to the existing literature by developing 16 item HRDI to measure the extent of disclosures by listed companies in India and thereafter by including some new propositions in the determinants of HRDI have never been tested in the existing studies. These propositions are government’s participation in ownership, separate HR committee of directors, board composition and foreign activity. These propositions have been empirically validated in this research except for foreign activity.

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Section: Literature Reviewmentioning

confidence: 99%

Impact of corporate characteristics on human resource disclosures

Kaur

Raman

Singhania

2016

ARA

101

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“…The next wave of researchers sought to get away from using costs, developing more sophisticated models that incorporated the present value of individuals’ future revenue potential that could be aggregated to derive a valuation for unit- or firm-level human capital. For example, Ogan’s model (1976a, 1976b) proposed that an individual’s “certainty-equivalent net benefits” (1976b: 310) to an organization included net costs and benefits (e.g., billings in a professional firm setting) associated with that person’s employment together with the likelihood of turnover and of survival (i.e., nondeath). Flamholtz proposed and tested a stochastic rewards model to estimate the present value of future income streams generated for the organization as the employee occupies different roles over time with differing revenue potential (“service states”), taking into account the probability of turnover and movement between roles (Flamholtz, 1971, 1972a, 1972c, 1999M; Flamholtz, Searfoss, & Coff, 1988).…”

Section: What Is the Financial Value Of An Organization’s Human Capital Resources?mentioning

confidence: 99%

“…They had individual-level theory about human capital (Becker, 1964; Schultz, 1961) and the economic notion of a resource as something that will generate future benefits, but little in the way of theory linking the two. They focused mostly on human capital resource value using a simple bottom-up approach by summing individual valuations to get the firm-level resource value (e.g., Lev & Schwartz, 1971; Ogan, 1976a, 1976b). As we see in Table 1, Likert’s 1967 model was unique in conceiving of some of the organizational factors influencing what we now label as “emergence” in multilevel models (e.g., Ployhart & Moliterno, 2011), but his focus on correlational relationships did not translate into a widely applied economic model.…”

Section: What Is the Financial Value Of An Organization’s Human Capital Resources?mentioning

confidence: 99%

“Our Most Important Asset”

Fulmer

Ployhart

2013

Journal of Management

120

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Despite managers’ claims that their organization’s human capital is their “most important asset,” few can confidently state the financial value of that resource or quantify in financial terms how changes in management practices, culture, or workforce composition affect the value of that resource. Scholars of strategic human capital and strategic human resource management face a similar situation, relying more on inferences about human capital resource value than on empirical measures of it. In an effort to explicate the challenges associated with financial valuation so that scholars can begin to move past them, we provide a multidisciplinary review of existing work that has been concerned with the estimation, disclosure, and management of the financial value associated with an organization’s human capital resources. We propose a multilevel organizing framework to facilitate the linkage between the financial valuation issues highlighted in our review and the recent literature on strategic human capital/strategic human resource management. Based on the insights drawn from this review, we then propose a series of next steps or “action items” to stimulate future research that holds promise for yielding both new theoretical insights and important practical implications for organizations.

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“…Fontana, 1986;Gennaro, 1971;Manzonetto, 1972;Scifo, 1974;Viganò, 1976;Sacmann et al, 1989;Scarpello & Theeke, 1989;Zambon & Marzo, 2007;Rupo, 2003. Lev & Schwartz, 1971;Brummet, 1968;Gennaro, 1971;Morse, 1973;Friedman & Lev, 1974;Jaggi & Lau, 1974;Sadan & Auerbach, 1974;Flamholtz, 1971;Ogan, 1976;Myers & Flowers, 1974;Hermanson, 1964;Zanda et al, 1993;Sangeladji, 1977;Hekimian & Jones, 1967;Zanda et al 2013;Rupo, 2003.…”

Section: Microeconomic Theoryunclassified

Valuation of Human Capital: A Review of Studies on Quali-Quantitative Methods

Ferraro¹,

Cristiano²

2019

IJBM

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Human capital is an important component of company assets as an intangible element linked to the future potential of the company itself and, therefore, capable of contributing to a considerable extent to the creation of its value. It is clear, therefore, that the evaluation of the economic capital of a company cannot disregard the estimate of its human capital, or rather the enhancement of the knowledge, skills and intrinsic attitudes of the personnel and the methods of organization and management of the same, from the specialized technicians for ward assistants and management. The paper aims to present an overview of the techniques and models through which the business-economic literature and professional practice has addressed the problem of measuring human capital. The originality of this work is to follow a path that provides a framework as exhaustive as possible of methods, models and sources to refer to in the qualitative-quantitative measurement of human capital. This objective seeks to respond mainly, even if not exclusively, to the needs of those who work in the process of estimating the economic value of capital. From the comparison of the latter it is clear that there is no optimal choice for estimating the economic value of capital, but it is a prevalent opinion in the literature that qualitative and quantitative models, rather than antinomies, must be complementary.

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Application of a human resource value model: A field study

Cited by 16 publications

References 10 publications

Impact of corporate characteristics on human resource disclosures

Impact of corporate characteristics on human resource disclosures

“Our Most Important Asset”

Valuation of Human Capital: A Review of Studies on Quali-Quantitative Methods

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