Intangible Asstes and especially human resources are crucial for the present and future success of a company. Many studies have found out the importance of human resources as a strategic resource following the argumentation of Prahalad and Hamelt and their resource based view. The need for a HR management system is therefore perceivable. Different approaches have been made including Human Resource Accounting and a Human Resource
Balanced Scorecard. These attempts, however, are either not meaningful for the practical use or not holistic in terms of money and strategy. After discussing the problems of the various approaches, I tried to combine different means towards an adaption of the Human Resource Balanced Scorecard developed by Becker et al..
Table of Contents
1. Introduction and Purpose Statement: The Significance of Intangibles and Human Resources
2. A holistic tool as a measurement system for Human Resources
2.1 Human Resource Accounting
2.2 Human Resource Balanced Scorecard
2.3 Discussion - A “new” Human Resource Balanced Scorecard
3. Findings and Future Implications
4. Appendix
5. Table of Literature
Objectives and Core Themes
This paper explores the strategic necessity of establishing a holistic measurement system for human resources, aiming to bridge the gap between traditional accounting-based valuation and modern strategy-oriented performance management.
- The increasing economic importance of intangible assets and human capital.
- Limitations of existing Human Resource Accounting (HRA) methods.
- Integration of HR performance metrics into the Balanced Scorecard framework.
- Development of a holistic, strategy-aligned HR management tool.
- Operationalization of HR functions to demonstrate their impact on corporate strategy.
Excerpt from the Book
1. Introduction: The Significance of Intangibles and Human Resources
„Wealth and growth in modern economies are driven primarily by intangible assets, defined as claims to future benefits that do not have a physical or financial form. {...} Dominant market positions, abnormal profits, and even temporary monopolisitc advantages are today most effectively achieved by the sound deployment of intangible assets.“
Following this argumentation, intangibles are nowadays a crucial point of relevance for every company. In this context, the term “intangible asset” could be defined differently, but always includes concepts such as property rights, brand names, networks, employee know - how or human resources. The unifying fact of all “intangibles” is that “it is often very difficult {…} to allocate an orthodox valuation to intangibles as they rarely have an exchange value”.
All intangibles are nonetheless of highest importance for the present value and the future development of the company, as Johnson and Kaplan noted in 1987: “A company´s economic value is not merely the sum of the values of its tangible assets{…}. It also includes the value of intangible assets.” With these assets, a company is able to produce sustainable competitive advantages and future earnings following the resource based perspective in the strategic management developed by Wernerfelt in 1984 and Prahalad and Hamel in 1990.
Summary of Chapters
1. Introduction and Purpose Statement: The Significance of Intangibles and Human Resources: This chapter highlights the growing relevance of intangible assets and human capital in modern, service-oriented economies for achieving sustainable competitive advantages.
2. A holistic tool as a measurement system for Human Resources: This section evaluates traditional Human Resource Accounting and the Balanced Scorecard as distinct management systems, proposing a novel integration of both to create a more effective tool.
3. Findings and Future Implications: This chapter concludes that while HR measurement is critical, existing systems require more empirical research to validate their effectiveness for management purposes.
4. Appendix: Provides supplemental materials, including comparative tables and a practical example of a Human Resource Balanced Scorecard.
5. Table of Literature: Lists the academic sources and research references used throughout the paper.
Keywords
Human Resource Controlling, Intangible Assets, Human Capital, Balanced Scorecard, HR Accounting, Strategic Management, Performance Measurement, Resource-Based View, Competitive Advantage, HR Deliverables, Value Chain, Human Resource Management.
Frequently Asked Questions
What is the primary focus of this paper?
The paper examines how companies can effectively measure and manage human resources as a strategic asset rather than just a cost factor.
What are the central themes discussed?
The core themes include the strategic importance of intangibles, the shortcomings of traditional accounting metrics for HR, and the application of the Balanced Scorecard framework to HR management.
What is the main research objective?
The goal is to develop a holistic measurement tool by linking financial HR accounting methods with the strategic perspective of the Balanced Scorecard.
Which scientific methods are utilized?
The author conducts a literature-based analysis and synthesizes existing management models, specifically adapting the Human Resource Balanced Scorecard framework to bridge operational and strategic needs.
What is covered in the main body?
The main body critiques existing HR accounting approaches and introduces a seven-step model for an HR Balanced Scorecard, concluding with a discussion on how these tools can be combined.
Which keywords best characterize this work?
Key terms include Human Resource Controlling, Intangible Assets, Human Capital, and Balanced Scorecard.
What are the identified problems with traditional HR accounting?
Traditional accounting often focuses on past data, lacks indicators for social factors like motivation or teamwork, and often fails to link HR measures to overall corporate strategy.
How does the author propose to improve HR management?
The author suggests integrating accounting metrics into the financial dimension of a Balanced Scorecard to provide a comprehensive view that connects strategic decisions to measurable financial figures.
- Quote paper
- Johannes Lenhard (Author), 2009, Human resource controlling, Munich, GRIN Verlag, https://www.grin.com/document/142172
