Human Resources Accounting in Infosys
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : HROB031
Case Length : 14 Pages
Period : 1990 - 2002
Pub Date : 2003
Teaching Note :Not Available
Organization : IBM
Industry : Information Technology
Countries : USA
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Excerpts
HRA in Practice at Infosys
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Infosys' HRA model was based on the present value of the employees' future
earnings with the following assumptions:
• An employee's salary package included all benefits, whether direct or
otherwise, earned both in India and in a foreign nation.
• The additional earnings on the basis of age and group were also taken into
account.
To calculate the value of its human assets in 1995-96, all the 1,172 employees
of Infosys were divided into five groups, based on their average age. Each
group's average compensation was calculated. Infosys also calculated the
compensation of each employee at retirement by using an average rate of
increment...
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HRA - The Benefits and Hurdles
The benefits of adopting HRA were manifold. It helped an organization to
take managerial decisions based on the availability and the necessity of
human resources. When the human resources were quantified, it gave the
investors and other clients true insights into the organization and its
future potential. Proper valuation of human resources helped organizations
to eliminate the negative effects of redundant labor.
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This, in turn, helped them to channelize the
available skills, talents, knowledge and experience of their
employees more efficiently. By adopting and implementing HRA in an
organization, the following important information could be obtained:
• Cost per employee
• Human capital investment ratio
• The amount of wealth created by each employee
• The profit created by each employee
• The ratio of salary paid to the total revenue generated
• Average salary of each employee
• Employee absenteeism rates
• Employee turnover rate and retention rate... |
Exhibits
Exhibit I: Models for Valuing/Measuring Human Assets
Exhibit II: Human Resources Values of Companies in India
Exhibit III: Human Asset Value of Bhel
Exhibit IV: Sail's Hra Model
Exhibit V: Infosys Balance Sheet (Including Intangible Assets)
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