The “ father of wealth “ sir William  petty made an attempt to estimate the money value of human beings by capitalizing the wage bill with no maturity period at market interest rate  in 1691.Farr developed  a scientific procedure for calculating the present value of an individual’s net future earnings. Marshall opinion was to exclude human beings from core of economic thought  because expenditures of human was considered as consumption rather than investment.

The “cost approach” to human resource accounting  is useful to the supervisor in getting ready for the advancement of human resources and making of ideal associations with outer gatherings. They are appropriately incorporated into the company’s capital spending plan. In the event that assets were  pre maturely, human resource accounting  system recognize difficulties to be balanced against customer estimated pay.

Criteria for inclusion of behavior in organisation

1.The behavior must be defined so that it  is significantly affected by the work  structure.

2. The behavior must be measurable and convertible to significant costs to the organization.
3. The measures and costs for each behav ior must be mutually excel

Behavioral variables which are included in presence and participation at work  Participation-Membership

– Absenteeism

– Turnover

– Strikes

–Tardiness

Performance-on-the-job

– Production under standard

– Quality under standard

– Grievances

– Accidents

-Unscheduled downtime and machine repair

– Material utilization and inventoryStrinkage

Calculation of human resource accounting includes data of recruitment,orientation, training, potential, productivity, participation cost of employees to get the accurate value.

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