A model for human capital valuation

Jasina, Tatia Simon (2004-12)

Thesis (MBA)--Stellenbosch University, 2004.

Thesis

ENGLISH ABSTRACT: As the world's economic landscape undergoes a fundamental shift from industrial economy in which plant and equipment are the core assets, to the 'new' economy which places a high premium on people and intangible assets traditional accounting systems are becoming less effective. Intellectual Capital has become the indispensable component of corporate value. The significant rise in the market-to-book ratio of listed companies is testimonial of this fact. By focusing on physical and cash assets, and remaining oblivious to Intellectual Capital, conventional accounting methods are missing a very crucial point. The exclusion of Intellectual Capital from financial performance reports results in information deficiency for both internal and external stakeholders of organizations. Measurement and reporting of Intellectual Capital has thus become imperative. However, it is the Human Capital component (of Intellectual Capital) that should be the prime concern of business leaders and other stakeholders. People are the true agents in business; all the other assets, whether tangible or intangible, are the result of human actions and ultimately depend on people for their continued existence. Measurement and reporting of Human Capital is therefore of the essence. Measurement of Human Capital is not simple and straightforward. Development of methodologies for valuation of Human Capital is a daunting challenge. In spite of its difficulty, measurement of Human Capital has to be vigorously pursued; the stakes are just too high for the challenge to be shunned. This study proposes a system for valuation of Human Capital. "Valuation" may conjure expectations of financial measurement; however, despite concerted efforts by the accounting profession, currency-based valuation of people has received very little, if any, appreciation in industry. The model put forward here, is a non-monetary Human Capital Index.

AFRIKAANSE OPSOMMING: Met die fundamentele verskuiwing van die ekonomiese landskap van die wêreld, vanaf 'n industriële ekonomie met produksie-aanlegte en toerusting as primêre bates, tot die nuwe ekonomie wat 'n hoë premie op mense en ontasbare bates plaas, het konvensionele rekeningkundige stelsels toenemend ondoeltreffend geraak. Intellektuele kapitaal het 'n onontbeerlike onderdeel van korporatiewe waarde geword. Die betekenisvolle premie wat die markwaarde bo die batewaarde van genoteerde maatskappye geniet, lewer bewys van hierdie tendens. Deur te fokus op fisiese en monetêre bates, en nie intellektuele bates in ag te neem nie , verontagsaam konvensionele rekeningkundige stelsels 'n kern beginsel. Die uitsluiting van intellektuele kapitaal as deel van prestasie verslagdoening lei tot 'n gebrekkige inligtingsbasis vir beide interne en eksterne belangegroepe van die organisasie. Meting van, en verslagdoening oor intellektuele kapitaal, het dus 'n noodsaaklikheid geword. Dit is egter die menslike hulpbron komponent van intellektuele kapitaal wat die primêre oorweging by sakeleiers en ander belanghebbendes behoort te wees. Mense is die werklike rolspelers in organisasies. AI die ander bates, tasbaar of ontasbaar, is die gevolg van menslike aktiwiteit, en hang uiteindelik van mense af vir hul voortgesette bestaan. Daarom is dit van die uiterste belang dat daar 'n proses is wat menslike bates evalueer en verslag doen. Die meting van menslike kapitaal is nie eenvoudig en voor die hand liggend nie. Die ontwikkeling van metodes om menslike kapitaal te assesseer is 'n besondere uitdaging. Ten spyte van die probleme moet die assessering van menslike kapitaal daadwerklik nagestreef word; hierdie saak is te belangrik om te ontwyk. Hierdie studie stel 'n model voor om waardebepaling van menslike kapitaal te doen. So 'n waardebepaling mag verwagtinge van 'n finansiële metingsbasis skep; tog, ten spyte van doelgerigte pogings deur die rekeningkundige professie, het 'n monetêre waardebepaling van mense weinig, indien enige, aanvaarding in die sakewêreld ontvang. Die model wat hier voorgestel word, is 'n nie-monetêre menslike kapitaal indeks.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/70108
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