Toward a Model for Human Resource Valuation.

Abstract The article informs that human resources is of importance to management as well as to outside users. Accountants are faced with the challenge of designing systems which are capable of providing accurate and reliable information about human resources. The model in this article provides a framework for determining the value of these resources. This model is based on valuation of groups rather than individuals; the term "group" refers to a homogeneous group of employees working in a firm. This group approach represents a major difference over the prior models. In this model, a Markov chain representation is used to consider the career movements of the employees within the firm and the chances of their leaving the firm before their retirement or death. The probabilities of career movement and of exit from the firm can be estimated on the basis of historical data and the Markovian chain technique. Since the pattern of movements is considered to be constant, the probabilities determined for one period are extended to future periods.