A Model for Human Resource Valuation: a Stochastic Process with Service Rewards.

Abstract The article deals with the problem of measuring the value of people to formal organizations, and presents a normative model for the economic valuation of individuals. It also examines the practical difficulties involved in operationalizing the normative valuation model as well as certain measurement approaches, which hold potential for surmounting the difficulties. The findings of some preliminary empirical research to develop a reliable and valid method of measuring an individual's value are also briefly reviewed. The implications of measuring an individual's value are explored in terms of the expected costs to be incurred or value to be lost from liquidating human assets as well as in terms of the cost-savings expected to be derived. An assessment of the project in these terms might lead to a decision to reject such a program. Similarly, once undertaken, the results of cost control programs should be evaluated in terms of the real net benefits derived and not merely in terms of the conventional accounting representations of these benefits.