Publication Type

Book Chapter

Version

acceptedVersion

Publication Date

12-2020

Abstract

It is common for modern-day corporate leaders and academic writers to make claim that human resources is one of the most important assets in their organization (Guest, 2001). If that were the case, effective management of human capital would be a critical factor in the success of any organization. As an important organizational resource, human capital is expected to generate significant economic benefits from its deployment, development and retention (Flamholtz, 1999). There is widespread evidence that the effective use of human capital can also create durable competitive advantage for an organization (Barney, 1991; Becker & Gerhart, 1996; Lado & Wilson, 1994). Given its importance, the purpose of this article is to highlight the key drivers of value for effective human capital management. Generally Accepted Accounting Principles (GAAP) governing the preparations and reporting of financial information of the firm, prescribes that rental value of the critical human resources (e.g. wages and perquisites arising from the hiring of such resources) are recorded as expenses in income statement. These are matched against the revenue generated as a result of their use. However, GAAP prohibits the inclusion of the sum of future benefits that accrues from the “ownership” of such resources to be captured as assets of the firm.

Keywords

Generally Accepted Accounting Principles, human capital, corporate assets

Discipline

Corporate Finance | Human Resources Management

Research Areas

Finance

Publication

Human capital leadership insights: Solving human capital challenges from the business perspective

First Page

224

Last Page

227

ISBN

9789811477157

Publisher

Singapore Management University

City or Country

Singapore

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