Econ 248 Assignment 2

ECON 248 Assignment 2 1. The bank rate is the interest rate at which the Bank of Canada stands ready to lend reserves to chartered banks. The banker's deposit rate is the interest rate that the Bank of Canada pays banks on their deposits at the Bank of Canada. Changes to these rates by the Bank of Canada typically spread to other interest rates and therefore will influence the amount of lending done by the banks. An open market operation is the purchase or sale of government securities, which are government of Canada Treasury bills and bonds, in the open market by the Bank of Canada. These transactions done by the Bank of Canada change the reserves of the banks, which have an immediately impact on the amount of overnight borrowing. This enables the Bank of Canada to hit its overnight rate target. Government deposit shifting is the practice of shifting government deposits between the government's account at the Bank of Canada and its accounts at the various chartered banks. These shifts of deposits affects the banks' reserves, and therefore their ability to make overnight loans. Since this tool is typically used on a small scale to smooth daily fluctuations in the amount of overnight loans, its impact on the implementation of monetary policy is small. The required reserve ratio is the portion of depositors' balances banks must have on hand as cash, as determined by the central bank. The monetary policy of a required reserve ratio is no longer in use by the Bank of Canada. The Bank of Canada's policy tools work by changing the quantity of money in the economy, by changing the monetary base. By raising the bank rate, the Bank of Canada can make it more costly for the banks to borrow reserves. By raising the interest rate it pays the banks on their own deposits at the Bank of Canada, it can induce the banks to want to hold larger reserves. By selling securities in the open market, the Bank of Canada can decrease the monetary base. The Bank of Canada can also decrease bank reserves and the monetary base by switching some government of Canada deposits from a chartered bank to itself. These actions decrease the quantity of money, other things remaining the same. . L = (1 – 0. 35) X (1 – 0. 07) L = 0. 6 Quantity of money created = $50,000,000 X 1/(1 – 0. 6) Quantity of money created = $50,000,000 X 2. 5 Quantity of money created = $125,000,000 3. a) The multiplier is the amount by which a change in any component of autonomous expenditure is magnified or multiplied to determine the change that it generates in equilibrium expenditure and real GDP. Investmen t expenditures increase aggregate expenditure and real GDP. The increase in real GDP increases disposable income, which increases consumption expenditure. The increased consumption expenditure adds even more to aggregate expenditure. Real GDP and disposable income increase further, and so does consumption expenditure. The initial increase in investment brings an even bigger increase in aggregate expenditure because it induces an increase in consumption expenditure. The multiplier determines the magnitude of the increase in aggregate expenditure that results from an increase in investment or another component of autonomous expenditure. The greater the marginal propensity to consume, the larger is the multiplier. ) The marginal propensity to import and the marginal tax rate together with the marginal propensity to consume determine the multiplier. Their combined influence determines the slope of the aggregate expenditure curve. Since Multiplier = 1 / (1 – Slope of AE curve) and the marginal tax rate determines the extent to which income tax payments change when real GDP changes, the size of the multiplier will decrease depending o n the extent to which the marginal tax rate reduces the slope of the AE curve. ) The slope of the AE curve equals 0. 75 Multiplier = change in real GDP/change in investment = 1/(1-MPC) Multiplier = 1/(1-0. 75) = 1/0. 25 = 4 The revised slope of the AE curve equals 0. 45 Multiplier = change in real GDP/change in investment = 1/(1-Slope of AE curve) Multiplier = 1/(1-0. 45) = 1/0. 55 = 1. 818181812 4. a) Given that the increase in unemployment means a decrease in real GDP, and that consumer spending and investment spending reductions mean a fall in aggregate demand, the economy is in recession. This is due to a fall in aggregate demand, and the fall in investment may lead to higher costs of production in the future. b) In a recession, the number of people experiencing economic hardship increases, so induced transfer payments such as unemployment benefits and welfare benefits increase. Induced taxes and induced transfer payments decrease the multiplier effect of a change in autonomous expenditure such as investments, and moderate recessions making real GDP more stable. Discretionary fiscal policy would be used in an attempt to restore full employment. The government might increase its expenditure on goods and services, cut taxes, or do some of both, increasing aggregate demand. An increase in government expenditure or a cut in taxes increases aggregate expenditure as well. c) In a recession, the Bank of Canada will conduct an open market purchase to lower the interest rate. The quantity of investment will increase, and other interest-sensitive expenditure items will also increase. With an increase in aggregate expenditure, the multiplier increases aggregate demand, bringing real GDP to equal potential GDP, and a recession will be eliminated. . Keynesianism is loosely defined as the economic view that, left to itself, the economy may not fully employ the resources available, and that expansionary governmental action may be required to achieve full employment and growth. Monetarists, in contrast, think broadly that the principal economic task of government is to regulate the money supply, and in particular set limits to it, and that achievement of adequate levels of employment and growth can be left to the market. Historically, Keynesians avoured fiscal policy and monetarists favoured monetary policy as the tool for stabilizing aggregate demand. Today, the divide between the two schools on this issue has almost vanished. Monetarists favour a target growth rate for the quantity of money, and feel that not keeping money growth on target risks outbursts of inflation. Keynesians favour a target for the interest rate, and feel that aggregate demand can be controlled more accurately by preventing the interest rate from fluctuating too wildly, which it might do with strict targeting of the quantity of money and its growth rate. When real GDP falls below potential GDP, Keynesians feel that taking swift action to stimulate the economy by cutting the interest rate and increasing government expenditures is the most effective road to take. Monetarists feel the best that stabilization policy can do to achieve a high level and growth rate of real GDP is to keep inflation in check. Monetarists favour an inflation target at a low inflation rate. When the inflation rate rises, monetarists want swift action to slow it regardless of the state of real GDP. 6. a) 1000 tons of breadfruit / 500 tons of fish = 2 The opportunity cost of 1 unit of fish in Kiribati is 2 units of breadfruit. b) 750 tons of breadfruit / 1875 tons of fish = 0. 4 The opportunity cost of 1 unit of fish in Tuvalu is 0. 4 units of breadfruit. c) Tuvalu has a comparative advantage because it is able to produce fish at a lower opportunity cost than can Kiribati. d) Kiribati will import fish from Tuvalu because Tuvalu has the comparative advantage in the production of fish. 7. The three main arguments for protection and restricting international trade are i. the employment argument ii. the infant-industry argument iii. the dumping argument The employment argument is that if a country imports cheap foreign goods, local workers lose their jobs and become a drain on the welfare system, spending less, and causing a ripple effect of further job loss. The proposed solution is to ban imports of cheap foreign goods and to protect local jobs, but that proposal is flawed. Free trade does cost some jobs, but it also creates jobs. It brings about global rationalization of labour and allocates resources to their highest valued activities. Local jobs are lost, but jobs are created in the foreign countries that now produce those goods. The local workers who lost their jobs now have better paying jobs because export industries have expanded and created more jobs than have been destroyed. Another point is that imports create jobs. They create jobs for retailers that sell imported goods and for firms that service those goods. They also create jobs by creating incomes in the rest of the world, some of which are spent on imports of locally made goods and services. The infant-industry argument for protection is that it is necessary to protect a new industry to enable it to grow into a mature industry that can compete in world markets. The argument is based on the idea of dynamic comparative advantage, which can arise from learning-by-doing. Learning-by-doing is a powerful engine of productivity growth, and comparative advantage evolves and changes because of on-the-job experience. These facts, however, do not justify protection. The infant-industry argument is only valid if the benefits of learning-by-doing accrue not only to the owners and workers of the firms in the infant industry but also spill over to other industries and parts of the economy. Dumping occurs when a foreign firm sells its exports at a lower price than the price at which the product is normally sold in the foreign firm's domestic market. A firm that wants to gain global monopoly might use dumping, selling its output in the domestic market at a price that is low enough to drive domestic firms out of business. When the domestic firms are gone, the foreign firm takes advantage of its monopoly and charges a higher price for its products. This practice is the typical justification given for anti-dumping tariffs. There are reasons for resisting the dumping argument for protection. First, it is virtually impossible to detect dumping. The test for dumping is a weak one because it can be rational for a firm to charge a lower price in markets in which the quantity demanded is highly sensitive to price and a higher price in a market in which demand is less price-sensitive. Second, it is hard to think of a good that is produced by a natural global monopoly. Even if all the domestic firms in some industry were driven out of business, it would always be possible to find many alternative foreign sources of supply and to buy at prices determined in competitive markets. Third, if a good or service were a truly global natural monopoly, the best way to deal with it would be by regulation. Such regulation would require international cooperation. 8. a) Exports to the US would decrease due to lower demand because it would cost US importers more to purchase Canadian goods. b) Canadian importers would see a decrease in cost when importing machinery and equipment from US suppliers. c) Cross border shoppers would pay less for goods they purchase in the US. ) If the retired Canadians have US dollar bank accounts, the fluctuation of the Canadian dollar would likely have little effect on them. However, if they have Canadian dollar bank accounts or have Canadian currency, they can buy more with those Canadian dollars. 9. Current account Exports of goods and services+411 Imports of goods and services-378 Net transfers+3 Net interest payments-34 Current account balance+2 Capital account Foreign investment into Canada+22 Canadian investment abroad-35 Statistical di screpancy+10 Capital account balance-3 Official settlements account Official settlements account balance-1

The Reporting of Human Resource Accounting

CHAPTER ONE INTRODUCTION 1. 1 BACKGROUND OF THE STUDY Indeed, accountancy profession is a profession that encompasses other profession and that is why accounting has usually been thought of as highly technical field that can only be understood by the professionals (chartered accountants). Also, it has often been called ‘the language of business. Even, people in the business world owners, managers, banks, stockbrokers, investors, human resource managers, lawyers, to mention a few all uses accounting terms and concepts to describe their resources and the activity of every business they engage in whether large or small. While, according to the dictionary of management by Daniel Hartzell ‘Human Resource Accounting’ is defined as a concept that views the employees of an organization as capital assets like plant and equipment. It is important to say here that human resources accounting involves measuring the costs incurred by business organizations and other entities to recruit, train, develop and maintain their human capital. It also involves measuring the economic value of people to organization. These people consist of suppliers, customers and the society as a whole. It is not an overstatement to say that we are living in an era of accounting and as such human resources accounting must not be seen as an ordinary concept in the field of accounting but as a current trend that has come to stay. However, in this study, focus shall be placed on human resources accounting and how it will be reported in the financial statement, which also mean the capitalization of human resources as an asset which can be amortized. Although, the worth of human resources may be fairly difficult to quantify, hence there is no reason to value them at zero or not to record them in the financial statement as an asset. If the change in the value of money are accounted for, depreciation and maintenance of plants and machinery are also accounted for different adjustments are made in material, machinery and other asset therefore, inclusion in the financial statement, human aspect which form about seventy-five percent or more of the total asset that makes up the production in the organizations are only accounted for in terms of salary and wages. Leaving such information out of financial statement presents only twenty-five or less percentage of the cost of production. Based on this, such financial statement does not provide total information for decision making. 1. 2 STATEMENT OF* THE* PROBLEM While the concept ‘human resources accounting’ is intuitively attractive, the significant problems it poses will not be swept under the carpet. For the purpose of this research the following problems are areas we to proffer solution to: The possible ways of measuring the monetary worth of an individual in an organization. The treatment of human resources as an asset to be amortized overtime in the financial statement. How to estimate the effect of managerial action to employee moral, productivity and turnover. To furnish a more complete and realistic picture of the organization financial strength and the total contribution to the economy in general. {text:list-item} The aim of this study is to evaluate human resources accounting and treatment in financial statement. It is pertinent to note that objectives are identifies into two divisions; the general or broad objectives and the specific objectives. Bearing in mind the problem this study hope to provide a solution to, the general objective is to achieve a creation of idea to be employed by a further researcher for the formulation of any technique, for the monetary value of human resources and the specific objectives is the preparation of a more complete financial statement given the monetary value. {text:list-item} Employees as individual are not usually accounted for rather the value of their output is accounted for and the rate of their pay in the nature of salaries and wages are accounted for. This study intend to classify employees as asset and give value to them accordingly and create ideas to aid the formulation of measure for treating them in the financial statement. {text:list-item} The limitations to the study include: INFRASTRUCTURAL FACILITIES: There is limited library and computer facilities which have gross effect on this research work. LIMITED FUND: The situations of the economy constitute problems to students as relating to raising funds. LIMITED TIME: Due to the nature of the school calendar, there is little or no time to carry out adequate research on the study being done. text:list-item} The followings are the research question to be considered: How can monetary values of employee’s service be established? Can this monetary value aid management in internal control? What are the possible effects of the monetary worth of employee’s services to the profitability of an organization? What impact would training and development of employees have on th e performance of an organization? {text:list-item} The hypotheses to be tested are stated below: H0: Most income statements are incomplete without adequate consideration and inclusion of the human resources element in the financial statement. H1: Most income statements are complete without adequate consideration and inclusion of the human resources in the financial statement. H0: There is need for capitalization and amortization of human resources like other fixed asset in the financial statement. {text:list-item} FINANCIAL STATEMENT: This are the accounting reports in respect of the economic activities of an enterprise, prepared periodically and usually at the end of every financial year. These statements form an integral part of the company’s annual report and accounts while their components are specified in both CAMA and the Statement of Accounting (SAS) No. . CAPITAL ASSETS: Assets including investments not held for sale, conversion or consumption in the normal course of business. Capital assets are certain types of assets that qualify for special treatment when gains and losses result from transactions involving the assets. AMORTIZATION: It is the writing off of assets, the lives of which are determined not by deterioration or obsolescence, but the expiry of the tenure of ownership. It is distinguished from depreciation in that there is generally no deterioration in the performance of the asset during its life. Amortization is for intangible asset. CAPITALIZATION: The term â€Å"capitalization† is derived from the word â€Å"capital†. Capitalization is the process of determining long term capital requirements of a business and obtaining capital for it from various sources of fund. HUMAN CAPITAL: That part of an organisation capital represented by the ability, experience and skill of its work force. It refers to the knowledge, education, training, skills and experience of a firm’s worker that have economic value to the organisation. {text:list-item} Access Bank Plc. was incorporated in 1989 as a private limited liability company with ownership residing with Nigerians and institutional investors. The Bank was subsequently listed on the Nigerian Stock Exchange in 1998. Access Bank Plc. is a full service corporate – commercial bank operating through a network of over branches and service outlets located in all major centres and cities across Nigeria, Gambia and Sierra Leone. Access Bank is recognized as Nigeria’s fastest growing bank in the fastest growing sector of the fastest growing African economy. Access Bank had consistently grown at a triple digit across key performance indicators since 2002; an unparallel performance in Nigeria and indeed in Africa. As a result, from a low ranking position in the Nigerian banking industry in 2002, the bank had risen significantly to rank amongst Nigeria’s top 10 banking groups. Access Bank had painstakingly built a formidable brand over the years in its continued drive towards becoming one of Nigeria’s leading financial institutions with the appointment of its current management team in 2002. Access Bank has successfully implemented a two-pronged growth strategy of both organic and inorganic growth with the objective of emerging as one of the top three banks in Nigeria within the next five years (2007-2012). THE POST CONSOLIDATION Access Bank Plc. was one of the first to successfully comply with the Central Bank of Nigeria’s banking consolidation policy through the acquisition of two Nigerian banks: Capital Bank International Plc. (formerly Commercial Bank Credit Lyonnaise Ltd) and Marina International Bank Ltd (formerly Allied Irish Bank). The three banks’ people, processes, systems and technology were fully integrated in a record time of 60 days. The Access Bank Plc. integration approach is now the model for integration in the banking industry. After the management and staff of the Bank, the Netherlands Development Finance Company (FMO) of the Netherlands is amongst a number of significant institutional investors in Access Bank Plc. stock, having invested US$15million in the bank by way of direct equity in 2005. This depicts the degree of confidence international investors have in the bank, its corporate governance and management strategies. The bank in 2007 conducted a phenomenally successful local and international public placements of common stock which has seen its shareholders’ funds grow by 560% to approximately N160billion. CHAPTER TWO LITERATURE REVIEW {text:list-item} The term ‘human resources accounting has been conceptualized to involve measuring the costs incurred by business organization and other entities to recruit, train, develop and maintain their human capital. But an overview of this research study shows that if researcher must discuss or research on human resources accounting, certain related terms such as human resources planning, human resources forecasting, human resources auditing, and human evaluation must be defined. {text:list-item} This involves having to employ the right number and the right kind of skill that result in the long run maximization of individual and organizational benefits. It also gives consideration to skill auditing within organization but additionally requires that human resources goals give attention to labour market condition in the environment of the organization. Human resources planning are the process of determining personnel requirements and the means of meeting those requirements in order to carry out the integrated plans of an organization. Human resources activities are important to individual, organization and national arenas in order to bring about the optimal utilization of human resources. Human resources planning involve projecting and forecasting the present personnel functions into the future. {text:list-item} This focuses on institutional adaptations resulting from external pressures and changes. This human resource forecasting is important because of various external pressure that affect resources forecast includes: Amount of production. Technological change. Supply and demand condition. {text:list-item} Auditing is an intensive, analytical and comparative process. Human resources auditing has to do with investigation into job analysis, recruiting, testing, interviewing, training, promotion and transfer personnel appraisal, labour relations, employee benefits and service, wages and salaries, administrative and personnel research. Computerized personnel system today uses human resources skill inventories. This inventory require a lot of data, which include personnel factors, education and training experiences, skill job experience and other additional information. It is obvious that it is an overstatement to say that the reporting of HRA information in external annual reports brings with it the question of its audit. Costs incurred in human resource are readily subject to verification by the auditor and thus present no new problems. Cost expirations on the other hand, if based on the theoretically sound assessment of future benefits remaining for the organization, present some problems for the auditor because human resource and behavior are highly complex. But, conventional accounting also uses estimates, assumptions, in many areas such as depreciation related to the future which could be as unpredictable and less accurate. The verification of value-based data for human resource in annual reports had represented a different and more substantial problem for the auditors. However, there had been found a growing interest in value-based human resource accounting at some time in the future could not be ignored. Flamholtz suggested that: â€Å"Human resource accounting will have an impact upon corporate financial reporting. In the future, corporations would have to report on their investments in human assets. At first this information will be reported in the chairman’s letter of corporate annual reports. The purpose will be to show management’s attention to building human assets. Some companies may choose to include this information in a statement of intangibles, and some will include it in proforma financial statements. Ultimately, however, it will be included in conventional statements as a generally accepted accounting practice† {text:list-item} Theoretically, human resources accounting had been explained from different analysis made by different authors. Conner (1991) in his theory titled â€Å"the resource theory† considered human resources in a more explicit way. This theory considered that the competitive position of a firm depends on its specific and not duplicated assets. The most specific (and not duplicated) asset that an enterprise has is its personnel. It takes advantage of their interdependent knowledge that would explain why some firms are more productive than others. With the same technology, a solid human resource team makes all the difference (Archel, 1995). Another interested theory is that of the two principles of â€Å"human resource cost† and â€Å"expenses recognition principle† Theoretically, the two principles of ‘human resources cost’ and ‘expenses recognition principle’ have been used to explain the treatment of human resource accounting in the financial statement. Accountants are known with human resource cost principle of treating human resource in the financial statement. They claimed to have accounted for human resource cost for a long time before the phrase ‘human resource accounting’ come into light. Generally, they have followed the practice of changing human resource cost, associated with production (e. g. direct labour) to inventories manufactures and changed all other human resource cost(wages and salaries) to operating expenses in the period incurred. This principle of accounting for human resource provides little insight into the recording of human resource cost but it does not show or identify human resource as an asset in the balance sheet. Strictly speaking, for the purpose of this research the accepted theory had been deeply rooted in different models of accounting for human resources as explained by Jawhar Lal (2003). {text:list-item} These two under-listed method of accounting for human resources will be critically examined and explained broadly for the purpose of this work. Human Resource Cost Accounting (HRCA), i. e. , cost-based human resource accounting. Human Resource, Value Accounting (HRVA), i. e. , value-based human resource accounting. {text:list-item} HRCA may be defined as the measurement and reporting of the costs incurred to acquire, develop and replace human resources. Generally speaking, (i) historical costs and (ii) replacement costs are recognized in human resource cost accounting model. Historical Cost (Acquisition Cost) of Human Resources This model known as the historic cost model focuses upon the amount of expense incurred during the defined period on formal training and orientation, familiarization and on-the-job training, and formal development and experience. This is the amount of the additional development and experience. This is the amount of the additional investment in the acquisition and development of human resources. Acquisition cost involve costs of recruiting, selecting and hiring people to meet an organisation’s present and future human resource needs. These costs refer to the sacrifices that must be incurred to ‘acquire’ a new employee. Development costs refers to the sacrifice (costs) that must be incurred to train a person either to provide the level of performance normally from an individual in a given position or to enhance the individual’s technical, administrative, or interpersonal skills. Development costs include these components: Orientation, off-the-job training, and on-the-job training. These three components generally include costs such as salaries, tuition, materials, travel and consulting fees. Orientation costs are costs associated with formal orientation of employees. The orientation makes employees familiar with personnel policies, company products, facilities and so on. Orientation costs are generally a mixture of salaries and materials. The salaries are for both trainer and trainee. Materials may include brochures describing firm policies, history, etc. Off-the-job training costs are incurred in formal training not directly connected with actual job performance. Formal training programmes may be advance technical training, or management development programmes. Off-the-job training costs may include salaries, tuition, meals, travel, facilities costs, consulting fees, and materials. Salaries include the cost of trainers as well as trainees. On-the-job training costs are incurred in training an individual on the job itself rather than in formal training programmes. On-the-job training is used not only for production workers but also for professionals such as accountants, engineers, and management trainees. The cost associated with on-the-job training include labour and materials costs. Accounting for Historical Costs Historical costs of human resources are treated in the same way as expenditure on fixed assets such as buildings, plant and machinery. Upon capitalization, the amount of investment in human resources will appear as assets on an enterprise’s balance sheet, and be written off over the expected employment life of the particular group of human resources employed in the enterprise. This allotting process involves recording of investments in human resources through a capitalization process; recording of routine (periodic) expectations of such capitalized items using a suitable mortization procedure; recording of losses on account of special expirations which may result from obsolescence of investments in certain skills or knowledge capabilities or the turnover of personnel; and dynamics and conditions of human resources in terms of investments therein. The determination of a suitable amortization procedure to recognize expirations in human resource is difficult and highly involved. Human resource investments are of a highly varied nature with different periods of long term benefits. Further, uncertainties of conditions of employees, and even mortality add to the complication of deciding upon appropriate amortization practice. Ideally, expiration of human resource investments should be determined by association with those periods during which the benefits of the investments are experienced by the entity. As example, cost of recruiting should be amortized over a period of time which is the best estimate of the remaining time that the individual will remain actively in the employment of the company. Training costs should be amortized over a period which is the best estimate of the time during which the benefits for such training will be enjoyed by the firm. Special training to develop a skill which will be utilized for a short time period should be amortized rapidly. General executive training on the other hand, may be amortized over the estimated remaining tenure of the recipient with the company. Amortization time periods should never extend beyond the date of the recipient’s tenure with the organization. TABLE 2. 1 ABC COMPANY LTD. BALANCE SHEET AS AT 31ST DECEMBER, 2003 FINANCED BY: TABLE 2. 2 ABC COMPANY LTD INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2008. In summary, while cost-based HRA system, are rather severely restricted in the range of their usefulness, within that range, they can be quite worthwhile. Furthermore, the applicability of existing accounting techniques and the familiarity of managers with these techniques suggest that such an approach can save as a logical starting point. Replacement Costs of Human Resources. Replacement costs as used here refers to the estimated costs that would have to be incurred by an enterprise in order to replace its existing human resources with others of similar ability and experience. The determination of replacement cost involves estimates and these estimates are concerned with the present rather than with the future. Flamhottz has developed a concept (model) for calculation of ‘positional replacement cost’ which he defines as the sacrifice that would have to be incurred today to replace a person occupying a specified position with a substitute capable of rendering equivalent services in the given position. There are three basic elements of positional replacement costs; acquisition costs, development cost and separation costs. Acquisition and development costs still remain as discussed under historical cost of accounting for human resources. Separation costs are or incurred as a result of an employee leaving a position or job in an organization. It includes three basic components: separation compensation costs, differential pre-separation performance cost, and vacant position cost. These costs are generally capitalized and amortized, but should be expensed when the employee ceases to be employed. Separation compensation cost is the cost of severance pay, of any personnel. It may range from very little or no cost to a person’s salary for one year, and perhaps more. Differential pre-separation performance cost is the cost of lost productivity prior to the separation of an individual from an organization. There is a tendency for performance to decrease prior to separation. In many cases, differential pre-separation performance costs may be difficult to measure for specified individuals but may be measurable from historical performance records by personnel classifications. Vacant position costs may be incurred during a period when a search is made for replacement in other positions, holders of the latter may perform less effectively when the former is vacant. This difference in performance or less performance can be termed a cost of vacant position. Evaluation In a sense, replacement costs can be viewed as representing a bridge between historical cost approaches and economic value approach. The justification for considering replacement cost as a form of economic value is the proposition that the value to an organization of an individual’s services is reflected by the amount by the amount that the organization would have to pay to replace their services. Furthermore, replacement costs are present-oriented rather than future-oriented. Thus, it is not necessary to make estimates about the future in order to determine human resources values in terms of replacement costs. There are several difficulties associated with the use of replacement costs for human resource accounting. Replacement costs are often irrelevant since management may be either unwilling or unable to replace a particular individual with another person of similar abilities. {text:list-item} Jawhar Lal (2003) explained in his study that human resource value accounting is an attempt to measure the value of human resources on the basis of benefits accruing to an organization. The amounts of such benefits are derived from the value differentials attributable to investment in human resources. Many authors have developed models for calculating (estimating) the value of human resources of an organization. These models have some similarities, but they do vary somewhat in both concept and in choice of surrogates. For this research work to proffer solution to the question of how human resources of an organization can be valued. Some models have been used thus; Hermanson’s model Hermanson discussed two possible valuation methods, both of which are based on economic concepts of value: (a) The Unpurchased Goodwill method, and (b) the Adjusted Present Value Method. Unpurchased Goodwill Method: Hermanson had suggested that the value of human resources of an organization may be assessed by capitalizing earning in excess of normal earnings for the industry or group of companies of which the firm is a part. This approach is historical cost-based and thus of limited use as a predictor. Also, if it is based on projected earnings rates it could be no better. This approach implicitly assumes a zero value for all human resources in competitive situations since a positive value of human resources requires above average earnings. Adjusted Present Value Method: This method requires four steps in order to arrive at the value of the human assets. Estimate annual wage and salary payments for five years into the future. Calculate the present value of estimated wage and salary payments by applying a discount factor equal to the normal rate of return in the economy. Calculate an average efficiency ratio based on the previous five years performance. This ratio is found by dividing the actual earnings of the firm by normal earnings for each year and averaging the result. (In making this calculation, the latter years receive more weight than the earlier years). Multiply the present value of the future wage and salary payments by the average efficiently ratio. The resulting figure represents the estimated present value of the human resources. This method also is related to Hermanson’s unpurchased goodwill model and shares the same limitations. In addition, it may be criticized on the ground that future compensation is as much as measure of the liability of the firm employing the individual as it is an asset. The concept, therefore may relate to the human capital represented in individuals employed by the firm. Both of Hermanson’s models were suggested as possibilities for external reporting and management uses. Giles and Robinson’s Model Giles and Robinson suggested that the valuation of human assets should be made in term analogous to the valuation of a business on a going concern basis. The price earning ratio, which relates market capitalization to the latest reported earning figure is their point of departure. Based on a sample of companies with similar characteristics, an average P/E multiple is computed and then adjusted to arrive at the multiple applicable to the firm by providing for (deducting from the average multiplier) the factors that are not related to human assets. The multiple is further adjusted as needed, for application to different job categories. Gross remuneration of employees and all additional expenditures related to investments in human resources are capitalized by using the appropriate multipliers. The technique provides the basic data necessary for periodic human asset, balance sheets and income statements and human asset profiles and projections of the firm. The multiplier represents a number of year’s capitalization of the annual human resource figure. The total human asset value in a firm is either equal to or less than the amount of ‘goodwill’ (the going concern value less net non-human assets). Due allowance is made for other goodwill elements, such as product loyalty, patented processes and the value of long term contracts. The net change in human assets value in a period is computed as the difference between capitalized amounts which enhance the value and capitalized provisions for dimension or amortization of value. Lev and Schwartz’s model This model determines present value of future earnings of a person in an organization. The model developed by Lev and Schwartz to estimate human capital value of a person (y years old) is: EVr*=t=rTPr? t+1)i=rtIi1+rt-r Where: EVr*= the human capital value of a person ‘r’ years old. I(i)= the person’s annual earning until retirement and this series is represented graphically by the earnings profile. r= a discount rate specific to the person. T= retirement age. Pr(t)= Conditional probability of a person of age ‘r’ dying in year ‘t’. I*t=fI? (t), t=r,.. ,T This model provides a reasona ble measure of human capital which could be used for aggregation in macro statistics and in assessing the dynamics and mobility of such capital. While the authors indicate that capital values determined by use of this model will provide financial statement uses with valuable information about changes in an organization’s labour force, the model’s use for practical decisions of managers of organizations or of potential investors in organization is obscure or even non-existent. Organ’s Model Organ attempted to measure in monetary terms the net present values of some of the human resources of a certified public accounting firm. A human resource value model was utilized in the research which is exhibited in table 2. Table 2. 3 Major Determinants of human Resource value Model Source: Pekin Organ, â€Å"Application of a Human Resource Value Model: A field Study†, Accounting, Organisation and Society, Vol. 1 No. 2-3, 1976, p. 198. According to Organ, there are seven major determinants of the values of human resources. Monetary value benefits potential. The individual performance index. Efficiency index. S tandard work index. Maintenance costs (salaries or wages) Start-up costs (recruiting, initial training). Training and development costs. Probability of continued employment. Probability of survival. Organ believes that has model generates data that are amiable for use in an on-going manner like a performance evaluation system or a human resource value accounting system. Organ’s model has two major limitations which are, one, the ‘total’ value of the individual is not considered, and two, the model is limited for use in professional service organizations. Jaggi and Lau’s Model In human resource valuation, there is a problem of forecasting the expected promotion chances and tenure of employees on an individual basis. To overcome this problem, Jaggi and Lau refer to ‘group’ as homogenous group of employees who may not be necessarily working in the same department. They claim that on a group basis it is possible to know the percentage of people (in a particular group or department) likely to get promotions or to leave the organization before death or retirement in future years. This model assumes that the pattern of employees’ movement generally remains constant over time. Therefore, predictions based on historical data for one period can be used for future periods also. The authors assert that with some intuitive justification, the model is likely to provide greater accuracy and reliability. Morse’s Model According to Morse in his study â€Å"A Note on the Relationship between Human Assets and Human Capital†, (1973), the following equation was implicating attributed to Flamholtz: A=i=1NrTIi(t)1+rt-r+rTX(t)1+rt-rdt Equation 1 Where A= human assets value to a formal organization; N= Number of individuals currently employed by the organizations; R= current time; T= highest time at which an individual currently employed leaves the organization; Ii(t)= net value of the services rendered by individual ‘i’ at time ‘t’ to the organization, Ii(t)=Gi(t)-Ei(t). Gi(t)= gross value of services rendered by individual ‘i’ at time ‘t’ to the organization. Ei(t)= all direct and indirect compensations given to individual ‘i’ at time ‘t’ by the organization. X(t)= value of services of all individuals presently employed working together in excess of value of their individual ervices at time ‘t’ and r= time value of money. Morse then converts the Lev and Schwartz equation, which determines an individual’s human capital value under certainty to: C=i=1NrTEi(t)1+rt-rdt Equation 2 Which according to Morse, is the total â€Å"human capital employed in an organization† as it exists at time ‘r’. Now, by expand equation 1 and re-arranging it, the writ e says: Equation 3 says that the present value (PV) of human assets equals Total Present value (TPV) of human resources less present value of payment to the employeed. Flamholtz Model Flamholtz in 1971 proposed a normative human resources valuation model which would trace the movement of an employee through organizational positions or service state where the employee â€Å"†¦ is expected to render in specific quantity of service to the organization during a specified time period. The probability of the individual occupying this service state is needed so that expected service from the individual can be derived using: ES=i=1NSiP(Si) Equation 4 Where: Si= services that are required from the individual in a service state; and PSi= probability that the individual will occupy the particular service state. The service than an individual renders determines his or her value to the organization and Flamholtz stated that the monetary equivalent of this services can be represented in two ways. The first way is to determine the quantity and price of the services and use their product as the monetary equivalent, and the second expected services are discounted so that their present value can be determined. Also, in 1972, Flamholtz offers a model for calculating an individual’s value to an organization using the present value of the set of future services the employee is expected to remain in the organization. This model is conceptually sound from a benefit point of view and would have left little room for improvement. During this same year, Flamholtz proposed ‘expected realizable value’ as a form of economic valuation of the human resources. His model postulates that an individual is not valuable to an organization in the abstract. An individual is valuable to an organization in relation to the personal attributes and the characteristics of the organization. On a conceptual and theoretical level, Flamholtz has tried to identify the key variables that determine an individual’s value to an organization and the inter-relationships of such variables; he recognizes that these determinants may land themselves to monetary or non-monetary indicators. The model developed by Flamholtz is shown in table 2. 4 below. TABLE 2. 4 Revised Model of the determinants of an Individual’s value to a formal organization Source: Eric Flamholtz, â€Å"Human Resource Accounting: A Review of Theory and Research,† unpublished paper presented to the Organization Behaviour Division at the 32nd Annual Meeting of the Academy of management, Minneapolis, Minn. , August 15, 1972, p. 10. Flamholtz suggested appropriately that this â€Å"model is suggested as a first step toward the development of a theory†. It is conceptual theoretical and perhaps only impressionist. One of the most difficult aspects of calculating realizable value is the estimation of the value of a person’s expected services. Flamholtz had proposed that it might be desirable to use a substitute measure of surrogate, for this purpose. Examples of possible surrogate measures include compensation, replacement cost and performance indexes. In an experiment designed to test the appropriateness of using these measures. Flamholtz found that all three may be relevant for this purpose. He suggested that the choice of the ‘best’ measure in a specific situation will depend on the intended use of the data. To summarize, according to Flamholtz, the measurement of human resource value of an individual to an organization requires the following: Estimate the total time period during which the individual can be expected to render services to the organization. Identify the various service states (i. e. position) that the individual may occupy during the time he is with the organization. Measure the value derived by the organization if the individual occupies the various service states for the specified time periods. Estimate the probability that the individual will, in fact, occupy each state at the specified future time. Akintoye’s Model Akintoye in 2006 proposed the ‘Net Benefit Model’ to human resources accounting in service organization as an expectation of the earlier conventioned models of Morse (1973), Lev and Schwartz (1971, 1972) and Flamholtz (1971, 1972). In this type of an organization, the estimate of benefit generation is a relatively simple exercise. Each employee has a stipulated and readily ascertainable billing rate and amount of time (measured in billable hours) over his or her estimated useful life with the organization. That may be other types of organizations that give themselves to parallel measurement like doctors and lawyers. The Net Benefit Model as proposed by Akintoye is hereby stated in it most general form below, thereafter the suggested constructs are explained and illustrated in details. Cij=j=1nk=tE-t1(1+r)c? Bqj Equation 1 Where *Figure 1: Adjusted Net Value of Human Resource for the *Organization The equation 1 above tells us that the total adjusted net present human resources benefit of a services organization is equal to the summation, discounted certainty-equivalent net benefits of the employees in the organization as shown in the above figure. The major thrust of this work is to conceptualise the determinations of certainty-equivalent net benefit streams generated by each individual, after all, the individual are determined, the total human resources benefit for the organization can be resolved by relatively simple procedures of discounting aggregation (Equation 1 and figure 1 refer). {draw:frame} Figure 2: Major Determinants of Certainty Equivalent Net Benefits {draw:frame} Empirically, analysis made by Walker (1995) with the aid of diagram showed that Human Resources Accounting in services organization seeks to make managers more of the importance of people as valuable resources and to hold managers more accountable for these resources. It is also an excellent way to assess management performance in this use of human resources. In this way it is expected to encourage better planning for human resources and better decisions wherever they involve people. Lastly, Human Resources Accounting in service organization is an excellent way to encourage managers to take a long-run outlook towards the value of people, rather than a short-run, quick-profit outlook that ignores human resources. Figure 3 Source: James W. Walker (1995), Grolier Library Adams (1965) stated that an individual who is involved in an exchange relationship, such as exchanging services for pay in a gainful employment situation, will perceive his or her inputs in more than monetary terms. The perceived input include effort, education, experience, skill, seniority and job status. Inputs are considered relevant only if they are perceived as inputs by individual contributor. On the other side of the exchange relationship is what the individual perceives he or she is deriving from the job-outputs. These are categorized in terms of their recognition and relevance and include salary, prerequisite, prestige and personal fulfillment. The individual will make comparisons of his or her output-input ratio with the situations of others whom he or she considers equal, in an all round sense. The purpose of this comparison is for the individual to determine whether the ratio of his or her output to input is fair. In making this comparison, the individual has in mind another specific individual whom Adam calls the individual’s ‘referent’. When the normative expectation of the individual in this comparison is violated to that of his or her output-input ratio as perceived is not equal to that of his or her referent (peer), then a feeling of in equity may result. Note that in this definition of inequity, the absolute level of outputs and inputs for the individual and his or her referent is irrelevant. What determines the equity of this output-input comparison is the individual’s perception of what he or she is giving and receiving as well as what he or she perceives the referent is giving and receiving. The relationship may occur when the individual and his or her referent are in a direct exchange relationship with a third party. {draw:frame} Symbolically, inequity exists when: Where: Oi=Output of the individual. Similarly, the individual will perceive a condition of equity when: The relationship of â€Å"equity theory† to the individual’s perceived rewards and peer’s perceived reward is that when the balance of ratio of these indices is disturbed, this will affect the individual’s internal satisfaction. Also it should be clear from Adam’s model that a feeling of inequity may exist when the individual perceives his or her ratio of output as greater or less than his or her referent’s ratio. This indicates that the model is realistic and not unidirectional. CHAPTER THREE RESEARCH METHODOLOGY 3. 0 INTRODUCTION This chapter covers the method used in the collection and generation of data in carrying out this study. It deals with the basic methods, sources of data and procedures used in gathering and analyzing of data and the problem s encountered in collecting the information required for the research. 3. 1 RESEARCH DESIGN Research design means the structuring of investigation aimed at identifying variables and their relationship to one another. It is used for the purpose of obtaining data to enable researcher test hypothesis and answer research questions. In an attempt to properly carryout this research, the researcher has obtained materials from both primary and secondary data. PRIMARY DATA: Primary data is information obtained for particular purpose/problems under consideration. According to Anyanwu (1994), it is first hand â€Å"tailor made† information be it personal, by a phone and by use of questionnaire administration. This research work employed the use of closed ended questionnaires administration as its sources of primary data in order to get the business opinion on the numerous questions to be asked. SECONDARY DATA: Is information assembled for some other purpose which the researcher finds relevance to his own research and incorporates these into his own work. Sources of secondary data used in this research includes articles in journal, textbooks, post written project work, newspaper articles, Access bank Annual Financial Report. 3. 2 RESEARCH POPULATION/POPULATION SIZE . 3 SAMPLING PROCEDURES However, due to some constraints like money, time, human and material resources and other facilities; the use of the entire research population is not only difficult but not feasible. Hence, there is need for the use of a subset of the entire population. Based on this fact, the use of judgemental/non-probability sampling is employed in choosing the sample size. Sampling according to Anyanwu (1994) is a pr ocess of selecting a proportion of the population for the purpose of generalizing the result from he sample about the population itself, the target population and any other population having the same characteristics. The researcher has some element of control because in non random sampling process, the researcher selects his sample on the basis of his own knowledge of the population its elements and the nature of the researcher aim. 3. 4 SAMPLE PLAN The study employed the use of primary data through questionnaire sampled among the employees of Access Bank Plc. , service industries and professionals. A total of fifty questionnaires were administered and these questionnaires were distributed to the selected sample size. At the end, 40 completed questionnaires were personally retrieved. Thereafter, the completed questionnaire were tested for validity 3. 5 DATA ANALYSIS Based on the nature of the study, analysis has been limited to the use of Chi-Square (? 2). Data analysis contains the statistical calculations performed with the raw data collected to provide answer to the questions initiated in the research. Chi-Square (? 2) is defined as the â€Å"sum of the ratio of difference between the square of observed and expected frequencies† (Hoel Paul, 2005). It is a measure of significances and is important in hypothesis testing especially in the type of research where only people who are among the managerial staff of the institution are required to fill the questionnaires to compute the Chi-Square, we find the difference between the sum of square of the observed and expected frequencies and divide whatever is gotten by the expected frequencies. Mathematically, the Chi-Square can be expressed thus, is given as: ? 2=O-E2E O is the observed frequency. E is the expected frequency. ? is the symbol of summation If the value of the observed value is greater than the expected value, the Chi-Square will largely indicate a poor experimental agreement, if the observed value and the expected value perfectly agree with one another; the value of the Chi-Square will be zero. Indicating an excellent or perfect experimental agreement, however, the value of the Chi-Square can never be zero Taylor (1977). The degree of freedom (df) is another important feature of the Chi-Square distribution. Its computational formula is given as: df=(r-1)(c-1) The decision rule is that if the computed value of Chi-Square is greater than tabulated critical value (? ). The null hypothesis is rejected as the state of significant. If the test is less than the critical value, the null hypothesis is retained (Murray 1977). A Chi-Square test is always a one tailed test. The level of the significance is 0. 05 or 5% which will be given in the Chi-Square table. 3. 6 RESTATEMENT OF RESEARCH QUESTIONS Most income statements are inc omplete without adequate consideration and inclusion of human resources element in the financial statement. The following are the research questions: How can the monetary value of employee service be established? Can these monetary values aid the management in internal control problem? What are the possible effects of the monetary worth of employee service to the profitability of an organization? What impact would the development of employee have on the general performance of an organization? 3. 7 RESTATEMENT OF RESEARCH HYPOTHESES Hypotheses set to be tested are stated below: H0: There is need for capitalization and amortization of human resources like fixed assets in financial statement. H1: There is no need for capitalization and amortization of human resources like fixed assets in financial statement. . 8 LIMITATION OF THE STUDY Factors limiting the scope of the study are as follows: TIME: The research is expected to merge school activities as a student with gathering data for this study. Also, the staffers of Access Bank Plc have to combine their daily work with attending to the researcher using their leisure time. DISCLOSURE OF HUMAN RESOURCE ACCOUNTING INFORMATION: Company had not made any serious attempt to provide HRA information in their published annual reports and is an area which is not yet fully developed. Further to attach quantitative values to them. The report is limited to use of questionnaire to gathered relevant data. Inspite of these limitations, this investigation will yield beneficial results and the limitations of this study will not have any significant effect on the research result. CHAPTER FOUR PRESENTATION AND ANALYSIS OF DATA {text:list-item} This chapter presents and analysis the data collected from Access Bank, First Bank Plc and United Africa Company (UAC). This is done on other to find out the possibly of human resource accounting. Through this analysis, the hypothesis set forth is either validated or nullified. The hypothesis states that most income statement are incomplete without adequate consideration and inclusion of monetary value of human resource element in the financial statement, and there is need for capitalization and amortization of human resources like other fixed asset in the financial statements. The findings present in this research are based on the response on the model of data selection supporting or negating the hypothesis. SUMMAR Y OF THE QUESTIONNAIRE DISTRIBUTED AND RESPONES COLLECTED The table shows that out of 30 questionnaire representing 42. % of the total distribution which were administered to Access Bank 27 or 38. 6% were returned, leaving a shortfall of 4. 3%. 20 questionnaire representing 28. 6% of the total distribution were administered to First Bank, of this questionnaire 19 representing 27. 1% were returned leaving a shortfall of 1. 4% while 20 questionnaires representing total distribution were administered to UAC, 18 representing 25. 7% were returned but 2 which is 2. 9% of the questionnaire were not returned. It should be noted that all returned questionnaire were used in this research based on the responses to the question. The researcher decides to select questions closely related to the hypothesis for the testing of the hypothesis. {text:list-item} Earlier in this research, it has been show that different schools of thought exist in respect of human resources accounting. In order to ascertain possibility of human accounting the analysis of all the questions will have to be used {draw:frame} TABLE 4. 2: DISTRIBUTION OF RESPONDENTS BY EDUCATIONAL QUALIFICATION {draw:frame} TABLE 4. 3*: DISTRIBUTION OF RESPONDENTS BY *HOW LONG THEY HAVE BEEN IN THE ORGANIZATION {draw:frame} TABLE 4. *: DISTRIBUTION OF RESPONDENTS BY *MARITAL STATUS {draw:frame} TABLE 4. 5*: DISTRIBUTION OF RESPONDENTS BY *COMPANY THEY WORK {draw:frame} TABLE 4. 6*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"HAVE YOU HEARD ABOUT HUMAN RESOURCES ACCOUNTING? † {draw:frame} From the above, 64 respondents answered the question. 85. 9% have heard about human resource accounting, while 14. 1% said they have not heard about human resources. TABLE 4. 7*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO YOU THINK THAT THE SKILL OF EMPLOYEE CAN BE MEASURED IN MONETARY TERMS? † {draw:frame} Out of the 55 respondents who have agreed that they have heard about human resources accounting, 56 agreed to the fact that the employee skill can be measured in monetary terms, while 8 respondents said the skill cannot be measured in monetary terms. TABLE 4. 8*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO YOU THINK THIS SKILL *IS *TRUELY REFLECTED IN THE FINANCIAL STATEMENT OF AN ORGANIZATION? † {draw:frame} 48 out of the 64 respondents says that the skill is not truely reflected in the financial statement, while 16 said the skill is truely reflected in the financial statement. TABLE 4. *: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"ARE YOU SATISFIED WITH THE PRESENT METHOD WHEREBY HUMAN RESOURCES IS REFLECTED IN FORM OF SALARIES AND WAGES ONLY? † {draw:frame} In the above question 47 respondents replied that they were not satisfied with the present method whereby human resources is shown in form of wages and salaries. 17 respondents believed that it were to shown in form of wages and salaries *TABLE 4. *10*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO YOU FEEL THAT HUMAN RESOURCES SHOULD BE CAPITALIZED AND AMORTIZED LIKE OTHER FIXED ASSETS? † {draw:frame} Out of the 64 respondents, 53 believe that human resources should be capitalized and amortized with other financial assets, while 11 respondents said human resources should not amortized and capitalized. TABLE 4. 11*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO YOU THINK MONETARY WORTH OF AN EMPLOYEE SKILL OR SERVICES CAN AFFECT THE PROFITABILITY OF AN ORGANIZATION? † {draw:frame} 58 i. e. 90. 6% were of the opinion that the monetary worth of an employee can affect the profitability of organization, while 9. 4% were of the view that such cannot affect the protability of the organization. TABLE 4. 12*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO YOU THINK THIS MONETARY VALUES OF HUMAN RESOURCES CAN THUS BE JUSTIFIED LIKE ANY OTHER ITEMS IN THE INCOME STATEMENT? † {draw:g} 54 respondents states that the monetary values of human resources can be justified like other items in the income statement, i. e. they can be treated and adjusted in the financial statement, while 10 respondents says otherwise. TABLE 4. 12*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO YOU THINK THAT HUMAN RESOURCES ACCOUNTING IS POSSIBLE? † {draw:frame} 82. % of the respondents felt that human resources accounting because in production we cannot do without human factor, while 17. 2% feel that human resources accounting is totally impossible. TABLE 4. 13*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO YOU THINK INCOME STATEMENT IS COMPLETED WITHOUT THE CAPITALIZATION ND AMORTIZATION OF HUMAN RESOURCES? † {draw:frame} 51 respondents believe that inco me statement is not completed without the capitalization and amortization of human resources, while 13 respondents believe that there is no need for the capitalization and amortization of human resources. TABLE 4. 14*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO YOU THINK INCOME STATEMENT IS COMPLETE WITHOUT ADEQUATE CONSIDERATION OF HUMAN RESOURCES? † {draw:frame} 55 respondents maintain and believe that human resource elements are not well handled in the financial statement which the make the income statement incomplete, while 9 respondents feels that the income statement is complete without the consideration of human resources. TABLE 4. 15*: DISTRIBUTION OF THE RESPONSE ON THE QUESTION â€Å"DO YOU BELIEVE THAT HUMAN RESOURCES ACCOUNTING WILL HAVE IMPACT UPON CORPORATE FINANCIAL REPORTING IN THE FUTURE? † {draw:frame} 7. 8% of the respondents believe that human resources will have no impact upon corporate financial reporting in the future. 92. 2% felt that human resources accounting will have great impact upon corporate financial reporting in the future. TABLE 4. 16*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"ARE HUMAN RESOURCES (PEOPLE) THE MOST IMPORTANT ASSET OF AN ORGANIZATION? † {draw:frame} TABLE 4. 7*: DISTRIBUTION OF *THE RESPONSE ON THE QUESTION â€Å"DO HRA INFORMATION PLAY ANY ROLE IN MAKING INVESTMENT DECISION BY INVESTORS AND OTHER USERS? † {draw:frame} 58 out of the 64 respondents felt that human resources accounting will play an important role in making investment decision by investors. 6 respondents believe that human resources accounting cannot affect investors’ decision in making in investment decision. {text:list-item} Question 5 and 10 give response to the null hypothesis which is to be tested. CHI-SQUARE TEST {draw:frame} {draw:frame} CHI-SQUARE TEST {draw:frame} {draw:frame}

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Wildlife Diseases - Essay Example Research has shown that the fungus Pseudogymnoascus destructans is the primary cause of the disease. A 2011 study reveals that 100% of healthy bats infected with this fungus cultured from diseased bats exhibited lesions and symptoms characteristic of the condition (in adherence to Koch’s postulate). The fungus thrives in low temperatures especially those between 4-15̊C (39-59̊F) and cannot withstand temperatures above 20̊C (68̊F). Consequently, it appears to favor infecting hibernating birds (Griggs, Keel, Castle & Wong, 2012). Some of the symptoms commonly associated with WNS are loss of body fats, unusual winter behavior such as flying, damaging and scaring of wing membranes and eventually death. The disease causes bats to rouse too frequently from torpor/ temporary hibernation and starve to death as a result of excessive activity. Most scientists and researchers, after extensive laboratory tests, believe that the condition is spread primarily through bat-to-bat transmission. Similar studies indicate that healthy birds in cages adjacent to those of infected bats do not catch the disease or develop symptoms. This means the fungus/ causal agent is not airborne and enhances the theory of contact transmission (Griggs, Keel, Castle & Wong, 2012). The fungus is thought to have originated from Europe because of the resistance exhibited by bats from such areas to the pathogen. They seem to have developed immunity over time and acted as vectors spreading the pathogen to the susceptible bats of the rest of the world (particularly those of North America).

Strategy Assingment Essay Example | Topics and Well Written Essays - 1250 words

Strategy Assingment - Essay Example Also an attempt to identify and understand the generic strategy used by the company has also been discussed. An attempt to help the company improve the strategies has also been laid down and a few tactics that can be used by the company have been discussed. Finally recommendations for the company to assist them scan the food industry in order to keep the strategies live and keep the company blooming have also been included. Kudler Fine Foods has used technology to a great extent and has been able to implement information and technology systems well into their work processes. The company utilizes several technologies like a wide area network (WAN), which allows storing the real time communication and all details of inventory and vendors effectively. This system ensures that the operations of the company run smoothly and in an uninterrupted manner at all times. The stores have also incorporated several other inventory servers like the University of Phoenix and the Information Technology networks. The systems used for the POS systems also allow the company to record the data in a more effective and efficient manner. The impact of the use of technology on the company has been vast and has led the company to a great level of success. As discussed earlier, the company is customer centric and it also concentrates to a great extent on the employees as well. All the information that is gained from the database and all information of the customers, orders, inventory and also the vendors, assist the company to determine the style and strategy that it requires to adopt in a more informed manner (Housel and Nelson 2005). Hence the use of technology allows the company to make more informed and well thought out decisions. The company in the current time uses a very centralized strategy for the day to day processes. The overall working

Private Law and Public Law Case Study Example | Topics and Well Written Essays - 1000 words

Private Law and Public Law - Case Study Example The public law issue, on the other hand, refers to the criminal liability (for theft, robbery, physical injuries, kidnapping or death, among others) that happened on occasion of the theft or robbery aboard the cruise ship The Minnow. Specifically, the public law issue is whether the criminal law of Liberia (the country of the ship's flag), or the criminal law of Nassau, Key West, and Grand Cayman (the possible place where the crime was committed or any of the elements of the crime occurred) or the criminal law of the United States. For the purpose of the given problem however, the detailed discussion will be limited to tort law and contract law. At the outset, it should be emphasized that the resolution of the contract law issue must be resolved and decided under the law chosen and agreed by the contracting parties as stated in the contract. However, the problem of ascertaining the applicable law in the case of torts is scarcely less perplexing than in the case of contract. The reasons for this are as follows. First, there is a variety of different connecting factors that can be raised by the facts of the case: the place where the tort was committed; the residence, habitual residence, domicil, or nationality of the parties; and the place where the parties' relationship was centered. Second, in the situation where, for example, a wrongful act takes place in one country and the consequent injury in another, there is a serious definition problem in determining the place where the tort was committed. Third, a wide variety of tortuous issues may arise. For example, there can be issues of capacity (can Mrs. Lowell sue on behalf o f her husband), vicarious liability (is DWI liable for the acts of its employees), defences and immunities, damages, limitations on recovery, wrongful death, or intra-family immunities. Should the same law govern these issues Furthermore, there are different types of tort or delict, ranging from simple negligence to torts involving ships. Should the same rule apply regardless of the type of tort involved Fourth, if a foreign tort law is to be applied, this could lead to liability being imposed for torts unknown to the parties which may reflect radically different views and protect radically different interests from those recognized by the law of the parties. The common law rule in relation to foreign torts are derived from three leading cases.1 The law can be summed up as follows: there is a general rule of double actionability (there must be actionability by the law of the forum and the law of the place of the tort) with a flexible exception to this rule based on the concept of the most significant relationship. There is a double limbed choice of law rule derived from Phillips which means that a claimant who seeks to recover damages in the forum for what is an admitted tort according to the law of the place where the tort was committed will fail, unless the claimant proves that, had the defendant's act been done in the law of the forum, it would have constituted an actionable wrong by the forum law. Hence, the Lowells can claim only if the complained act is actionable under Liberian law or the law of the place where the tort was committed if the such act is also deemed to be an actionable tort in Florida (the forum). The second

Human Resource Paper Assignment Example | Topics and Well Written Essays - 1000 words

Human Resource Paper - Assignment Example A health care organization must have objectives that guide them in their line of duty. Some of these objectives are strategic and have implications on the human resource management. These objectives are; to promote health and impart health education, to immerse in disease inspection and analysis and to collaborate with governments and administrations around the world to promote health promotional programs. These three objectives have implications on human resource management. Human resource management is concerned with the safety and compensation of manpower among other things. When the objectives of a health care regarding promoting of health and imparting, disease inspection and analysis have been attained, then the expenses incurred by the human resource management to make sure that the staff members are safe are cut down and therefore there will be no expenses on compensation brought about by poor health care. This is because with good health and proper health education then case s of disease and infections are cut down. Health problems cost an organization a lot. Disease inspection and analysis will help in the understanding of the causes and the possible treatments that are to be administered to various diseases and infections. The time and money wasted in trying to cater for the treatment of a worker will be reduced if the diseases they have are known unlike when a company uses its funding to facilitate the treatment of an unknown ailment. The above strategic objectives can only be attained if actions and systems are put in place. Health Systems Executives play a big role in the attainment of set objectives. It comprises of health experts who have come together to offer their advice regarding the various issues that affect the health care organization. The experts are in the various fields that have a co-relation with health matters. It might consist of medical doctors, IT specialists, trainers, sales and marketing experts among other professionals. For i nstance, a Health Systems Organization can have an IT specialist who is an expert in issues dealing with technology. One of the objectives of a health care organization was to inspect and analyze diseases. With the proper technology, this objective can be attained. An effective Health System Executive body will ensure that new technologies are introduced in a health care organization; the work force is enlightened through training and the implementation process starts immediately. With introduction of hi-tech machinery, the organization will be in a position to inspect and analyze diseases and new infections. The objective, to promote health and impart health education can be achieved when the Health System Executive consisting of training personnel who educates the masses concerning matters of health. Those who have been trained will then train others and the cycle continues. This will ensure that people become aware of the health issues and how to handle them. The third objective, to collaborate with governments and administrations to promote health promotional programs can be achieved by the Health

Grade World History Essay Example for Free

Grade World History Essay Before King Leopold the II of Belgium colonized the Congo, it was known for its independence. It was the ideal place to be for the Europeans. It was geographically diverse, it had mineral enriched soils, deposits of gold, diamonds copper and manganese, and it had a large animal population, lots of plants. King Leopold saw potential in the Congo and made it his. He had an American man, Henry Stanley; secure treaties with all the local chiefs. With those he had complete power of the land. Imperialism on the Belgian Congo had a negative affect in many ways, including geographically, politically and psychologically. One of the major impacts is psychological. Psychological impacts are ones that mess with people’s emotions. King Leopold was a man who did not care about other peoples emotions or their state of being; he cared about himself and how much money he was going to make with the Congo. To quote a Congolese states on the amount of psychological torture he put some of the Congolese people in: â€Å"I ran away with two old people, but they were caught and killed, and the soldiers made me carry the baskets holding their cut-off hands. They killed my little sister, threw her in a house and set it on fire.† (8) The person that is talking sounds like a child. If a child was going through this, which many did, witnessing something this horrifying can be very emotionally scarring. Another impact would be economical. An economic impact is one that affects the business part of things, such as labor systems. â€Å"Tell them [the rubber agents] that we cannot and therefore will not find rubber; we are willing to spend our strength at any work possible, but the rubber is finished. If we must either be massacred or bring rubber, well, let them kill us; then we suppose they will be satisfied.†(20) This quote is from a village headman to Reverend Harris, a British missionary. This is from a workers point of view. It shows economic impact because it has to do with the rubber industry, which was very important in the Congo. A third impact on the Congo is political. Political impact has to do with government or people in government. One quote that gives an example of political impact is one by Reverend Whitehead, â€Å"Their chiefs are being weakened in their prestige and physique through imprisonment which is often cruel, and thus weakened in their authority over their own people they are put into chains for the shortage of manioc bread.† This means that Leopold and his people are forcing the native Congolese to back down in their government so Leopold has more power. Britain was also very involved in the Congo Free State. They were interested in the trading system it had. This effects Britain because it brought in new products to be sold, and potentially could make them money. It is important to study issues like this today so nobody makes the same mistake twice. In conclusion, imperialism in the Congo had an overall negative affect on it. Imperialism affected, not only psychologically, but also politically and economically. King Leopold II never had good intentions for the Congolese people, he just had his own self in mind.

Success and failure factors of BPR

Success and failure factors of BPR Business Process Reengineering is a complex process that intends to bring about radical transformations within an organization. This particular study is a pilot project on BPR that studies a store belonging to Argos, one of UKs prime retail chains. It interacts with the employees out there and observes various processes in order to come up with a framework for BPR implementation. Before getting into the fieldwork, a detailed literature review has also been undertaken through this study involving various success and failure factors of BPR and related issues like six sigma, benchmarking and importance of total cycle time. This study consists of mainly qualitative analysis with a bit of quantitative portions wherever necessary. The primary modes of data collection includes a open ended interview involving six questions asked to six respondents working at different levels of the store that was assigned for this purpose. This interview was used as the foundation to proceed with further analysis of various processes within the store with active help from the organization. It was seen through the interview that the employees do have reservations about certain operating issues within the organization. But at the same time they are a bit wary of potential changes and hence are not willing to freely talk about the whole issue. It basically shows two main areas of improvement namely in supply chain and inventory management and also in the field of customer relationship management. Further analysis of the processes has shown that due to the usage of multiple outdated legacy software, the supply chain has become slow and unable to handle the recent growth. That is why Argos is working with Oracle and Accenture to overhaul the software system. Along with these technological modifications, some strategic changes have been proposed through this study regarding the inventory replenishments strategy. It has proposed a more frequent replenishment backed by cutting edge business forecasts and other related measures. As far as customer service issues are concerned, a problem with delays in delivery has been observed and hence more automation in the process along with some amount of outsourcing is suggested in order to save costs as well as increase efficiency by reducing cycle time. Throughout this study, it has also been seen that the proposed BPR processes can meet with employee resistance owing to their own insecurities and practical problems. That is why it has been advised to have a more compassionate HRM policy ensuring proper training and support for the employees. Nevertheless, it has to be accepted that due to time and resource constraints a few important aspects could not be analyzed or implemented in through this study including the implementation of a Six Sigma process and its implementations. A longer duration for implementation and observation of these issues could have generated more insights. Nevertheless, this study has provided with an opportunity to venture into this complex topic of reengineering a retail outlet and we hope that it would be a good foundation point for the future researchers. Introduction Business Process Reengineering (BPR) is a complex process that calls for almost a radical redesigning of the core business processes inside an organization in order to achieve rapid developments in terms of productivity, quality as well as cycle times (McAdam and Donaghy, 1999). In this process, companies start with an open mind without any presumptions and rethink the whole process in an effort to deliver better value to the clients. They bring about revolutionary changes in their value system and put extra emphasize on the customer needs. They also restructure the organization and do away with unproductive activities especially in two important areas. Firstly, the functional organizations are redesigned into different cross-functional teams. Second, modern technologies are used to improve dissemination of knowledge as well as decision making. Business Process Reengineering proposes five major steps to be taken by the managers to achieve dramatic changes in their organizations. These steps include, refocusing on the company values based on customer needs, redesigning the core processes using modern information technology, reorganizing the teams across function by attributing end-to-end responsibility to them for a whole process, rethinking existing organizational as well as people issues, improve business processes across the organization (Peppard and Fitzgerald, 1997). Business Process Reengineering is used by the companies in order to achieve certain results that reduce costs as well as cycle time. Business Process Reengineering reduces costs and cycle times by eliminating the activities as well as the employees who obstruct productivity (Ranganathan and Dhaliwal, 2001). When the teams are reorganized, it decreases the layers in management and removes hierarchical boundaries thus accelerating information flows which redu ce defects and errors in the whole process. It also helps in improving overall quality by decreasing fragmentation of work by establishing clear responsibilities as well as ownerships of processes. So, the workers at every level get responsibility for respective outputs and can also measure their own performances based on regular feedbacks. For this particular study, UK based retail chain Argos is being used as the subject upon which the principles of BPR will be tested. Argos is a fully owned subsidiary of Home Retail Group, UK. Argos is the pioneer of Multi channel business retail. With 33,000 employees working to support over 700 stores in UK and Ireland, Argos is a  £4.3 billion company. The intention is to see how operational efficiency can be improved within the organization through BPR and for this purpose a certain Argos store was picked up for the preliminary study. It was done with active support from Argos side and for last few weeks I have worked with close cooperation with the store manager. The retail industry is a business that is fast moving, complex, and constantly changing. It is an industry where only the most innovative and well managed organisations can survive and succeed (Ranganathan and Dhaliwal, 2001). The retail industry generates revenues through the sales from supermarkets, cooperatives, co nvenience stores and nowadays even through online stores etc. Traditionally, there were various marketing strategies that allowed the retailers to continually promote their companies by attracting new customers. But the fierce competition in the contemporary markets has necessitated better consumer relationships and the capacity to follow up with them (Peppard and Fitzgerald, 1997). The increase in disposable income as well as the changes in lifestyle of these consumers have opened new vistas in retailing and have also increased competition. The managers in the retail sector must be innovative as well as prudent enough to survive in this cut throat environment making sure that every necessary step towards managing change has been taken and they should be ensuring delivery of quality standards in customer service so that the firm builds strong brand loyalty among the consumers towards them. Here, we have to see that the process of BPR is closely associated with project management and hence we should also take an overview of project management before getting into further details. A project is a temporary business activity, one having a well defined beginning and ending. They are undertaken to accomplish particular goals and objectives (McAdam and Donaghy, 1999). The temporary nature of a project, as against the more repetitive functions like operations, requires a different management approach. Project Management is a management discipline concerned with the planning, organization and managing resources for successful implementation of a business strategy which meets all its goals and aims. This particular study is also a project that has been undertaken to see the impact of the business process reengineering process on the supermarket chain Argos. The primary objective of Project Management is to achieve all the project goals within the pre defined resource constraints. As such, it shares many tools and techniques with Business Optimization and Modelling (Peppard and Fitzgerald, 1997). The generic constraints of any project are time, scope and cost; also referred to as the project triangle. For my project, the constraints are time: 3 months, scope: a specific utility within the operations function which is yet to be allocated to me by the company and cost: I would have to work incurring no financial costs for the company; as such the only costs incurred are my time and efforts. I would be working under these constraints to optimise the reengineering project. Business Process Reengineering (BPR) is a management approach that aims at implementing improvements by elevating efficiency and effectiveness of the business processes. The fundamental strategy adopted by organizations in this area by looking at their operations from a cl ean state. More specifically, they are looking at what can be done in a better way if the whole process function were to start from scratch. Reengineering is the fundamental rethinking and the radical redesign of business processes to achieve dynamic improvements in the areas of cost, speed and quality of service (McAdam and Donaghy, 1999). Many of the recent developments in the management sphere can be attributed to reengineering. The cross functional team is one such illustration, developed out of an effort to reengineer the separate functional departments to a mutually coordinating and interdependent process utilities. The Management Information Systems, ERP, Supply chain management, Knowledge management and many others have been developed by reengineering (Ranganathan and Dhaliwal, 2001). BPR derives its existence from various interdisciplinary components, though the four most affecting areas are: Strategy, Technology, People and Organization (Peppard and Fitzgerald, 1997). A process is viewed as common framework, considering these dimensions. Michael Hammer and James A Champy were the first proponents of this concept. They began by criticizing the rigid departmental approach in many organizations. In a series of publications: The Agenda, Reengineering the Corporation, Reengineering the management, they argued that a single team that works under diluted responsibility and reporting structure would be more useful to the organizations. The result was the development of Cross Functional Teams. They later expanded their arguments to include Suppliers, Customers and distributors. Reengineering is very difficult to implement in an organisation. It causes widespread discomfort among the employees and usually experiences a strong resistance to change. The primary reason being that, over the years, BPR has been used effectively by organizations, however, the first thing that BPR results in is the layoffs. BPR, though a powerful organizational thinking, has not been able to achieve the expectations for the following treasons: The primary assumption of the BPR system is that the single most factors affecting an organizational performance is the inefficiency of its operations. True, processes can always be improved at any level, but that doesnt mean that they are inefficient. It disregards the status quo by looking at an organization from a clean state. It is not an effective tool to focus the improvement strategies on the organizational constraints. As a matter of fact today most organisations are facing great challenges in this regard and they are feeling the need to become more and more competitive through a special focus on organisational design, knowledge management, hierarchical structures performance management as well as quality control. It has always been difficult to find a strategy that encompasses every aspect of this issue. Experts have suggested a number of strategies to manage changing times in organizations. The concept of BPR is one of the latest in this league. We have seen various facets of BPR earlier. Collectively, we can now define BPR as the fundamental rethinking as well as radical redesigning of the business processes that intends to achieve revolutionary improvements in critical aspects of the business with contemporary measures to improve various aspects of performance such as quality, service level, cost and speed (Hammer and Champy, 1993). As this definition suggests, it is desirable on part of the or ganisations to do away with their archaic practices as well as processes, policies, principles as well as structures that negatively affect the performance of the organization. That is why BPR is primarily about redesigning the processes within an organization (Balle, 1995). BPR can also be defined as the re evaluation or redesign of the firms business processes as well as organisational structures in an effort to achieve marked improvements in certain critical success factors namely cycle time, quality, productivity as well as customer satisfaction (Tapscott and Caston, 1993). This particular definition differs from the previous one as it makes a specific reference to the process (Poh and Chew, 1994). It can also be defined as the analysis as well as design of workflows and processes inside the organizations. BPR is basically a tool for planning as well as controlling change (Morris and Brandon, 1993). It offers redesigning and improvement both in depth (i.e. organizational roles and responsibilities, organisational structure, use of technology, appraisal and incentives, shared values as well as skills) and in breadth (i.e. activities that are performed with long term goals in mind) (Hall et al., 1993). Some of the experts take it a step further and explain that BPR is just a part of the necessary steps in the radical alteration of processes (Davenport, 1993). So, there is a need for process innovation in BPR that can lead to new strategies and designs and mobilize both people and technology towards a singular objective (Poh and Chew, 1994). So, we can see that definitions of BPR vary for person to person but overall it involves a renewal of existing processes and involvement of technology as well as strategic thinking. Research Objective: The primary objective of this study is to analyse how implementing BPR can improve process efficiency. BPR involves revamping a process function to a great extent. The process architecture and the associated quality manuals are changed. Implementing such an extensive strategy comes with high initialization costs and time. Customer Service will also be affected during the transition period. I would be performing a cost benefit analysis of the proposed BPR implementation. Secondly, many organizations have been using Business Modelling software based on the concept of Six Sigma. Six Sigma, though very instrumental in being able to improve operational efficiency, is very technical in nature. It is often criticized that it neglects the human factor in a business process and totally focuses on process automation. I have tried to show that BPR and Six Sigma can go hand in hand. These strategic initiatives are to be used by organizations in a complimentary fashion. Research Problem: The research problem that this particular study wished to investigate was to see how process efficiency can be improved within Argos. For that purpose, I worked in the operations function in one of the retail stores of Argos which was allocated to me by the company. I have adopted the principles of Project Management and Business Process Reengineering during this study in order to analyze and then suggest modification in the existing structure. I have prepared a To- Be architecture of the process function, and compared it with the as -Is and proposed recommendations on how the process can be improved with the help of these understandings. Research Questions: Throughout this study, I have sought to answer the following research questions: What are the current drawbacks in the process utility within Argos? Argos has been successful and has done well over the last couple of decades in its field of operations. But that does not mean it has nothing to improve. With time, everything changes and hence even the successful organizations must make certain changes. Moreover, the initial observation of the existing system and interaction with some of the employees there has given some ideas about what is lacking in the situation. How can BPR be used to improve process efficiency within Argos? Here the study will explore the fields that can be targeted for a BPR initiative. This can be the supply chain or the store layout or the organizational structure. It has to be seen which requires it the most and which would suite these procedures. What are the challenges involved? This study would also see the possible difficulties in this implementation procedure and if possible, would try to suggest remedies for the same. How to manage service delivery during the transition stage? Another important issue is to ensure that the system does not become unproductive while going through a transition because it will have significant negative impact the business. So, it would be seen how to manage these issues. About Argos: Argos serves over 130 million customers growing at an annual rate of 20%. 26% of these transact online or through the phone. 18 million families or about two thirds of the English population have an Argos catalogue. It is amongst the most respected Brands of the UK and before being acquired by Home Retail Group, even featured in the FTSE 100 league (Antony and Banuelas, 2002). With over 170 different product groups, Argos is a revolution which has single handedly changed the meaning of cost effective retailing over the past decade. Offering home enhancement and general merchandise products, Argos works on an innovative business model. Customers can browse through the entire catalogue online, buy and pay online. Alternatively, they visit any of the 700 branches, browse through the physical catalogue, check the product availability via the in house kiosks with the product ID, order, pay and collect over the counter. Business turnaround at Argos happened in March 1999, when it was acqui red by GUS plc (Antony and Banuelas, 2002) At that time, Argos was primarily a single channel, store based retailer, selling a smaller range of general merchandise, concentrated primarily on toys, jewellery, house wares and electrical. In 2000, Argos, the GUS home shopping business, Reality UK operations were restructured to form the current business model. In 2000, a financial services wing was set up to offer credit and warranty products to the customers of Argos. Argos is a pre-eminent retail brand in the UK and Ireland. The business runs by leveraging on the economies of scale. This is reflected by the fact that the average transaction size is just around  £30, while the transaction numbers are around 5 per customer in a year (Schroeder, 2003). Leadership in multi channel product distribution continues to be the prime forte of Argos and is the key differentiate to the customers shopping experience, as compared to the competitors, by enabling the customers to shop the way they want. Around 40% of the total sales are through multi channel internet and phone/ store for home delivery. The fastest growing channel, over the years, has been the online reservation for in store collection. The feature is available at every store. Business Process Reengineering: Having explored multiple definitions of the business process reengineering, now let us see various implications of the same. Simply speaking, BPR is a basically a management approach that intends to enhance organizational performance by enhancing the efficacy of business processes across the organizations (Watson, 1993). BPR looks at the existing business processes remaining unattached to them and tries to determine how these processes can be aligned in order to optimize the ultimate performance of the business. Impact of BPR on Business: The prime motive of any business process is to improve productivity and lead to better profitability. BPR is also a way of reorganizing the processes within the business organizations in order to break the traditional barriers in various processes that have been built over the years and hence are very difficult to do away with (Hall et al., 1993). By this process of diluting the functional divisions, BPR makes the businesses more responsive, betters customer services and improves quality. BPR brings about visible structural changes throughout the organization and often obliterates existing frameworks (Hall et al., 1993, Shin and Jemella, 2002). The conventional hierarchical thinking process is removed from the organizations and a process oriented view takes over the organization with the implementation of BPR. So, the work is now defined in terms of the set of processes instead of the functional boundaries in which they exist. This tactical shift can be attributed to changing busines s goals in recent times (Tonnessen, 2000). But it has to be noted that a degree of risk can always be associated with these changes. For example diluting the functional barriers within an organization can disturb existing structure, confuse people and also create insecurity in the upper echelons of the organizational hierarchy. The emergence and prominence of Information Technology has also played an important role in development of BPR process. It has enabled sophisticated re-designing processes which were not possible earlier due to technical or resource limitations (Tonnessen, 2000). So, the business processes must be analyzed with respect to the changes and improvements that IT can provide to them in order to solve existing problems. IT can also increase the value of the information exponentially by making it easier to collect, compose and categorize. Moreover, BPR ultimately redefines the job descriptions in the organization. It might also create a new breed of employees to handle new technologies and make another breed of employees obsolete by replacing the manual systems with technology (Hall et al., 1993, Shin and Jemella, 2002). This is also a cause of concern because it leads to HRM issue like removing or retraining the obsolete employees. So, the employees must work as part of the team and should be empowered to take decisions. So, BPR also necessitates an effort towards building effective teams that work together with close co-operation and for that reason there must a system encouraging socialization and familiarization among the employees at various levels and functions within the organization. Now, let us have a look at some other important concepts that are closely related to BPR and can be useful in this whole process. Six Sigma: The concept of six sigma was initiated by the Motorola Corporation in an effort to improve their quality measures by redacting the rate of defect to about 3.4/million. Basically it meant that if they produced a million pieces of a certain item, there can be a maximum of 3.4 defected items in the lot (Linderman et al., 2002). It was a marked improvement and in fact and audacious one considering the previous benchmark of For Sigma, which allowed up to 6,200 defects per million (Linderman et al., 2002). But it is not only limited to reduction of errors and defects but also about the improvement of the process. It goes beyond the statistical tools as well as metrics it uses and becomes a philosophy that encompasses every activity within the organization and brings about overall improvement in productivity as well as profitability. This process generally includes five different stages namely definition and quantification of the problem, measurement of the performance and determ ination of the defect levels, analysis of data and performance of root cause analysis, improvement of the quantity of defects and controlling the processes in order to ensure continuous sustenance of the improvements that have been achieved. The success and popularity of this concept can be attributed to several factors. It has received widespread acceptance most because it involves the whole management, makes adjustments according to culture as well as employee attitudes, puts special emphasize on organization structure, boasts of standard training facilities on the six sigma methodology as well as the tools, enhances the skills in project management and links the quality control process to the overall business strategy, HRM strategy and customers satisfaction (Antony and Banuelas, 2002). It is also important to use the structured methods, pick the specific processes for implementation of six sigma improvements, employ specialists to work on it full time and relate the financial results as well as other business benefits to the bottom-line (Schroeder, 2003). Some researchers classify Six Sigma as a method of setting and achieving goals (Linderman et al., 2002) and hence emphasize on the importance of the clear and chall enging goals that are strictly specified and made known to everyone involved. This also necessitates other efforts like performance appraisal, rewards, incentives as well as training for the employees to ensure the desired levels of performance. Six sigma was initially introduced in an effort to control the variations as well as the defects in the manufacturing processes. But over the years, even the service industry has employed it with a great degree of success. Especially the financial institutions as well as healthcare organizations have benefited by using this concept. Success of some iconic companies like Motorola and GE has made it a very significant development in the recent decades but it has to be seen that there are still a lot of many other companies have been dissatisfied with the results from their six sigma projects (Hammer, 2002). These failures have been attributed to the lack of involvement of the customers as well as the supplier, lack of coherence with the overall business goals and the use of it just as a tool instead of a complete organizational improvement approach (Velocci, 2002). Also, some of the six sigma processes are not directly linked to the profit making functions of the organizations and henc e are overlooked by the people (Velocci, 2002). Nevertheless, some researchers opine that six sigma is too analytical and less creative and hence we might not be suitable in every case. Benchmarking: It can be defined as the process of continuously measuring and comparing the business processes inside a certain company to the same in one of the leading organizations in the same sector. This is done in order to get a comparative understanding of its own standards so as to identify the problems and implement improvements (Watson, 1993). The American Productivity Quality Centre (APQC) defines it as a systematic as well as continuous measurement process. It is a process of continuously measuring as well as comparing an organizations business processes against the business processes of the leaders in that industry anywhere in the world so as to gain information that can help the organization in taking action to improve its own performance. Benchmarking can be described as a more sophisticated version of reverse engineering of the successful competitive products. Since then, it has evolved as a process of continuous comparison and improvement in the process as well as strategic levels and also with a global point of view. There are several types of benchmarking that are being used in various organizations nowadays namely, internal, external, competitive as well as generic benchmarking (Watson, 1993). Photocopy pioneer Xerox is often credited using this process in the late 1970s when it applied this benchmarked technique with its Japanese partners. Originating in US, benchmarking has gained worldwide acceptance around the world in the last few decades. In the UK, we have seen the initiatives like UK benchmarking index, and Cranfield Best Factory that have worked exclusively on this (Zairi and Ahmed, 1999). The process of benchmarking at its core is a comparison between multiple organizations and their best practices. As a matter of fact it is performing a gap analysis through benchmarking to understand the procedural and strategic differences between itself and another company that it sees as a successful one. Generally it is done between two companies and procedure is generally simple. But in an effort to reduce complexity, it might lose out on the nuances of the trade-offs that might exist between two companies. A spider-web diagram is a method that is more elaborate and it allows multi dimensional analysis and can analyze multiple aspects for different functions (Ahmed and Rafiq, 1998). There are other such tool but they are beyond the scope of this discussion. Irrespective of the tools used in the benchmarking process, some experts allege that it actually limits the levels of ambition. It just aspires to take the company to the level of the best one in the industry but it would not know how to surpass it. Also it is not easy to unanimously define the definition of the best in the industry becau se the best will depend on what criteria is used to decide and also on which year it is measured (Zairi and Ahmed, 1999). Also, there is an issue with the availability of proprietary information from the companies against which the analyzing farm is benchmarked. They might choose not to disclose specific details in order to maintain their competitive advantage and hence this exercise would not have much value (Pulat, 1994). Nevertheless, a lot of companies have been reported to have achieved significant development in their processes using this practice. Companies like Chevron, Hewlett Packard and Hughes Communications have publicly attributed their success to effective benchmarking processes and consequent transfer of industry best practices. Reengineering: We have defined BPR before. But there are many other aspects to the process of reengineering. It differs from most other process improvement approaches as it does not focus on the existing processes but tells us how they should be in order to achieve better performances (Attaran and Wood, 1999). The intention is not to change or fix the errors in the existing processes but to see whether they are necessary at all and if not then come up with a completely different framework (Zinser et al., 1998). So, the key principles reengineering are ambition, focus on the processes, evaluation and questioning of the fundamental assumptions within the organization and the processes, and use of information at a broader level in order to measure the processes (Peppard, 1999). There is also a need for integrating the redesign process with the corporate strategy as well as organizational visions of the underlying business. It has been implemented by several companies in the past with varied degree of success. Nevertheless, both the service sector (Hall et al., 1993, Shin and Jemella, 2002) as well as the manufacturing sector (Hall et al., 1993, Tonnessen, 2000) over the world has applied it. A success story are largely well documented and available easily in the public domain but it is difficult find the details of the failures and hence are very difficult to analyze (Attaran and Wood, 1999, Hammer and Champy, 1993, Zinser et al., 1998). So, we can say that an improper choice of the processes can result in the failure of reengineering. In general, experts suggest a bigger breadth and depth in the process meaning that they should include as many activities as possible to ensure that every aspect of the organization is improved through the process