The document discusses the changing role of training in organizations. It notes that training is shifting from a reactive role, responding to changes mandated by management, to a proactive role where training leads workplace changes. This represents a fundamental paradigm shift. Effective training now focuses on developing critical thinking, problem solving, and interactive skills like communication and collaboration, enabling employees to be proactive. Organizations are also blending in-house and online training methods like blended learning to better train employees across broad international footprints. Proactive training management involves considering individual learning styles, aligning training with career goals, and getting constant feedback to foster a culture of learning.

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Unit IV: Changing role of training—proactive training management; strategic activities for
developing training team; Innovative web based training—m-learning, e-mentoring, e-coaching;
Strategic employee empowerment.HR audit and accounting.
Changing role of training
Training presents a prime opportunity to expand the knowledge base of all employees, but many
employers in the current climate find development opportunities expensive. Employees attending
training sessions also miss out on work time which may delay the completion of projects.
However despite these potential drawbacks, training and development provides both the
individual and organizations as a whole with benefits that make the cost and time a worthwhile
investment.
 Benefits of training
1. Improved employee
2. Improved employee satisfaction and morale
3. Addressing weaknesses
4. Consistency
Increased productivity and adherence to quality standards
5. Increased innovation in new strategies and products
6. Reduced employee turnover
7. Enhances company reputation and profile
As the workplace has evolved over the past twenty years into a place where employees both
perform and learn in order to accomplish current work, as well as the work of tomorrow,
companies have transformed into learning organizations. This change has affected both the
processes and the culture of the workplace, and is now affecting the role that training and
development plays.
While in the past, employees went to their jobs and performed their tasks as directed, they
now select from a menu of information and resource options as they exchange ideas and best
practices in efforts to innovate toward greater efficiencies and outcomes. Companies no longer
solely identify and direct the work tasks to be accomplished, but rather require their employees
to constantly acquire new skills and knowledge in order to identify gaps, propose solutions, and
make decisions about how best to accomplish the solutions. Employees and employers find
themselves in different roles as companies have discovered that not only did workplace practices

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and hierarchies need to change, but so too has the role that training and development plays in the
workplace.
As this transformation occurred, companies increasingly came to blend their own
in-house training with a variety of educational provider solutions to assist with professional
development and training of employees at all levels. Many colleges and universities have
responded and have, consequently, re-focused and expanded their missions to provide programs
for mature adults as well as to continue their traditional undergraduate and graduate academic
curricula. Many have innovated to create separate departments that tailor the curriculum as well
as to develop new programs that meet the unique educational requirements of business and
industry. Others have led in undertaking needs assessments and conducting environmental
scanning in order to identify new workplace trends and accompanying training needs that in turn
inform the development and design of the curriculum modifications for the adult working
populations.
The logical next step in this evolution is being witnessed today—the phenomenon of training
actually leading change in the workplace rather than merely reacting to the changes. This is a
fundamental paradigm shift from the traditional role of training. In the past, much of training
was geared to developing specific skills that would be directly applied to the accomplishment of
work tasks. Training was mainly reactionary—resulting from changes in work processes
cascaded down from decisions made by management.
As companies have come to regard the investment in human capital as extremely
important to yielding high returns for the business, the need to have a proactive rather than a
reactive workforce has emerged. Employees who have learned to learn and to initiate proactive
change in work processes have come to be highly valued. These employees require a more
demanding educational approach that focuses on developing foresight, a higher level of critical
thinking, and the ability to perform complex, ever-changing tasks. Not only is success in the
workplace increasingly dependent upon the ability of employees to learn and be proactive but
success is also dependent upon productive interaction between co-workers. The growing
importance of interactive skills, such as effective communication and collaboration over
distances, has made the ability to work well with others imperative. Companies need to develop
this skill in their employees when they don‘t already come equipped to take on this higher order
performance.
Therefore, the need to train workers for a range of behavior modifications that reflect
greater self-awareness, self-monitoring, self-control, and self-motivation has become essential.
To effectively learn and apply these interpersonal skills is paramount for success in today‘s
workplace. In this weightier role, training takes on a whole new approach that calls for a higher
degree of leadership and creativity by educational providers as they meet these new needs.

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Blended learning is becoming more and more popular. Blended Learning is the
effective combination of online learning and classroom learning. Many of 20|20‘s clients prefer
their staff to learn on-site rather than attend off-site training programmes – especially in
industries like oil and gas where it is often very impractical to attend off-site courses. On-site
learning programmes like the blended learning approach, allow 20|20 to train more people
working across a larger international footprint. This makes it much more cost-effective and
allows for greater process consistency.
Proactive training management
Proactive behavior involves acting in advance of a future situation, rather than just reacting.
It means taking control and making things happen rather than just adjusting to a situation or
waiting for something to happen.
Training is a great motivator in the workplace, especially when perceived as a
form of recognition. Moving from a reactive to a proactive training strategy can help keep
workers happy and productive. Also, training can positively impact the company‘s bottom line,
as employees become more knowledgeable and equipped with the skills needed to perform well
on the job.
The Proactive Training experience not only engages you but draws a deeper meaning of
life, while bringing out your best and inspires excellence in your performance. Be it in the area of
Presentation Skills, Customer Service, Teambuilding or Enhancing Problem Solving Skills,
Proactive Training make training fun and makes the learning impactful. You have to experience it to
believe it! After you do, it will not only leave you with a lasting good feeling but also a more directed
and focused direction in mastering a valuable life skill. Proactive Training has made an impact on
thousands of participants from Multi National Companies to Corporate SME‘s.
 How to Create a Proactive Training Program
1. Consider Individual Learning Styles
When thinking about what kind of training to offer to your end users you want to be mindful of
two factors that will really dictate how much value a user gets out of training: their current
comfort level with organizational change as well as their preferred learning styles.
Some users, especially those newer to the workforce, are more comfortable learning new
products and solutions and can more easily deal with changes in the organization. These users
typically need less hand holding and prefer to manage the change(s) independently. On the
opposite spectrum there are the users who find it difficult to merge existing processes to new
solutions and are less comfortable dealing with changes in the organization.

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It‘s also important to keep in mind how your users learn. One size does not fit all. Forcing
people who‘d rather learn on their own to sit in three hour training session will de-motivate your
users. Providing self-guided documentation to people who learn best in a classroom setting will
limit the success of your training. Again, the goal is to be proactive and not reactionary.
Understanding this user segmentation is critical in delivering training that will best meet your
user‘s unique and individual needs.
2. Align Training with your Users Career Objectives
Training strategies are typically more successful, not to mention better received, when the
training aligns with your users professional and career objectives. Identify the professional and
personal objectives of your users before you begin training and segment your training to
meet those objectives.
3. Facilitate a Culture of Learning and Get Constant Feedback
Fostering an open environment where users can tell you what they want to get out of training and
how the course experience can be improved goes a long way in developing a solid training
program. Some of the best organizations I‘ve worked for had cultures that not only placed great
emphasis on learning but also probed and pushed people to communicate how they wanted to
learn and grow.
Strategic activities for developing training team / 7 Simple Strategies for
Effective Team Building
Team building is about providing the skills, training and resources that your people need, so that
they can work in harmony. But, to be truly effective, it needs to be a continual process,
embedded into your team and organization's culture.
There are many ways in which unity of teams and team cohesion can be achieved, and these team
building strategies include brainstorming between the team members and the managers as well
as experiential learning and the vision and mission of the key members of the team.
 7 simple strategies for effective team building
1. Adopt an Open-Door Policy
A simple but effective strategy is to adopt a companywide open-door policy. You want every
employee to feel heard and part of something meaningful and you can achieve this by:
 communicating with your team on a regular basis
 listening to various ideas and concerns
 updating personnel on corporate changes
 Taking action should a staff member report harassment.

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It is crucial that you embrace clarity and refrain from being ambiguous and vague.
2. Set Boundaries and Give Direction
This can be accomplished by outlining objectives, making the company‘s aims transparent,
providing consistent feedback and leading by example. Being an example to the group means
holding yourself accountable, refusing to be disgruntled and always trying to improve yourself.
3. Manage Sensibly
This is done by laying out ideas, lending a hand from time to time, taking a step back and
allowing your employees to work in their own style and at their own pace. If you make a
conscious effort, then you will be rewarded with a dedicated and confident workforce.
4. Gamify Work
One important feature of gamification is to provide instant feedback, which is something that
experts say today‘s generation of workers require. When you‘re considering gamification, you
need to further install the social experience because it spurs healthy competition, keeps workers
engaged at all times and allows staff members to continually learn and hone their craft.
5. Organise a Corporate Retreat
The best way to facilitate interoffice relationships is to go on a corporate retreat. For years,
offices have utilised offsite team-building activities to enable trust, understanding and likeability
among colleagues. Everything from participating in sporting activities to partaking in a
philanthropic endeavour, there are many events that you can take advantage of in your city, or at
least in your region, that can help you cultivate teamwork.
6. Give Employees Autonomy
A great managing method is to give your staff some level of autonomy on any project. By
extending this independence, you‘re highlighting your trust in each and every one of your
employees. Sure, some workers will experience hiccups, but others may take the ball and run
with it, helping the company develop a new scheme or gain some market share over competitors.
7. Solve Team Problems
The rudimentary solution to solving team problems is mediating the situation. It is up to you as
an owner or head of human resources to sit down, air out grievances and resolve personal issues.

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By getting these petty differences out of the way, the group can concentrate on what matters
most: getting work done.
 Steps to Building an Effective Team
 Consider each employee's ideas as valuable. Remember that there is no such thing as a
stupid idea.
 Be aware of employees' unspoken feelings. Set an example to team members by being
open with employees and sensitive to their moods and feelings.
 Act as a harmonizing influence. Look for chances to mediate and resolve minor
disputes; point continually toward the team's higher goals.
 Be clear when communicating. Be careful to clarify directives.
 Encourage trust and cooperation among employees on your team. Remember that the
relationships team members establish among themselves are every bit as important as
those you establish with them. As the team begins to take shape, pay close attention to the
ways in which team members work together and take steps to improve communication,
cooperation, trust, and respect in those relationships.
 Encourage team members to share information. Emphasize the importance of each
team member's contribution and demonstrate how all of their jobs operate together to
move the entire team closer to its goal.
 Delegate problem-solving tasks to the team. Let the team work on creative solutions
together.
 Facilitate communication. Remember that communication is the single most important
factor in successful teamwork. Facilitating communication does not mean holding
meetings all the time. Instead it means setting an example by remaining open to
suggestions and concerns, by asking questions and offering help, and by doing everything
you can to avoid confusion in your own communication.
 Establish team values and goals; evaluate team performance. Be sure to talk with
members about the progress they are making toward established goals so that employees
get a sense both of their success and of the challenges that lie ahead. Address teamwork
in performance standards. Discuss with your team:
o What do we really care about in performing our job?
o What does the word success mean to this team?
o What actions can we take to live up to our stated values?
 Make sure that you have a clear idea of what you need to accomplish; that you know
what your standards for success are going to be; that you have established clear time
frames; and that team members understand their responsibilities.
 Use consensus. Set objectives, solve problems, and plan for action. While it takes much
longer to establish consensus, this method ultimately provides better decisions and

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greater productivity because it secures every employee's commitment to all phases of the
work.
 Set ground rules for the team. These are the norms that you and the team establish to
ensure efficiency and success. They can be simple directives (Team members are to be
punctual for meetings) or general guidelines (Every team member has the right to offer
ideas and suggestions), but you should make sure that the team creates these ground rules
by consensus and commits to them, both as a group and as individuals.
 Establish a method for arriving at a consensus. You may want to conduct open debate
about the pros and cons of proposals, or establish research committees to investigate
issues and deliver reports.
 Encourage listening and brainstorming. As supervisor, your first priority in creating
consensus is to stimulate debate. Remember that employees are often afraid to disagree
with one another and that this fear can lead your team to make mediocre decisions. When
you encourage debate you inspire creativity and that's how you'll spur your team on to
better results.
 Establish the parameters of consensus-building sessions. Be sensitive to the frustration
that can mount when the team is not achieving consensus. At the outset of your meeting,
establish time limits, and work with the team to achieve consensus within those
parameters. Watch out for false consensus; if an agreement is struck too quickly, be
careful to probe individual team members to discover their real feelings about the
proposed solution.
 Innovative web based training
Web-based training (sometimes called e-learning) is anywhere, any-time instruction delivered
over the Internet or a corporate intranet to browser-equipped learners. There are two primary
models of Web-based instruction: synchronous (instructor-facilitated) and asynchronous (self-
directed, self-paced). Instruction can be delivered by a combination of static methods (learning
portals, hyperlinked pages, screen cam tutorials, streaming audio/video, and live Web
broadcasts) and interactive methods (threaded discussions, chats, and desk-top video
conferencing).
Web-based training (WBT) is an innovative approach to distance learning in which computer-
based training (CBT) is transformed by the technologies and methodologies of the World Wide
Web, the Internet, and intranets. Web-based training presents live content, as fresh as the
moment and modified at will, in a structure allowing self-directed, self-paced instruction in any
topic. WBT is media-rich training fully capable of evaluation, adaptation, and remediation, all
independent of computer platform.
Web-based training is an ideal vehicle for delivering training to individuals anywhere in the
world at any time. Advances in computer network technology and improvements in bandwidth

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will usher in capabilities for unlimited multimedia access. Web browsers that support 3-D virtual
reality, animation, interactions, chat and conferencing, and real-time audio and video will offer
unparalleled training opportunities. With the tools at hand today, we can craft highly effective
WBT to meet the training needs of a diverse population. Web-based performance support
systems (WBPSS) further help today's busy workers perform their jobs by integrating WBT,
information systems, and job aids into unified systems available on demand.
The current focus of WBT development is on learning how to use the available tools and
organize content into well-crafted teaching systems. Training designers are still struggling with
issues of user interface design and programming for high levels of interaction. Unfortunately,
there are few examples of good WBT design visible on the public Internet. As instructional
designers and training analysts learn how to write and produce WBT, and as training vendors
come to realize the overwhelming advantages of this delivery method, expect an explosion in
training offerings available over the public Internet and private intranets.
m-learning
M-learning or mobile learning is "learning across multiple contexts, through social and content
interactions, using personal electronic devices". A form of distance education, m-learners
use mobile device educational technology at their time convenience.
(Mobile learning, also known as m-learning, is an educational system. Mobile
learning supports, with the help of mobile devices, a continuous access to the
learning )
M-learning technologies include handheld computers, MP3 players, notebooks, mobile phones
and tablets. M-learning focuses on the mobility of the learner, interacting with portable
technologies. Using mobile tools for creating learning aids and materials becomes an important
part of informal learning.
M-learning is convenient in that it is accessible from virtually anywhere. Sharing is almost
instantaneous among everyone using the same content, which leads to the reception of instant
feedback and tips. M-learning also brings strong portability by replacing books and notes with
small devices, filled with tailored learning contents. M-learning has the added benefit of being
cost effective, as the price of digital content on tablets is falling sharply compared to the
traditional media (books, CD and DVD, etc
 Examples of mobile learning in education:
Offering mobile learning material
This is the most easy way of mobile learning. You can offer texts, videos or audios. It‘s possible
to do this whenever you want. Participants are able to prepare homework by watching a video
that the teacher has put online. This way of mobile learning is relatively less interactive. It‘s

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more about individual consuming. There is no interaction with teachers or other students, which
makes it an asynchronous way of learning.
Interaction during lessons
If you do want to have some more interaction, you can use mobile devices during your lessons.
An example of this is asking questions during your instruction. Teachers ask questions and the
pupils will answer them on their mobile devices. Teachers are able to get immediate feedback.
This is especially easy for teaching large groups.
Synchronous learning
Immediate feedback from your teacher or fellow students? This is possible with synchronous
learning. You are able to get direct feedback while you‘re at home. Teachers can interact with
their students during their lectures.
 Advantages of mobile learning
Wherever and whenever
It‘s possible to lay in bed and watch a lecture whenever you want.
Motivation
‗We are making an online quiz!‘ You can see the smile on the faces of the children. It really
motivates children to learn from tablets or other mobile devices.
More content
Videos and audios are things you can add with mobile learning. Videos make it possible to make
learning more lively!
Working together from long distance
While the one student might be in New York and the other one is in Amsterdam, it‘s still
possible to work together! This is one of the main benefits of mobile learning.
 Disadvantages of mobile learning
Distraction
Mobile devices can be a great distraction for participants. Children like learning on tablets, but
gaming on tablets seems to be even more fun! As a teacher you are not always able to control
what your pupils are doing on their tablets.

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Not enough electricity for all mobile devices
There have to be enough sockets for all those mobile devices, and not even spoken about all the
cables. This may be a problem in the first couple of years. In the future, there will probably be a
solution for this problem :)
E-mentoring
E-mentoring is a type of mentoring style where mentors and mentees communicate mostly or
exclusively by email, social media, instant messaging, or other sorts of online communications.
It has a reputation of being more accessible, with statistics showing a higher retention and
recruitment rate for matches. Online mentoring often referred to as electronic or e-mentoring.
E-mentoring is a means of providing a guided mentoring relationship using online
software or email. It stemmed from mentoring programs with the invention of the internet, and
began to gain popularity around 1993.
Modern e-mentoring projects tend to rely on web-based solutions, particularly if children are
involved. Online software allows both mentors and mentees to log into a secure online
environment where they can converse under supervision of moderators and coordinators.
E-coaching
A two-way communication between a Coach and Coachee that is enabled through the use of
technology, whether it be email, telephone, online chat or bulletin board.
It is a non- hierarchal developmental partnership between two- parties separated by a
geographical distance, in which learning and reflection process is conducted via both analogue
and virtual means.
There are 4 types of e-coaching.
2. Video
3. Telephone
4. Chat-sms or similar
5. email
 Who can benefit from e-Coaching?
Any individual or any group, school, district, company, or organization who:
 has a vision that affects a large group but is not sure how to reach it.
 has a vision that affects one person or a small group but is not sure how to reach it.
 knows their team needs professional development but is not sure what to do next and
what their goals are.

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 is having a problem communicating their expectations to their team.
 is not satisfied with the direction of their current professional development program.
 wants team engagement and a successful, sustained online community.
 needs a plan that utilizes their own system and/or people.
 needs a plan that supplements traditional training methods with an online platform for
support, resources, communication, collaboration, etc.
 is required to have their course or classroom be available online.
 has regular online meetings.
 wants team members to have a feeling of ownership.
 What Makes a Good e-Coach?
Many people think that simply because they have technical skills or know how to
train/mentor/coach others that they will be good e-Coach. There are specific skills a facilitator
needs to make an online group or class successful:
 careful observation before reacting
 empathy for diverse learners
 active listening skills
 sensitivity to overall group dynamics
 background on design of online communities
 how to foster engagement and determine motivation
 courage to allow the group to move into areas where the facilitator may not feel
comfortable
Strategic employee empowerment
Fundamentally, employee empowerment works by giving team members the authority and
freedom needed to adapt instantly to situations, responding with better services and experiences
for your customers. It requires open communication and contextual understanding from the top
down, in turn enabling employees to make crucial decisions on the spot. By empowering
employees, businesses give their team:
 Resources they need to get the job done – from tools to fundamental knowledge
 Procedures that employees know represent best practices for serving customers
 Authority to go the extra mile for their company
Empowering employees can seem risky, but in a world that puts experience above all else,
bridging the gap between employee knowledge and customer satisfaction is paramount for
success.

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 6 Strategies for Employee Empowerment in Organizations
Employee empowerment is a means by which individuals are given the authority to analyze
situations autonomously and take proactive decisions. This instills a sense of ownership towards
the company in the employees. This attitude of the employees can go a long way in driving the
business forward.
Here are six means of empowering employees in a workplace.
1. Provide the right skill set for the job: Employees cannot effectively complete assigned tasks
if they do not have the necessary skills. It is vital for an organization to assess the gaps between
the current and required skills. Training must be provided to employees to improve and increase
their skills. Therefore, if you want an empowered workforce, employees need to be offered
appropriate training.
2. Grant sufficient autonomy: The second means for empowerment of employees is to provide
them with adequate authority to decide on how to complete their tasks. They need to be given
allowed to complete their assignments in any manner they choose; as long as it complies with the
parameters and time lines set by the organization.
3. Clearly articulate the scope of individual’s job: It is paramount that employees have a clear
idea of how their role fits into the overall scheme of the organization. When this is shared in a
meaningful manner, it empowers them with the broader perspective of the organization‘s overall
mission, vision, goals and strategic plans.
4. Provide adequate information and resources: Employees must have access to all the
information they require in order to make informed and appropriate decisions and be able to
problem solve issues. Therefore supplying information and allocating the necessary resources
empowers the employees to perform their responsibilities to the best of their abilities.
5. Build employee’s confidence: When employees have been given autonomy and offered the
opportunity to improve and increase their skills; they will feel valued, supported, and
appreciated. When one feels this way it increases their confidence which will in turn increase
their performance levels because they now believe they have the ability to achieve success. The
various ways to boost employees‘ confidence include:
a) Providing growth opportunities to the employees by giving them more challenging tasks. This
demonstrates that you value your employees and their personal development.
b) Exhibiting greater trust and support in the employee‘s ability to accomplish a work
assignment by not micro-managing their tasks.
c) Encouraging cross-learning so that employees benefit from each other‘s skills and knowledge.
This can also increase productivity if people are absent
.
d) Acknowledging and rewarding the employees for their accomplishments.
6. Guide with positive feedback: Providing positive feedback for tasks done well and guiding

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employees about best practices, gives encouragement to the employees. When employees feel
appreciated, performance improves and creativity is enhanced.
HR audit and accounting
HR audit is an important management control device. It is a tool to judge organisations
performance and effectiveness of HR management. According to Dale Yoder, ―Personnel audit
refers to an examination and evaluation of policies, procedures and practices to determine the
effectiveness of personnel management.‖
It is an analytical, investigative and comparative process. It gives feedback about HR functions
to operating managers and HR specialists. It enables to know about the effectiveness of
personnel programmes. It further provides feedback about how well managers are meeting their
HR duties. It provides quality control check on HR activities. It refers to determine the
effectiveness and efficiency of HRM.
It examines and evaluates policies, procedures and practices to determine the effectiveness of
HRD function in an organization.
• Human resource audits are potentially powerful tools in promoting wiser, more equitable use
of human resources and more accurate human resource planning. It works on the principle of
―prevention is better than cure‖.
• E-enabled HR audit system is not always required.
The essential features of HR audit are:
(1) The measurement and effectiveness HR management‘s mission, goals, strategies, policies,
programmes and activities, and
(2) To determine the action plan for future in response to the results from such measurement.
According to R.D. Gray, ―the primary purpose of audit is to know how the various units are
functioning and how they have been able to meet the policies and guidelines which were agreed
upon; and to assist the rest of the organization by identifying the gap between objectives and
results for the end product of an evaluation should be to formulate plans for corrections or
adjustments.‖
Guidelines for HR Audit
1. Identification of areas of HR audits e.g. recruitment process, job description, employee
classification, leaves, personnel records etc.

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2. Goals of HR Audit:
• To make effective HR policies.
• To ensure compliance with all regulatory norms.
• To correct existing deficiencies or people related problems in any department, section, or
organisation as a whole.
• To correct the performance evaluation systems
• To make training and development functions more effective and need based.
3. Focus on developing Good Business Practices: By meeting strategic goals, enhancing such
goals and dovetailing such goals with the overall strategies of the organisation.
4. Focus on Legal Compliance.
5. Focus on Administration Issues: Maintaining personnel or HR files, how they are kept, degree
of confidentiality in record keeping.
6. Auditing HR Functions.
7. Employee-relation Audits: questionnaires, exit interviews, job satisfaction studies etc.
 Approaches to HR Audit:
According to William Werther and Keith Davis, there are five approaches for the purpose of
evaluation.
These are briefly outlined as under:
(1) Comparative Approach:
Under this approach auditors identify one model company and the results obtained of the
organisation under audit are compared with it.
(2) Outside Authority Approach:
In outside authority approach a benchmark is set to compare own results. A standard for audit set
by outside consultant is used as benchmark.
(3) Statistical Approach:
Under statistical approach the statistical information maintained by the company in respect of
absenteeism, employee turnover etc. is used as the measures for evaluating performance.

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(4) Compliance Approach:
Under compliance approach the auditors make a review of past actions to determine to see
whether those activities are in compliance with the legal provisions and in accordance with the
policies and procedures of the company.
(5) MBO Approach:
Under MBO approach specific targets are fixed. The performance is measured against these
targets. The auditors conduct the survey of actual performance and compare with the goals set.
 Importance of HRD Audit.
 It helps to identify the changing training needs and development of new training modules for
effective utilization of manpower due to technological changes.
 To keep pace with environmental changes, management philosophy and practices at the
organisation level like participative management, employee empowerment and total employee
involvement.
 Methods and techniques of HR Audit
• Attitudinal Survey.
• Data Interpretation.
 Advantages of HRD Audit:
• To ensure effective utilization of HR.
• To comply with administrative regulations.
• To inculcates sense of confidence in management.
• To develop and sustain organisation reputation in the society.
• To perform a due diligence review for various stakeholders.
 HR Audit Process
 Pre-Audit Information
 Pre-Audit Self Assesment
 On Site Review
 Records Review
 Audit Report

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Human Resource Accounting
Human resource accounting is the process of identifying and reporting investments made in
the human resources of an organization that are presently unaccounted for in the
conventional accounting practices. It is an extension of standard accounting principles.
Measuring the value of the human resources can assist organizations in accurately documenting
their assets.
Human Resource Accounting is, ―The process of identifying and measuring data about
human resource and identifying and measuring data about human resource and communicating
this information to interested parties‖
-- AMERICAN ACCOUNTING ASSOCIATION COMMITTEE
 HISTORICAL DEVELOPMENT OF H.R.ACCOUNTING
According to Eric G Falmholtz
• FIRST STAGE (1960-1966)–
Beginning of academic interest in the area of HRA
• SECOND STAGE (1966-1971)
The focus here was more on developing and validating different models of HRA
THIRD STAGE (1971-1976) –
This period was marked by a widespread interest in the field of HRA. R.G. Barry experiments
contributed substantially during this stage.
• FOURTH STAGE (1976-1980) – FOURTH STAGE
(1976-1980) –
This was the period of decline in the area of HRA
• FIFTH STAGE (1980 onwards ) –
There was a sudden renewal of interest in the field of HRA
 Objectives Of HRA
Provide cost value information about acquiring, developing, allocating and maintaining HR.
• Enable management to effectively monitor the use of HR.
• Find whether human asset is appreciating or depreciating over a period of time.
• Assist in the development of effective management practices
• To motivate individual persons in the organization to increase their worth by training.
• HR by giving valuable information.
 Uses Of HRA
According to Grojer and Johansson-
• As a political tool, used to demonstrate mismanagement of human resource.
• As a pedagogical instrument for analyzing and structuring.
• As a decision making aid to ensure that decision on HR are more rational from the management
point of view.
 Methods of HRA:-
Historical cost method

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Replacement cost method
Opportunity cost method
Capitalization of salary method
Economic valuation method
Return on efforts employed method
Adjusted discounted future wages method
Reward valuation method
Standard Cost Method
1) Historical cost method:- This method developed by Brummet, Flamholtz and Pyle.
According to this method, the actual cost incurred on recruiting, selecting, training, placing and
developing the human resources of an enterprise are capitalized and written off over the expected
useful life of human resources. The procedure followed for human resource asset is the same as
that of other physical asset.urchasi
2) Replacement cost method:- This method was developed by Rensis Likert and Eric G.
Flamholtz. The cost of replacing employees is used as the measure of company‘s human
resources. The human resources of a company are to be valued on the assumptions as to what it
will cost the concern if existing human resources are required to be replaced with other persons
of equivalent experience and talent.
3) Opportunity cost method: - In order to overcome the limitations of replacement cost method,
Hekimian and Jones suggested the use of opportunity cost method which determines the value of
human resource on the basis of an employee‘s value in alternative uses. Accordingly the value of
an employee is based on his opportunity cost-the rice other divisions are willing to pay for the
services of an employee working in another division of an organization. M
4) Capitalization of salary method:-
The advocates of this method Baruch Lev and Aba Schwartz have used the concept of human
resources in terms of economic value in this model.
According to them the salaries payable to employees during their stay with the organization may
be used as a replacement for the value of human resources, in view of the close correlation
between employees‘ compensation and their value to the organization. Thus the value of human
resources is the present value of future earnings of homogeneous group of employees.
5) Economic valuation method:-
Economic valuation method considers the present worth of the employee‘s future service
expected to be derived during their stay with the organization as the value of firm‘s human
resource. Although there are some resemblances between earlier model i.e., capitalization of
salary method and this model, yet they differ with each other. The economic valuation model
recommends the capitalization.
6) Return on efforts employed method:-
This method measures the value of the firm‘s human resources on the basis of efforts made by
the individual for the organizational benefits. These efforts are evaluated in the light of the
following factors:

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 Positions an employee holds;
 Degree of excellence employee achieves;
 Experience profile of the employee.
7) Adjusted discounted future wages method:- Roger H. Hermanson developed this model
wherein he recommends measuring the value of human resources on the basis of relative
efficiency of an organization in the industry. This model relates the value of human resources
with the extra profit the firm earns over and above the industry expectations.
In fact, this model attributes the difference in profitability rates between firms of an industry to
the varying efficiency of their human resources.
8) Reward valuation method:- As an improvement over the capitalization of salary method
Flamholtz developed a model commonly known as Stochastic Rewards Valuation Method. The
method seeks to measure the value of human resources on the basis of an employee‘s value to an
organization at various services states (roles) that he is expected to occupy during the span of his
working life with the organization. The author has identified the major variables which
determine the value of an individual to a firm.
9) Standard Cost Method: - This method envisages establishment of a standard cost per grade
of employee, updated every year. Variances produced should be analyzed and would form a
useful basis for control. Replacement costs can be used to develop standard costs of recruitment,
training and developing individuals, such standards can be used to compare actual results with
those planned.
10) Current Purchasing Power Method: - Under it, instead of taking the replacement cost to
capitalized; the capitalized historic cost of investment in human resources is converted into
current purchasing power of money with help of index numbers. Its great advantage is its
simplicity even though it might produce only approximate answers and approximately correct
data.
 Advantages of HRA
• Foresee the changes.
• Provides different methods of testing.
• Increase productivity.
• Brings high return.
• Helps individual employee to aspire.
• Provides scope for advancement.
• Throws light on the strength and weaknesses of theexisting workforce.
• Helps potential investor judge a company.