Integration of Fuzzy AHP with TOPSIS for Ranking of Barriers of Human Resources Accounting from the Viewpoint of Managers

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1 Journal of anagement Sciences. Vol., (3), 3-39, 05 Available online at ISSN Integration of Fuzzy AHP with TOPSIS for Ranking of Barriers of Human Resources Accounting from the Viewpoint of anagers Hasan Paki, Sirous Fakhimi Azar* Department of Industrial anagement, Tabriz Branch, Islamic Azad University, Tabriz, Iran Corresponding Author Abstract: Human resource accounting provides measurable information about the value of human assets, which helps the top management to take decisions regarding the adequacy of human resources. The aim of this research is Integration of Fuzzy AHP with TOPSIS for Ranking of Barriers to Human Resources Accounting from the Viewpoint of anagers in Pumpiran Company. We use fuzzy AHP method to determine the weights of the criteria. And to ranking the barriers that have been identified, TOPSIS method is used. Finally, prioritized according to the weight and importance of each barriers were identified. Ranking result shows that, Difficulty in collecting data, Complexity of calculation of criteria and models of HRA, Lack of awareness of benefits of HRA and high cost of implementation of HRA, Have highest rank among the Barriers. Keywords: Ranking, Barriers, Human resource accounting, TOPSIS, Fuzzy AHP. Introduction Today, the success of any organization depends on the effective use of human resources (Bullen & Eyler, 00). Effective and efficient utilization of physical resources of any organization depends on the characteristics of human resources. Organization, with abundant physical resources may be fails, unless they have qualified manpower. Therefore we cannot ignore the importance of human resources (Seth, 009). anagers of all organizations, to improve organizational performance, are trying to invest in human resources, to convert their potential to actual. And through the human resource development, led to grow of organizational productivity. So managers for decision making in the field of human resource development programs require the following information: How much is the value of each human resources? How much is the cost of human resources? What amount of financial resources used for human resources, should be considered for the lost? anagers found that conventional accounting systems cannot make such information available to them to decide. Therefore, it was necessary, a new look at human resources in the context of accounting concepts, and human resource accounting system became established (Afiouni, 007). If we look at the financial statements of organizations, we find in usual accounting, except for the manpower, other factors are introduced as a assets of the organization. Human resources does not mention as a factor of production, assets and capital. So far, in the current account, the method is not designed to consider the importance of human resources (Avazzadehfath, 0). Accounting Society of America (970) defines the human resource accounting is the process of identifying and measuring information related to human resources and reporting this information to managers and investors (Al amun, 009). HRA is combination of accounting and human resources. In other word, application of accounting concepts and techniques in the area of human resource. Human resources accounting is information systems that says to management, what changes over time in the organization's human resources or the intangible asset has occurred. In today's economy, virtual and intangible assets along with tangible assets determined the value of the organization (Hussi & Ahonen, 00). 3

2 J. anag. Sci. Vol., (3), 3-39, 05 Flamholtz et al (00) has considered three main goals for the HRA: ) Providing objective information about the total cost and the value of the human resources of the organization ) Providing a theoretical framework to guide decisions regarding the human resources of the organization 3) Directing decision makers interest towards the human resource. However, there are barriers and difficulties in the establishment, implementation and development of HRA. That the main issue of this research is identify and ranking these barriers by Fuzzy AHP and TOPSIS. Therefore, based on objective research, questions that this research seeks to them include: What are the Barriers of human resource accounting from the Viewpoint of anagers in the Pumpiran Company? What are the ranking of barriers of human resource accounting from the Viewpoint of anagers in Pumpiran Company based on Fuzzy AHP and TOPSIS model? The necessity and importance of such studies, to identify and ranking of barriers of human resource accounting be useful for the company in this research and similar companies in planning and action to remove barriers based on their rank, and establishment and development of HRA, using the conclusions and recommendations of this study. According to the literature of research important barriers of human resources accounting is: - High cost of implementation of HRA - Lack of a modern economy based on intangible assets economy in country 3- Lack of resources and software and hardware infrastructures 4- Use of traditional accounting systems and the lack of desire to change the system 5- Complexity of calculation of criteria and models of HRA 6- Lack of public acceptance of criteria and current models of HRA 7- Difficulty in collecting data 8- Lack of awareness of benefits of HRA 9- The lack of a standard for HRA in Iran 0- Lack of human resource information systems - Increased bureaucracy in organization - Shortage of technical knowledge of staff 3- Uncertainty about the diagnosis of information that must be reported 4- Create some restrictions by authorities 5- Thinking of management about HRA 6- Lack of motivation and commitment to change in organizations 7- Lack of a standard or law for monitoring, state institutions and regulatory 8- Lack of payment of salary based on performance 9- Leave work and disloyalty of staff to the organization 0- Uncertainty about the long-term employment of staff in organization - Insufficient education in universities Background Human Resource Accounting information can be useful for managerial decision making in different areas. any research studies were conducted to prove this. During the two last decades, there are several studies on human resource accounting (HRA) that focused on wide and diverse range of research concerns. For an instance, researchers have linked a HRA measures with firm or organizational performance (Afiouni, 007; van der Zahn et al., 007; Johansson, 007; artin-de-castro et al., 006; Youndt & Snell, 004; Roos et al., 004; Perez & Ordonez de Pablos, 003). Few others have focused on the valuation or measurement of HRA (Carrell, 007; Catasus & Grojer, 006; Burr & Girardi, 00; Bontis et al., 999; Boudreau & Ramstad, 997). While some addressed the of regulations, standards or reporting of HRA (Cuganesan, 007; Bozzolan et al., 006; Catasus & Grojer, 006; Roslender et al., 006). And several advocates of HRA, including, (Herman & John, 008; Flamholtz et al., 003; Flamholtz et al., 004; Lev & Schwartz, 97; Elias, 97; Hendricks, 976; Bullen & Eyler, 00) and others have suggested that HRA could benefit external users of financial statements. Talebi et al (0) ) in a study entitled "Survey of establishment and implementation barriers of human resources accounting and effect using of this system on business corporation managers decision making process in Iran in accounting association point of view" concluded that, lack knowledge of accounting information users, absence of enough training about this system in universities, absence of emphatic standards in using this system in firms and organizations, lack expert persons in implementation of this accounting system and also absence suitable register and reporting of human resources expenditure, are responsible for the lack of implementation of HRA. 33

3 J. anag. Sci. Vol., (3), 3-39, 05 Conceptual odel According to the literature of research and study of different books and papers and also interview and leading of familiar people with HRA, it was revealed that various factors are effective in establishment and implementation of HRA. Although there are a lot of different factors, but it is possible to divide them into five groups as follows: Financial organizational management technical Human Barriers to Human Resources Accounting FUZZY AHP and TOPSIS Figure. Conceptual model of research. The analytic hierarchy process has been used in many different fields as a multi-attribute decision analysis tool with multiple alternatives and criteria. The analytical hierarchy process was developed primarily. AHP formalizes the conversion of the attribute weighting problem into the more tractable problem of making a series of pairwise comparisons among competing attributes. AHP summarizes the results of pairwise comparisons in a matrix of pairwise comparisons. Steps of Chang s extent analysis can be detailed as follows: Step - Forming fuzzy decision matrix; Sk, which is a fuzzy triangle number in each matrix paired comparison that as follow: S k n j kj * m n i j ij Step - Finding the degree of possibility. If and are two fuzzy triangle numbers, the degree of possibility of to is shown by V ( ) and they are defined as: V ( V ( ) hgt( ) if m m otherwise hgt( ) ( u u l l ) ( m m ) Step 3- Finding the degree of possibility of one fuzzy triangle number from "k" of another fuzzy number. The following equation can be used to determine the degree of greatness: V (,..., K ) V( ),..., V ( K Criteria weight is calculated as follows: W ( x ) in V ( S S ),, k,,..., n. i k i i k The paired matrix comparison and the criteria resultant will be as the below: W ) ( xi ) W ( c ), W ( c ),..., W ( c n T By Hwang and Yoon TOPSIS model was proposed in 98(Percin, 008). This model is one of the best models of AD (Olson, 004). In this method, alternative by N criteria will be evaluated. The basis of this technique is that an alternative should be the least distance to the positive ideal solution and highest distance to the negative ideal solution (Shih et al., 007). ) 34

4 J. anag. Sci. Vol., (3), 3-39, 05 aterials and ethods Consequently, the research method is descriptive, and from the viewpoint of objective, is an applied study. The statistical population of this research is 4 managers of Pumpiran Company. Because of the limitations of statistical population, Sampling is not used. The aim of the present study is Integration of Fuzzy AHP with TOPSIS for Ranking of Barriers of Human Resources Accounting from the Viewpoint of anagers in Pumpiran Company. In this paper, after reviewing the literature and current concepts in human resource accounting, Barriers of HRA have been studied. Then a questionnaire was designed to identify the important Barriers and was given to the members of statistical population, and their opinion about the barriers has been determined. Then, for ranking of important barriers, TOPSIS method is used. In addition, to obtaining the weights of criteria FUZZY AHP is used. For this purpose, second questionnaire (pair-wise comparison) designed and given to the members of statistical population. Then, Third questionnaire to evaluate the value of each Barriers or alternative (A, A, A3, A4) to the specified criteria (C, C, C3, C4, C5) have been extracted and was put at the disposal of statistical population. After data collection, decision matrix, was obtained. Finally, Ranking according to the weight and importance of each of these barriers had been identified. Validity of the questionnaire was confirmed by professors in management and accounting. Reliability, with Cronbach Alpha estimation by using software SPSS (0.79) is obtained. Important barriers of HRA that identified by statistical population is as follows: - Lack of awareness of benefits of HRA - Difficulty in collecting data 3- High cost of implementation of HRA 4- Complexity of calculation of criteria and models of HRA Ranking of Barriers to Human Resources Accounting Financial C Human C Organizational C3 Technical C4 anagement C5 Lack of awareness of benefits of HRA Difficulty in collecting data High cost of implementation of HRA Complexity of calculation of criteria and models of HRA A A A3 A4 Figure. Decision hierarchy. Results In Fuzzy AHP method, we determine the weights of each factor by utilizing pair-wise comparison matrixes. We compare each factor with respect to other factors. You can see the pair-wise comparison matrix for ranking of these factors in table. 35

5 J. anag. Sci. Vol., (3), 3-39, 05 Table. Fuzzy pair-wise comparison matrix. C C C C3 C4 C5 C (.00,.00,.00) (3.00,5.00,7.00) (4.00,4.00,4.00) (0.0,.47,7.00) (0.33,3.44,6.00) C3 (0.4,0.3,0.33) (.00,.00,.00) (.00,3.5,7.00) (0.4,.6,3.00) (0.0,.73,5.00) C4 (0.5,0.5,0.5) (0.4,0.44,.00) (.00,.00,.00) (0.0,.8,3.00) (0.4,0.3,0.33) C5 (0.4,.7,5.00) (0.33,.78,3.00) (0.33,0.85,7.00) (.00,.00,.00) (0.33,.00,7.00) C (0.7,.8,5.00) (0.0,.84,5.00) (.00,3.00,5.00) (0.4,.6,3.00) (.00,.00,.00) After forming fuzzy pair-wise comparison matrix, we calculate the weight of criteria. The weight calculation details are given below: S= (8.53, 5.9, 5.00) (0.0, 0.0, 0.05) = (0.09, 0.36,.8) S= (.49, 8.37, 6.33) (0.0, 0.0, 0.05) = (0.0, 0.9, 0.84) S3= (.74, 3.09, 5.58) (0.0, 0.0, 0.05) = (0.0, 0.07, 0.8) S4= (.4, 9.79, 3.00) (0.0, 0.0, 0.05) = (0.0, 0.,.8) S5= (4.5, 6.8, 9.00) (0.0, 0.0, 0.05) = (0.05, 0.5, 0.97) Then the V values calculated using these vectors are shown in Table : Table. V values result. (V) S S S3 S4 S5 S - S S S S Thus, the weight vector from Table is calculated and normalized as: Wt = (0.697, 0.847, 0.059, 0.6, 0.3) The weights of criteria are calculated by Fuzzy AHP up to now and then these values can be used in TOPSIS. According to TOPSIS methodology, we obtained weighted normalized decision matrix by: Table 3. Weighted normalized decision matrix. Alternative C C C3 C4 C5 A A A A Determine the worst alternative A- and the best alternative A+ by: Table 4. Determine the worst alternative A- and the best alternative A+. C C C3 C4 C5 A A

6 J. anag. Sci. Vol., (3), 3-39, 05 Calculate the distance between any alternatives to positive ideal and negative ideal by: Table 5. Calculate the distance between any alternatives to positive ideal and negative ideal. Alternative di+ di- A A A A Calculate the relative closeness to the ideal solution C i * by: Table 6. Calculate the relative closeness to the ideal solution C i * and select the alternative with C i * closest to. Alternative C* Rank A A A A So, as you see, Ranking of Barriers of Human Resources Accounting System by TOPSIS method are as follows: Table 7. Barriers of implementation of HRA. Barriers of human resource accounting Rank Difficulty in collecting data Complexity of calculation of criteria and models of HRA Lack of awareness of benefits of HRA 3 High cost of implementation of HRA 4 Difficulty in collecting data Conclusion Human resource accounting is an attempt to identify and report investment made in the resources of the organization that are not presently accounted under conventional accounting practices. The main objective of this study is Integration of Fuzzy AHP with TOPSIS for Ranking of Barriers of Human Resources Accounting from the Viewpoint of anagers in Pumpiran Company. Ranking results show that, the Barriers of implementation of human resource accounting is respectively equal to: Difficulty in collecting data, Complexity of calculation of criteria and models of HRA, Lack of awareness of benefits of HRA, High cost of implementation of HRA. Results of this study are conformance with research results of Dinesh Patil and Narayan isal (04) and Talebi et al (0). According to the results, we offer the following suggestions: Awareness managers about the benefits of human resource accounting, pay special attention to intangible assets in the organization, regarding the obstacles in group A, and take the necessary measures to eliminate them. 37

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