Analysis of methods for human capital assessment at the micro level

Transcription

1 Analyss of methods for human captal assessment at the mcro level Galna Krushntska The artcle consders the man features of human captal assessment methodologes at the mcro level; the problems of human captal valuaton methodologes at the ndvdual level and human captal at the frm s level, based on the nvestment approach and ncome captalzaton approach, ther combnatons and some other approaches, ther objectvty and suffcent data for estmaton of human capta have been analyzed. Key words: human captal, human captal assessment, methods of evaluaton of human captal, nvestment approach, the ncome captalzaton approach. INTRODUCTION As t s wdely known, one of the man problems of economc theory snce ts emergence as an ndependent scentfc dscplne was to evaluate the worker s productve abltes. Human Captal Assessment Methodology was developed n the scentfc lterature of both foregn and domestc scholars. In partcular, nvestment (costly) approach to assessng human captal s reflected n the scentfc lterature by H. Bekker, E. Enhel, J. Kendryk, J. Mntser, E. Flemholts, T. Shults, V. Allaverdyan, K. Chyhoryayev, V. Antonyuk, O. Hrshnova, O. Zaharova, Yu. Kaloshyna, M. Nkolaychuk and others. Assessment of human captal n terms of the ablty to generate ncome ncarnated n a man are consdered n the works of T. Vtsteyn, L. Dubln, A. Lotka, L. Turow, V. Farr, I. Fsher, M. Frdmen, A. Yevstratov, V. Tsarov, V. Antonyuk, I. Zhuravlova, A. Kudlay, O. Russyan and others. The numercal evaluaton of varatons n human captal shows that at ths tme there s no one that would really meet ts real volume. Ths s due to, frstly, mperfect measurement technologes, mathematcal models, dffcultes of statstcs and ts accuracy. Secondly, for relable assessment of human captal, t s necessary to take nto account a number of operatng factors, whch are prncpally mpossble to assess. Thrdly, t s dffcult to predct the consequences of events caused by the combnaton of these factors. Thus, the purpose of the research s to study the relablty of methodologcal tools for quanttatve assessment of human captal at the mcro level. PRESENTMENT A large number of works, both by foregn and domestc scholars, s dedcated to human captal assessment methodology; these researches show that a great varety of approaches used n such cases. Analyzng the methodology for assessng human captal, t should be noted that most of the researchers used two methods of cost estmates of human captal: the cost of producton and the process of captalzaton of earnngs, and ther combnatons. The frst procedure s to assess the real costs (usually net costs of lvelhood) on the "producton" of a man, the second one s to assess the actual (reduced to the present tme) value of the future ncome stream of the ndvdual (net or gross) [1, p.73; 2, p.28]. It should be mentoned that the estmaton of the human captal components s beng done at dfferent economc levels: mcro level - human captal at the ndvdual level and human captal of enterprses and companes; macro (mesolevel) level - human resources of large corporatons and regons; macro - aggregate human captal n terms of natonal economy (socety); mega level - ntegrated human captal on a global, worldwde scale [3, p.84-86]. Takng nto account the purpose of the study, let us analyze the methodologcal tools of human captal quanttatve assessment at the mcro level - human captal at the ndvdual level and human captal of enterprses and companes. Thus, at the ndvdual

2 level the evaluaton of human captal s needed to determne the value of a partcular employee of an enterprse to dfferentate salares, as well as a part of the procedure of further human captal assessment of the organzaton as a whole. At the enterprse level evaluaton of human captal s needed to assess the effectveness of human resource management (effcency of nvestments n staff development), nnovatonal actvty of the enterprse, guaranteeng and mprovng ts compettveness and evaluaton of the busness cost n case of sellng or busness merger. One of the methods of evaluaton of human captal at the ndvdual level and human captal of frms, where nvestment (costly) approach to the assessment of the value of human captal s used, s a technque offered by Russan scentst K. N. Chyhoryayev [4, p.54-56]. The author of the methodology notes that "n order to assess the mpact of a company s human captal on ts fnancal results, t s necessary for t to have a quanttatve epresson. Accordng to ths method, all costs assocated wth human captal are dvded nto three man groups: the payroll (all payments to employees, ncludng wages, taes, bonuses, ncentve bonuses, etc.), the cost of ntellectual captal (costs of tranng, retranng, qualfcaton mprovement tranng, partcpaton n thematc conferences, workshops, R&D, etc.), and the cost of "health captal". The term "health captal" means nvestments n people, commtted to the formaton, mantenance and mprovement of ther health and workng abltes, for eample, the costs of health care (checkups of employees, addtonal health nsurance, and other measures of prophylactc care and dsease preventon). Thus, n a formalzed form, the epresson for the quanttatve determnaton of human captal wll appear as an addtve model that serves as the sum of three components: НС = А + В + С (1) [4, p.55] where A - enterprse s payroll fund, B - enterprse s epenses on ntellectual captal, C - enterprse s spendng on "health captal". The authors of ths method ndcate that the calculaton should take nto account the fact that each element has ts own return epenses, and therefore, t s advsable to ntroduce β 1, β 2, β 3 weghts for each return epense: НС = β 1А + β 2В + β 3С, (2) [4, p.55] where the return epenses represent the costs of: β1 - payroll, β 2 - the ntellectual captal β 3 - the "health captal". In general, ths technque deserves certan attenton. Its postve sde, by contrast to other methods of evaluaton of human captal at the ndvdual level and human captal of frms, s the relatve ease of calculaton and takng nto account not only the educatonal component, but also the wage bll and the component of "health." However, the method offered by K. N. Chyhoryayev has ts drawbacks. In partcular, frstly, ths method does not nclude an nflaton component. Secondly, t makes t mpossble to trace the relatonshp between the nvestment pad and the level of accumulated human captal. Among the methodologes for assessng human captal at the ndvdual level and human captal of frms, where an nvestment (costly) approach to the evaluaton of the volume of human captal s used, the method of evaluatng the potental of the company, offered by Russan epert on nvestment projects V. V. Allaverdyan, also deserves attenton [5]. Ths technque s based on the calculaton of human potental goodwll of each employee. The author of ths technque of an employee s value assessment offers to use the followng formula: S = Z + G p, (3) [5] where S - the estmated value of employee Z - wages predctable or pad to an employee G - coeffcent, goodwll of an employee s human resources, calculated value. p

3 The author notes that goodwll of an employee s human resources s a factor whch reflects the real, market, ndvdual value of a worker, not as a head unt, but as a specfc ndvdual who s able to perform certan functons, and solve certan tasks [5]. Ths technque can be appled n determnng workers wth hgher levels of human potental, and therefore, other thngs beng equal, they wll brng greater economc returns from nvestng n ther professonal development. However, ths technque s tme consumng and requres consderable tme to evaluate as HR goodwll of staff must be calculated separately for each employee and wth certan tme ntervals. However, the man dffculty n applyng ths technque s the need to determne the level of goodwll of human potental of each employee must take nto account all the factors affectng the market value of the employee. Ths technque also makes t mpossble to determne the mpact of nvestment n human captal on the performance of an employee. Another method of assessng the value of human captal at the ndvdual level and human captal of enterprses and companes s the method of earnngs captalzaton. Ths approach to assessng the value of human captal was used by many economsts, ncludng V. Farr, L. Dubln, A. Lotka, I. Fsher, H. Bekker, B. Chyzuk and others. Amercan economsts and socologsts L. J. Dubln and A. Lotka also elaborated the problems nvolved n evaluaton of human captal. They derved the followng formula: V0 = V P ( Y E C ), (4) [6, c.14] = 0 1 where V 0 - the value of the ndvdual at the tme of brth; V = - the current (1 + ) value of a dollar earned n years; P - the probablty of a person to lve to age ; Y - annual earnngs of a worker snce to + 1; E - the proporton of employees n manufacturng aged to + 1; C - the value of the cost of human lfe from the age of to +1. In order to determne the monetary value of a person of a certan age (for eample a,) ths formula (4) can be transformed to the followng: P0 a Va = V P ( Y E C ) (5) [2, p.39]. Pa = a Ths ndvdual ncome captalzaton method, dervng any costs of consumpton or abstnence, gves useful evaluaton for many purposes. Indeed, these authors developed methods for assessng the economc sgnfcance of human ablty to work (or human captal) s techncally perfect and sutable for practcal use on real data. In partcular, I. Fsher offered the methodology for assessng human captal that reflects only ncome that wll be receved n the future. In hs opnon, the use of captal means recevng an nterest as a unversal form of any ncome (wages, profts, rents). Dscounted sum of future ncome s the volume of captal beng used. Methods of assessng human captal, offered by I. Fsher, are based on the dscountng of the amount of ncome that an enterprse can receve n the future due to all knds of nvestment n human captal. The formula of countng looks as follows: Dt D = c t (1 + ), (6) [7, р.55] where Dc - the present amount of ncome, D t - the future amount of ncome - current nterest rate t - number of years. Ths technque s not qute far, snce t makes t possble to determne only the ncome that s receved by the enterprse n the future not takng nto consderaton the amount nvested n human captal resources, changes n the workers professonal level as

4 a result of nvestment, the level of staff educaton, the costs of research and development, healthcare, addtonal costs, etc. In general, as noted by O.Zaharova and Yu.Kaloshyna, ths technque can only be used as a method of plannng of both the epected amount of ncome from nvestment n the future and of current ncome [7, p.55]. H. Bekker suggested usng the standard method of dscountng to assess the human captal: n ³ V a = ( B C)(1 + ) (7) [8, p.49], = a where V a - еvaluaton of human captal of the worker aged a ; B - ncome of the worker; C - wages for ordnary labor and nvestment costs; n - the age at whch actve employment actvty s fnshed; and - the rate of return of human captal. H. Bekker s method of assessng human captal, that s based on dscountng of the volume of wages, whch s assocated wth an ncrease n professonal development of personnel and wth other factors of nfluence throughout workng lfe, makes t mpossble to accurately determne the mpact of nvestment n human captal. Ths technque can be used to determne the mpact of nvestment n human captal along wth other factors changng the value of human captal. Another method of human captal assessment s a technque developed jontly by H. Bekker and B. Chyzuk. They developed a sngle formula for calculatng the ncome of owners of both human and physcal captal. Accordng to the authors of ths method, "total ncome of any person, after he/she fnshed nvestng n human captal, equals the sum of ncome on these nvestments and earnngs from ts ntal human captal" for the owner of human captal [9]. The formula they offered for calculatng ncome s as follows: m E = X + r C (8) [7, p.55], j j= 1 j where E - ncome ( earnngs ) of a person; X - the effect of the ntal captal of ths person; j - specfc nvestments; - nterest rate; r j - rate of ncome of that person from nvestment; Cj - the amount of the funds nvested. Ths technque has a specfc advantage because t takes nto account both earnngs and revenues for nvestment n human captal and ts use enables to calculate the ncome of the employee as a result of nvestment n human captal very reasonably. However, ths technque does not allow determnng the effectveness of enterprse funds nvested n staff development. There are other approaches to the valuaton of human captal. In partcular, the concept of "Analyss of human resources" (AHR), offered by E. Flemholts n the early 60 -es of the XX century, s one of the most famous attempt to use the theory of human captal at the corporate level among the methods of cost valuaton of human bengs [10]. The emergence of AHR s assocated wth the emergence of nterest n staff as an mportant resource of the organzaton, the use of whch hdes sgnfcant reserves. Snce any resource s characterzed by economc effcency of ts use, t was necessary to develop tools that allow managers to more effectvely use ther personnel, to assess ths effectveness and to brng t to the total monetary valuaton, along wth other types of resources. Accordng to the concept of "Analyss of human resources", the term the value of human resources refers not only to the prce of ther purchase, but to ther value to the organzaton or the ablty to generate future profts. As t can be seen, the concept of AHR s based on the use of both ependture and ncome approaches to human captal assessment. Thus, the analyss uses the concept of ntal costs and renewable costs. Intal costs nclude the costs of search, acquston and pre-tranng of employees, ther composton depends on the partcular case, the purposes for whch these costs are calculated, and data avalablty. Renewable (replacement) costs

5 represent today's costs needed to replace an employee who s workng now on a new worker, who s able to perform the same functons. However, the concept of the value of human resources s based on the assumpton that human resources have value f they are able to generate ncome n the future by provdng ther workforce. Thus, the cost of personnel, as well as any other resource, s the current value of the estmated future servces and benefts that t provdes or sells, workng n the organzaton. The cost of the employee to the organzaton also depends on the duraton for whch t can provde ts servces to the organzaton and be proftable,.e. the term of work n the organzaton. If the frst condton determnes the condtonal epected value of the worker, then both of them together determne the epected real value. Thus, the assessment of ndvdual value of human captal s based on the developed probablstc model that takes nto account the possblty of the employee to occupy a certan poston n the organzaton and the duraton of work n ths organzaton, cost of revenue for the organzaton that the employee can brng to t beng n ths poston. It should also be noted that, n addton to the above revewed methods of quanttatve assessment of human captal at the ndvdual level and at the level of human captal of frms, there est a lot of other methods, both n the nvestment (costly) approach and n the ncome captalzaton approach, and ther combnaton s offered by a number of researchers. In partcular, ths s the method of estmatng human captal at the corporate level by Ya. Fttsents, the methodology of dscounted cost evaluaton of the potental of an enterprse s employee by V. Tsarova and O. Yevstratova, the model of evaluatng effectveness of nvestment n personnel tranng by J. Fllps and several others. CONCLUSION Despte the varety of approaches and methodologes for assessng human captal at the ndvdual level and at the level of human captal of enterprses, offered by scentsts, ether of these methods does not take nto account certan mportant aspects. Ths s prmarly due to the fact that not all structural components of human captal allow to be quantfed. To solve ths problem t s necessary to use varous ndrect methods of estmaton, whch n ther turn appear to be a tme-and-labor consumng process. However, ths s not the only dffculty n constructng estmates of human captal as a much greater complety les wth collecton, processng, and statstcal countng of the nformatonal data at all levels of research. So n ths respect, an mportant task s to mprove the current statstcs by developng metrcs to measure human captal - namely, to ntroduce a system of statstcal ndcators that would provde both value assessment as well as full assessment of avalable human captal at the mcro level. The lst of ndcators should prmarly nclude epenses of enterprses and ndvdual entrepreneurs, amed at personnel socal development, ncludng on-job educaton and qualfcaton mprovement tranng, health care, health nsurance, lesure, and cultural development of employees. REFERENCES [1] Zhuravlova,I.V., Kudlay A.V. Human Captal Management of a Company. Kharkov p. [2] Kortsky,A.V. Human captal as a factor of economc growth n the regons of Russa. Novosbrsk p. [3] Dobrynn,A., Dyatlov, S., Tsyrenova, E. Human captal n transtve economy: the formaton, evaluaton, effcency. St. Petersburg p. [4] Chgoryaev,K.N., Skopntseva N.A., Ulyaschenko V.V. Estmaton of cost of human captal on the bass of the costs ncurred. Tomsk Polytechnc Unversty. Tomsk Number 6. Pp [5] Allaverdyan,V.V. Estmaton of cost of "personnel potental" of the enterprse. URL: [6] Maksmova,V.F. Investng n human captal. Moscow p

6 [7] Zakharovа,О.V, Kaloshyna Yu.O. Ratonale for the evaluaton model of nvestment n human captal. Economy of Crmea. Smferopol. In Number 1 (30). Pp [8] Korchahyn,Y.A. Russan human captal: the factor of development or degradaton?. Voronezh, p. [9] Tuguskna,G.N. Methods of assessng human captal enterprses. URL: html?1936 [10] Flamholtz,E.G. A Model for Human Resource Valuaton: A Stochastc Process wth Servce Rewards. Accountng Revew Aprl. - Pp About the author Galna Krushntska, PhD, assocate professor of the department of entrepreneurshp economcs of Chernvts Branch of Interregonal Academy of Personnel Management. Ukrane. Phone: , E-mal: ukr.net Ths paper has been revewed