Accounting for Human Resources Revisited: Insights from the Intellectual Capital Field

Overview Since the mid-1980s, managerial accounting has been the site for a wide range of exciting developments that have resulted in its wholesale transformation from the allegedly irrelevant discipline it had become by the beginning of that decade. One of many interesting facets of this change process is that managerial accounting’s boundaries have become increasingly difficult to identify, something very apparent in its evolving research literature. Many of the most powerful developments have involved a good measure of cross-functional collaboration with other management disciplines, thereby continuing a tradition that characterizes the previous history of managerial accounting. This in turn has resulted in a twenty-first century managerial accounting discipline that exhibits a valuable coherence with the prevailing strategic management concept. Largely absent from the compendium of new management accounting developments has been any concerted attempt at progressing accounting for human resources (AHR), that is, for employees, nowadays widely regarded within organizations as the most important asset. One reason for this oversight may be that accounting researchers continue to believe AHR to be a financial accounting and reporting issue, which is mainly concerned with putting people on the balance sheet. This view overlooks the fact that the most influential contribution to AHR to have emerged to date, Flamholtz’s human resource accounting approach, was manifestly conceived of as a managerial accounting development at its inception in the late 1960s. The purpose of this chapter is therefore twofold: to encourage managerial accounting researchers to reengage with the continuing challenge of AHR; and to identify and discuss a number of valuable insights on how this might be progressed that have emerged in the literature on intellectual capital. The remainder of the chapter is structured as follows. The following section provides a brief history of AHR in the form of human asset accounting, human resource accounting and human resource costing and accounting. In the third section, a number of the main accomplishments of the new management accounting are surveyed, while section four offers a commentary on the absence of much interest in AHR within this set of recent advances. The emergence of the intellectual capital field is outlined in section five and is followed in section six by a discussion of a number of developments associated with accounting for intellectual capital. The chapter concludes by identifying the topic of employee health and well-being as one that managerial accounting researchers might wish to consider investigating as they renew their acquaintance with AHR.