Accounting for the development of human capital in manufacturing organizations: a study of the Pakistani textile sector
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AbstractPurpose – The purpose of this paper is to examine empirically the impact of human capital development in organizations. It is based on some conceptual aspects of human resource accounting and considers how investments in the development of human capital can be measured in order to investigate the financial returns for organizations. Design/methodology/approach – The study is exploratory in nature as this is the first of its kind in the Pakistani manufacturing sector. The technique of convenience sampling was used to collect the data due to time and resource limitations. The sample comprises of 30 leading companies in the Pakistani textile sector. A self-administered postal questionnaire was designed for the research survey. The results focus on the benefits derived by using the capital investment appraisal techniques of human resource accounting including: return on investment, benefit to cost ratio, weighted average cost of capital, and bottom line evaluations. Findings – The results provide evidence of an association between investment in the development of human capital and the benefits, which organizations can reap from such investments. It further finds that the organizations investing in training and development programs provide high employee productivity that ultimately contributes towards high-organizational performance.
CitationAccounting for the development of human capital in manufacturing organizations: A study of the Pakistani textile sector 2010, 14 (3):178 Journal of Human Resource Costing & Accounting
DescriptionResearch limitations/implications – Owing to the research design, the results may exhibit a lack of generalizability to other sectors. As the results cannot be applied to other organizations, further research can be done by using the same techniques. Originality/value – This paper is a groundbreaking work in Pakistan and thereby an addition to the existing global literature on human resource accounting. This research provides new directions for the literature in this area, by encouraging a debate about the importance of investing in the development of human capital.