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What is her connection to SHRM in the first place? What is her agenda or goal, her passion for a philanthropic vision of the middle class? A philanthropic approach is our way out of the current financial crisis and it starts with the Human Resources.
The middle class has been traditionally entered into the basic financial equation by corporations and we are entered as wages payable, as expenses under Liabilities. A = L + SE. The very nature of this formula (especially to maximize corporate performance) is to cut cost to maximize profits and pay out dividends to the SE (stakeholders). The wage earners are Liabilities, a cost to cut in order for the upper management to outperform the competion. Maximize profits, bottom line, at any costs.
The answer is to petition to redefine the basic economic equation and begin to define the HR approach and negotiation process and policay and to present the projectiopns which this action would affect. Collaborate the Finance and accouniting regarding Intangible assets with an Intrinsic values which is how the corroboration enters many other elements into their counting books. Intangible Assets which have an “unlimited life” are not the same as with Intangible Assets having a “limited life”. Even the unlimited life of an Intangible Asset is “tested” at least annually for possible impairment; comparatively, the new situation (accounting entry) for Human Capital under the rule of GAAP (for an example), Amortization should also be scrutinized by such measures or subject to oversight to achieve balance and fairness. But I digress; “Most companies do not estimate a residual value for their Intangible Assets because, unlike Tangible Assets which can be sold as scrap, Intangible Assets usually have no value at the end of their useful lives”.
If you study up on this premise and understand that the basic accounting equation must be balanced and that this change moves the wages payable over to SE and will still balance out the equation; Following the changes I am proposing, at the end of an employee’s contract, the balance would be zero. For example: employed as a manager of a Wal-Mart store, based on my negotiated single year contract totaling $36,000, the monthly entry could look similar to this:
Assets = Liabilites + Stockholders’ Equity
JH -3000 (-A) Amortization Expense (+SE) -3,000
dr Amortization Expense (+E, -SE) 3,000
cr JH (-A) 3,000
These are simple illustrations of the concept which redefines the accounting entries: Presently Human Resource (Capital) is defined as a Liability (+L)
Assets = Liabilities + Stockholders’ Equity
Wages Payable (+L) +3,000 Wages Expense (+E) -3,000
dr Wages Expense (+E, -SE) 3,000
cr Wages Payable (+L) 3,000
This will inject more money into the economy because workers will negotiate their intrinsic value on finite terms and when those intangible assets (the contract) another negotiated contract is created. Time value, time is money, people come to the job with intrinsic value and a promise to invest time and their value and potential and credibility of past performance. WE are not just some liability to be cut.
Cutting costs, expenses and lowering liabilities is a primary function of the business model; the very nature of a liability (Wages Payable) means to keep the Human Capital costs at the very minimum. That is the effect properly carrying out the role of managing a business. What is a cost? jacob.lee.hedman@gmail.com
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