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Valuing human resources: an analytical framework

Ananda Samudhram (School of Business, Monash University Malaysia, Bandar Sunway, Malaysia)
Bala Shanmugam (School of Business, Monash University Malaysia, Bandar Sunway, Malaysia)
Kevin Lock Teng Low (School of Business, Monash University Malaysia, Bandar Sunway, Malaysia)

Journal of Intellectual Capital

ISSN: 1469-1930

Article publication date: 17 October 2008




The purpose of this paper is to develop an analytical framework that links the expenditures on human capital to the resulting long‐term benefits, and thus provide a model for reporting human capital on balance sheets. The framework identifies different kinds of accounting treatments for different kinds of human capital related expenses.


This paper sub‐divides expenditures related to human capital into four categories, based on the expenditure‐long‐term benefits relationships, using a Cartesian axes‐based approach.


The paper shows that a sub‐class of expenditures occur that are within the control of the organisation and provide economic benefits over several periods. As such, these expenditures can be capitalised. Furthermore, expenditures that do not provide long‐term benefits or result in lower productivity also exist. These need to be addressed by the management.

Research limitations/implications

This model needs to be formally field‐tested.

Practical implications

The analytical framework may be used in practice by managers for analysing the benefits of the different types expenditures on human capital. It can also be used by researchers to analyse the benefits of the expenditures on different types of intellectual capital and financial accounting standard setters to standardise the appropriate accounting treatments for different types of human capital related expenditures.


This is the first study that breaks down the human capital related expenditures into comprehensive categories based on the expenditures‐benefits relationships such that positive and negative intangibles are identified, and examines the financial accounting and strategic managerial accounting implications of both kinds of intangibles.



Samudhram, A., Shanmugam, B. and Lock Teng Low, K. (2008), "Valuing human resources: an analytical framework", Journal of Intellectual Capital, Vol. 9 No. 4, pp. 655-667.



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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