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MANAGEMENT ACCOUNTING FOR STRATEGIC INVESTMENTS IN HUMAN CAPITAL

K. Gulpenko, N. Tumashik, Y. Filyasova

Abstract

The article presents theoretical consideration of types and elements of personnel motivation programs and performance evaluation criteria as obligatory components of a management accounting system, aimed at reaching strategic organization’s goals and objectives, through investments in human capital. Result-oriented performance is only possible by means of matching employees’ professional interests and abilities with corporate goals. The presence of highly qualified personnel in an organization is its main competitive advantage, since they provide the most valuable constituent of human capital, though characterized by the longest payback period, - intellectual capital, for example, software programs, databases, musical and vocal recordings, patents, inventions, useful models, industrial designs and pre-production prototypes, selective breeding results, integrated circuits, know-how, among other. Intellectual resources, being mainly intangible assets, should be in the focus of management accounting, as they provide sustainable future for the organization in the long term. A system of performance evaluation, based on certain industry-specific performance indicators, within larger systems, such as management by objectives (MBO) or balanced scorecard (BSC), along with a motivation system, consisting of two components – basic and additional, are intended to stimulate higher return on investments from key personnel. Elements of personnel motivation include monetary (salaries, wages, bonuses, profit sharing, shareholding) and non-monetary (company automobiles, covering travel expenses, discounts for purchasing company products, subsidized meals, covering educational expenses, trips to the countryside, memberships in clubs, professional consulting, medical care, life insurance, pensions, retirement benefits, flexible work schedule, among others). The main evaluation criteria include the amount of labour, performance quality, attitude to work, accuracy, readiness for cooperation within the organization, problem solving abilities, taking decisions and assuming responsibility for results. Management accounting, being industry-specific, needs further detailed scientific investigation and standardization for increasing efficiency of investments in human capital.

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