Management science and the development of human resource accounting

              Shahid L. Ansari UNIVERSITY OF CALIFORNIA, LOS ANGELES
Diana T. Flamholtz
LOYOLA MARYMOUNT UNIVERSITY
MANAGEMENT SCIENCE AND THE DEVELOPMENT OF HUMAN RESOURCE ACCOUNTING*
Abstract: A common misconception about human resource accounting (HRA) is that it focuses narrowly upon financial accounting, that its purpose is to reflect the asset value of people on financial statements. The major purpose of HRA is to provide concepts and measurements to facilitate the effective and efficient man-agement of human resources. It, therefore, represents a management accounting development.
Management science has played an important role in facilitating the development of human resource accounting as a managerial tool. The theories underlying HRA are derived from and consistent with the concepts and philosophy of management science developed after WW II. The rationality and multidisciplinary problem solv-ing approaches which characterize management science were applied to HRA and together with other economic and social factors of the 1960's produced human resource accounting.*
Accounting history has, for the most part, dealt largely with the earlier development of the discipline. It has thus focused on book-keeping and accounting as it evolved from its beginnings in Europe. Less has been done to interpret, and to put into proper historical perspective, more contemporary developments in accounting. While it is recognized that earlier accounting developments grew out of societal needs and reflect the state of general development of con-temporary societies, many recent developments are not recognized as representing the outcome of similar forces. This is important because those who use and shape accounting must anticipate the impact of societal changes upon accounting—particularly in the period of rapid change we find ourselves in today.
The twentieth century has been marked by the recognition of management accounting as a major branch in accounting. This evolution was greatly influenced by the developments in "manage-
*Our thanks to the following people who provided us information useful in writing this paper: R. Lee Brummet, C. West Churchman, Eric Flamholtz, Paul Kircher, R. O. Mason, Wm. Pyle, Burt Swanson.