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PraveenIP Started The Discussion:

Dear Fellow HR,
Will you be able to provide me with an example on the Lev and Schwartz methodology of Human capital accounting? I would need to understand how the calculation actually works.
regards
Praveen

M.Peer Mohamed Sardhar -  Member Since: Jan 2007
Kindly click on the following link, it will give you some required information, http://www.citehr.com/search_new.php?q=Lev+and+Schwartz+methodology+&submit=Go

PraveenIP -  Member Since: Jul 2006
Peer,
Thanks for the info. I have already searched the site for the example. There are a lot of definitions but no explanation on the calculations. I need the sample calculation to understand the topic.

Regards
Praveen

M.Peer Mohamed Sardhar -  Member Since: Jan 2007
http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/3160090104.html

Attached FilesProvided by community member M.Peer Mohamed Sardhar. Join us to learn and grow with your peers.
 lev_and_schwartz_120.pdf (506.7 KB, 970 views) lev_and_schwartz_120.pdf (506.7 KB, 344 views)
martian -  Member Since: Oct 2007
dear all i could not open the L & S pdf file... can any one attach the sam eonce more please thanx

HR_Pro -  Member Since: Aug 2007
hi,

may this will help u a bit....

Lev and Schw artz’s model is based on human capital theory,
which recognizes human capital as one of several forms of holding wealth for a business enterprise, such as money, securities and physical capital. In this model of accounting, human capital is treated like other forms of earning assets and thus is an important factor explaining
and predicting the future economic growth of the company.

Lev and Schw artz’s accounting model is based on the measurement of human capital using the formula:
Vr = ÓTt=r I(t)/(1+r)t-r,

where Vr = the human capital value of a person “r” years old;
I(t) = the person’s annual earnings up to retirement;
r = a discount rate specific to the person;
T =retirement age

The formula uses an earnings profile, which is a graphic mathematical
representation of the income stream generated by a person. Typically, earnings increase with age. As the person reaches retirement age, productivity declines as a result of technological obsolescence and health deterioration.

This model postulated in 1971 remains largely unused as a result of criticism from Accounting professionals who argue that human capital cannot be purchased or owned by the firm and therefore would not be recognized as an asset. Additionally, critics of human capital theory state that labor force does not have a “service potential”; meaning employees are paid for rendering current services and no asset is formed by these
payments.

Regards
HR_PRO

PraveenIP -  Member Since: Jul 2006
HR_PRO,
Thanks for your comments. Do you have an examle calculation for the same? It would help us understand better if we have a sample calculation based on an assumption of a company say employing 10 personnel with age groups 23 to 30 and 30 to 40.

Regards
Praveen

martian -  Member Since: Oct 2007
thanx a lot sir i can able to download it... is it possible to get case study of Infosys in this regard regards

Bhavesh Sakariya -  Member Since: Feb 2010
Dear Sardhar, Please send me example of Lev and Schwartz model to me my email id is - bsakariya@gmail.com

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