On valuing appreciating human assets in services

On valuing appreciating human assets in services

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Article ID: iaor20081661
Country: United States
Volume: 54
Issue: 2
Start Page Number: 221
End Page Number: 235
Publication Date: Mar 2007
Journal: Naval Research Logistics
Authors:
Keywords: service
Abstract:

This paper derives optimal policies for when to hire, train, and lay off employees in service organizations when worker productivity appreciates deterministically or stochastically under constant, monotonic, and cyclic service demand. The model, an extension of the machine replacement problem from the engineering economy literature, uses infinite horizon linear programming to produce optimal personnel planning strategies and dual prices that characterize the workforce's economic value. The effect of employee attrition is also considered. In its valuation of human assets, unlike pure accounting approaches that only try to measure, this paper proposes an approach to capture the interaction between firm decisions pertaining to human resources and human resource value.

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