Replacement Cost Approach - Management Duniya

Replacement Cost Approach

Replacement Cost Approach:

This method was developed by” Rensis Likert” and Eric G Flamholtz” “ the cost of replacing employees is used as measure of companies HR’s. The HR’s of company are to be valued on the assumption as to walk it will cost in the concern if existing HR’s are required to be replaced with other persons of equal lent experience & talent.

Merits:

1. This approach of advantage of adjusting the human value of price trends in the economy & there by provides more realistic value in inflationary items.


2. It has the advantage of present oriented.

Limitations:

1. It may not always be possible obtain such a measure for a particular employee.


2. It is not always possible to find out the exact replacement of an employee.

Source: Books & Notes

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By: Management Duniya