Purpose – The purpose of this paper is to present an approach to quantify the monetary value of job security. Design/methodology/approach – The paper is theoretical and based on a financial economics human capital model. Empirical estimates of the annualized value of job security at three large corporations and at the government of the USA are also developed for an illustrative employee profile. Findings – A financial economics human capital model can be used to derive a lower‐bound estimate for the monetary value of job security and empirical estimates can be calculated straightforwardly to help managers who allocate economic resources to fulfill organizational labor requirements or negotiate labor agreements. Research limitations/implications – The model presented provides a lower‐bound estimate only. Future research could suggest approaches to calculate more precise estimates. Practical implications – This paper provides a tool for managers and workers who wish to include the monetary value of relative job security in the definition of total compensation during the negotiation of employment conditions or while benchmarking total compensation. Originality/value – This paper is a pioneer contribution in the field of quantifying the monetary value of job security.
Journal of Human Resource Costing & Accounting – Emerald Publishing
Published: Sep 1, 2006
Keywords: Human capital; Compensation; Assets valuation; Employment protection