AQC states that the implementation of a labor valuation mechanism will create conditions for the expansion of the official market, strengthening of financial reporting, and full provision of transparency. It is possible to add the direction of labor market and labor value assessment to independent valuation activities.
This was stated by Rufat Aliyev, a member of the Board of Directors of the Azerbaijan Society of Appraisers.
According to him, labor valuation can be directly or indirectly reflected within the framework of the existing 9 directions, particularly in the section on service valuation, based on the law "On Valuation Activities." "Both theoretically and practically, the value of labor is determined based on classical valuation approaches – market, cost, and income approaches."
Touching upon international experience, Rufat Aliyev noted that in the USA, labor valuation is already a widespread and institutionalized practice. "Professional appraisers (Valuation Analysts), experts in forensic valuation, as well as HR structures and independent valuation companies are actively involved in this field. Valuation reports related to labor value are widely used in court proceedings (calculation of lost income, cases of reduced work capacity), corporate restructuring projects, startup and innovation initiatives, as well as during mergers and acquisitions (M&A)."
According to the expert, although wages are not regulated by the state in the USA, the economic value of labor is often justified precisely through appraiser reports. "In Germany, this process is carried out in the form of economic expertise and is conducted by officially recognized experts (Öffentlich bestellter Sachverständiger), as well as valuation and consulting companies."
Rufat Aliyev emphasized that the main philosophy of assessing labor activity is based on the principle of "to manage, one must measure." "A well-structured performance and motivation system focuses employees on the final result, while frequent changes in goals create negative outcomes for both the employee and the employer. A stable and transparent valuation system allows management to gain the trust of employees, while also enabling more informed strategic decisions to be made."
He added that Labor Activity Valuation involves the objective assessment of employees' performance, productivity, and development potential at predetermined criteria and time intervals. This process can be applied not only to individual employees but also to teams and the company's performance as a whole.