Q.1.Define HR AUDIT .Explain the HR Audit Process in Detail with Illustrations.

HUMAN RESOURCE AUDIT

DEFINITION:

Human Resource Audit is a systematic assessment of the strengths, limitations, and developmental needs of its existing human resources in the context of organizational performance (Flamholtz, 1987). In some cases an HR audit may even help a company find areas where savings could be realized with the help of job cuts and the funds may then be allocated to different departments in an effort to either streamline productivity or launch a new program or product line by either moving personnel there or hiring additional staff. HR audit is a systematic evaluation of the strengths, limitations, and developmental needs of its existing HR function based on the organisational performance. HR audit activities play a more important role than just solely collecting and presenting evidence of compliance. The HR audit is an analysis of factors involved in the management of human resource with a summary of the findings. It is then followed by the solutions to correct the short comings. The advantage is that there are previously defined policies, goals and standards and the audit must see that management abides by it.HR Audit is an important process in any organization to evaluate the working of the staffs. HR being such a significant part of any organization needs special attention in order to have competitive edge in the ever growing market. The proper audit helps in understanding various core areas that the company has to address. We have been providing unbeatable service of HR Audit to our esteemed clients. We have employed a group of domain experts which is dedicated for HR Audit. These experts analyze the clients organization on different parameters and understand the exact area to be addressed. After the exhaustive study they offer the viable solutions to the clients regarding the efficient use of manpower and cost cutting measures they can employ. This helps in improving the performance of the company in general and employees in particular.

The various aspects of HR audit are as follows: Staffing Compensation and benefits Performance management

Employee development Employee relations Safety Reporting and record keeping

NEED FOR H.R. AUDIT:Top Management saw solutions to their problems, issues and challenges in HRD to face business competition and to achieve organizational goals. PURPOSE OF H.R. AUDIT: 1. To examine and pinpoint strength and weaknesses related to H.R. areas and Skills and Competencies to enable an organization to achieve its long-term and short-term goals. 2. To increase the effectiveness of the design and implementation of human resource policies, planning and programs. 3. To help human resource planners develop and update employment and program plans. SCOPE OF HUMAN RESOURCE AUDIT

Whenever the H.R. Audit it taken up, the scope is decided. Audit need not be exhaustive, but should be focused on particular function of H.R.M. such as Training and Development, Performance Appraisal, Compensation, etc.. However, the objective and approach of H.R. Audit, more or less, remains the same, regardless of scope.

APPROACH TO H.R. AUDIT

1. Self directed surveys. 2. Task Forces within the organisation. 3. Out side Consultants. AUDITING PROCESS: STEPS IN H.R. AUDIT

Auditing process varies from organizations to organizations. Generally involves following STEPS: STEP ONE: Briefing and Orientation: Key Staff Members meet: i. To discuss particular issues considered to be important. ii. To chart out audit procedures, and iii. To develop plans and program of audit. STEP TWO: Scanning material information: Scrutiny of all available information pertaining to personnel, personnel handbooks and manuals, guides, appraisal forms, computer capabilities and any other related information. STEP THREE: Surveying employees: a. Interview with key managers, functional executives, Top functionaries in the organisation and employees Representatives, if necessary. b. The purpose is to pinpoint issues of concern, Present strengths, anticipated needs and managerial views on human resources. STEP FOUR: Conducting interviews: I. What questions to be asked, are developed during scanning of information. II. It is better for H.R. Audit, if clarity about the key factors of H.R.M. selected for audit and the related questions that need to be examined. STEP FIVE: Synthesising:

The data gathered is synthesized to present the a. Current Situation. b. Priorities. c. Staff pattern, and d. Issues identified. STEP SIX: Reporting: 1. The results of the audit are discussed with Managers and Staff Specialists, in several rounds. 2. Important issues are identified for inclusion in the formal Report.

CHALLENGES FOR H.R. DEPARTMENT

EIGHT CHALLENGES IDENTIFIED BY DAVE ULRICH (1997) 1. GLOBALISATION INVOLVES: NEW NEW NEW NEW NEW MARKETS PRODUCTS MINDSETS COMPETENCIES WAYS OF THINKING

H. R. DEPATMENTS WILL NEED TO CREATE MODELS AND PROCESSES FOR ACHIEVING: GLOBAL ACTIVENESS COMPETITIVENESS EFFECTIVENESS 2. VALUE CHAIN FOR GLOBAL COMPETITIVENESS AND HR SERVICES

BUILDING CUSTOMER-RESPONSIVENESS ORGANISATION THROUGH:

a. Innovation b. Faster Decision Making c. Price or Value Advantage d. Effective linking with Suppliers

3. GROWTH OF ORGANISATION By BY BY BY INCREASING Customers MERGERS ACQUISITION JOINT VENTURES

HR ISSUES INVOLVED: Having EXECUTIVES with BUSINESS MINDSET. - For CUTING COST on hiring PEOPLE. - For overcoming CHALLENGE in New Business. 4. BUILDING ORGANISATIONAL CAPABILITIES Reviewing Existing Capabilities New Capabilities. Aligning Capabilities with Business Strategies. 5. MANAGING CHANGE Adopting some new H.R. Practices. Learning some New Skills and Attitudes. Unlearning some existing skills and Attitudes. Modifying Mindset of Executives and Employees.

6. MAKING TECHNOLOGY VIABLE

Finding out ways and means to make technology successful. 7. ATTRACTING AND RETAINING COMPETENT PEOPLE Attracting Talented People. Retaining them. Utilising them suitably. 8. TRANSFORMING ORGANISATION Creating fundamental and lasting changes.

PRINCIPLES FOR HRM EFFECTIVENESS

SIX PRINCIPLES OF Dr. T. V. RAO ARE BASED ON HIS OBSERVATIONS AND PERSONAL KNOWLEDGE ABOUT THE 11 NATIONAL HRD AWARD WINNERS, DURING THE PERIOD FROM 1989 TO 1997. DR. RAO OBSERVED, FOLLOWING COMMON TRAITS AND CHARACTERISTICS IN THE AWARDEES: i. ROLE MAKERS NOT ROLE TAKERS. II. INTEGRATION OF HR POLICIES AND PRACTICES WITH COMPANY BUSINESS. III.VERSATILITY FOR ONE ROLE TO OTHER. IV.THRUST FOR LERNING. V. ALL ARE NOT HR MANAGERS. VI. READY TO HANDLE LINE RESPONSIBILITIES. VII. HAVING HIGH APPLIED BEHAVIOURAL SCIENCE ORIENTATION. SIX PRINCIPLES FOR BECOMING AN EFFECTIVE HR MANAGER: 1. RESPECTING EACH OTHERS TIME.

2. BECOMING TRUSTWORTHY AND PROMOTING TRUSTWORTHINESS. 3. CONTINUOUS INTROSPECTION OF ROLES AND RESPONSIBILITY OF SELF AND THE GROUP. 4. LEARNING FROM NEIGHBOURS FOR CHANGE AND REFLECTION. 5. PAYING ADEQUATE ATTENTION TO THE CULTURE AND VALUES IN THE COMPANY AND THE COUNTRY. 6. USING PERSONNEL POLICIES FOR EMPOWERING EMPLOYEES AND PROMOTING MANAGERIAL EFFECTIVENESS AND NOT FOR BLOCKING CREATIVITY AND INNOVATION.

H. R. COMPENTENCIES

1. Knowledge of H.R. practices: - Staffing. - Development. - Appraisal. - Rewards. - Organisational Planning. - Communication, Etc...

2. Mastery of Human Resource: - Every thing about H.R.

3. Knowledge of Business: It means knowing about: - Financial. - Strategic. - Technological variables and their influence on business. 4. Mastery over Change process and Change Management: - Creating Meaning. - Problem Solving. - Innovation.

- Transformation. - Relationship Influence. - Role Influence. 5. Mastery of Business: It means knowing about following capabilities of the organisation: Business, Financial. Strategic. Technological. Organisational.

METHODS OF H.R. AUDIT FOUR METHODS: 1. 2. 3. 4. INDIVIDUAL INTERVIEW METHOD GROUP INTERVIEW METHOD WORKSHOP METHOD QUESTIONNAIRE METHOD

I. INDIVIDUAL INTERVIEW METHOD: Top level management and senior managers are interviewed, individually. It helps in following: A. Knowing their thinking about future plans and opportunities available for the company. B. Knowing about their expectations from the H.R.Audit. C. Getting sensitive information pertaining to working styles and culture. Union leaders, departmental heads, some strategic clients and informal leaders are also interviewed, individually. In case of small companies, manned by professionals, interviews can be extended with selected employees from different levels and functions. II. GROUP INTERVIEW METHOD:

Group interviews and discussions with the employees and/or executives of large companies for H.R. Audit, facilitate collection of information about effectiveness of existing systems. COMPOSITION OF GROUP: 1. Ideally, the group should be of 4 to 8 persons. 2. Group should consists of same or similar level of employees from cross functional areas. 3. In case of large organisation, group interviews for each functional area can be conducted, separately.

III. WORKSHOP METHOD: In some cases of H.R. Audit, instead of Individual and Group Interviews, Workshop Methods i.e. Large Scale Interactive Process (LSIP) is conducted, as under:

a. 30 to 300 participants can be asked to gather in a room. b. They are divided in small groups. c. They are asked to work either around Systems, Subsystems or around different dimensions of HRD and do SWOT Analysis. d. All the groups thereafter give presentations. e. The H.R. Auditor compiles the views of all groups, makes own observation, conclusions and prepares a report. f. The H.R. Auditor announces the audit Results before submitting the report to top Management. LSIP WORKSHOP FOR HRD AUDIT ON PERFORMANCE APPRAISAL SYSTEM - RELEVANT QUESTIONS THAT HAVE BEEN ASKED

IN ONE OF THE HR AUDIT CONDUCTED BY Dr. T.V. RAO: i. What are the three good things in your performance appraisal system? ii. What is the one thing you would like to change in your performance appraisal system? iii. How would you critically evaluate the job rotation in your company? iv. What are the strengths and weaknesses of your training policies and practices? v. What three objectives would you use to describe the promotion policies as they exist in your company?

IV. QUESTIONNAIRE METHOD: Feed back about various dimensions of HRD, including the competency base of HRD staff, the styles of line managers, the implementation of various HRD systems, etc are obtained through a detailed questionnaire from individuals or groups for H.R. Audit. This method helps in benchmarking. The process is as follows: a. Detailed questionnaire is prepared by H.R. Auditor. b. Individuals or groups are asked to assemble in a room or hall are explained the objective and process of HR Audit. They are then given questionnaires. c. They submit the questionnaire, duly filled in, to the HR Auditor. d. The HR Auditor compiles the feedbacks, makes observations, conclusions and recommendations. e. Audit Results are informed to the Participants before the report is submitted to the top management.

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OSERVATION, ANALYSIS OF SECONDATY DATA, REPORTS, MANUALS AND OTHER PUBLISHED LITERATURE

OBSERVATION: In addition to following the said methods, the HR Audit, needs to undertake following to assess the extent to which a congenial and supportive human welfareoriented climate exists in the company: 1. Visit workplace, plant, machinery room, canteen, toilets, training rooms, hostels, hospital, school, living colony, etc., as applicable. 2. Observations can be made through a checklist. ANALYSIS OF SECONDARY DATA: This can provide an insight into the HRD assets and liabilities of the company. For example in the are of training, it may reveal as to whether employees are given training systematically or otherwise, the cost involved for training, the age group of employees attended training programmes, the purpose of training the employees etc.. ANALYSIS OF REPORTS, RECORDS, MANUALS AND OTHER PUBLISHED LITERATURE: Study and analysis of said documents help in assessing the strengths and weakness of HRD.

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H.R.AUDIT METHODOLOGY (INDIVIDUAL INTERVIEW METHOD HOW TO INTERVIEW AND FRAME QUESTIONS?)

INTERVIEWS BEGIN WITH THE CEO AND TOP MANAGEMENT PURPOSE: TO KNOW EXPECTATIONS OF CEO. TO EXPLAIN SCOPE AND LIMITATIONS OF HRA. TO GET COOPERATION FROM STAFF. TO KNOW STRATEGIC LONG-TERM AND SHORT-TERM PLAN OF THE ORGANISATION.

CEO SHOULD BE INTERVIEWED, SEPARATELY.

BRIEFING SESSION WITH CEO, COVERS: HRD AUDIT AND ITS METHODOLOGY. SCHEDULE OF H.R. AUDIT. ASKING CEO OF HIS/HER EXPECTATIONS. EXPECTATIONS, WHICH CANNOT BE MET.

IF DESIRED BY CEO, BRIEFING SESSION OF SENIOR AND TOP MANAGERS CAN BE HELD IN A GROUP:

BRIEFING WILL COVER FOLLOWING QUESTIONS WHAT IS HRD? WHAT IS HRD AUDIT? WHAT IS REQUIRED OF THE LINE MANAGERS IN INDIVIDUAL OR GROUP INTERVIEWS? WHAT HAVE BEEN THE FINDINGS OF GROUP. HR AUDITOR TO TELL DURING BRIEFINGS TO CEO AND SENIOR/ TOP MANAGEMENT: HR AUDIT IS NOT A PROBLEM-SOLVING EXERCISE. IT WILL NOT GIVE FEEDBACK ABOUT INVIDIDUALS, BUT ABOUT STRUCTURE, COMPETENCY LEVELS, LEADERSHIP, PROCESSES ETC. IT IS COMPREHENSIVE, BUT CAN BE FOCUSED ON ONE OR MORE SYSTEMS. ACTION ON HRD AUDIT REST WITH CEO. FORMULATION OF QUESTIONS FOR INTERVIEW WITH CEO: WILL BE BASED ON FUTURE PLANS OF THE COMPANY IN THE AREAS, THE COMPETENCY REQUIREMENTS AND PREPAREDNESS OF H.R. DIVERSIFICATION, NEW MARKET, NEW BUSNESSES, NEW AREAS SCALE OF OPERATIONS, EXPORT, ANY CHANGE OR CONSOLIDATION.

INTERVIEW QUESTIONNAIRE: WHAT DO YOU SEE AS THE COMPETENCY REQUIREMENTS FOR THE FUTURE? WHAT COMPETENCY GAP DO YOU SEE

IN THE EXISTING STAFF? WHAT NEW COMPETENCIES NEED TO BE DEVELOPED IN THE STAFF AND HOW DO YOU PROPOSE TO DO THAT?

INTERVIEW WITH THE HRD CHIEF

OBJECTIVE: TO UNDERSTAND THE EXISTING SYSTEMS, STRUCTURE, SKILLS OF STAFF, STYLES OF TOP MANAGEMENT AND RELATIONSHIP WITH THE HRD PHILOSOPHY, PROBLEMS ETC.. TO UNDERSTAND HRD CHIEFS PERCEPTIONS: 1. ABOUT TOP MANAGEMENT AND THE SUPPORT REQUIRED FROM THEM. 2. ABOUT LINE MANAGERS, THEIR COMPETENCIES AND INVOLVEMENT IN HRD MATTERS. 3. ABOUT UNIONS AND THEIR INVOLVEMENT IN HRD RELATED ISSUES. THE COMPETENCIES OF HRD DEPARTMENT AND STAFF. TO UNDERSTAND THE INTERNAL CUSTOMER FRAMEWORK OF HRD DEPARTMENT. TO FIND OUT THE TIME DIVISION AND HOW TIME IS SPENT BY THE DEPARTMENT. TO ASCERTAIN VIEWS ON HOW VARIOUS SYSTEMS ARE WORKING. TO GET A SWOT ANALYSIS OF HRD SYSTEMS. TO PREPARE A LIST OF DOCUMENTS VIS--VIS CHECKLIST OF HR AUDIT.

FRAMING OF INTRVIEW QUESTIONNAIRE, BASED ON SAID DIMENTIONS FOR INTERVIEW WITH HRD CHIEF: WHAT ARE THE OBJECTIVES OF YOUR DEPARTMENT? WHEN AND HOW WAS IT SET UP? WHAT ARE THE SIGNIFICANT MILESTONES AND CONTRIBUTIONS OF THE DEPARTMENT? WHAT ARE ITS CURRENT ACTIVITIES? WHAT IS THE ORGANISATIONAL STRUCTURE? HOW ARE THE STRATEGIES OF HR AND HR PLANS FORMULATED? WHAT IS THE ROLE OF THE DEPARTMENT IN STRATEGIC PLANNING? WHAT ARE THE MAIN COMPETENCIES OF HRD STAFF? WHICH ARE THE COMPETENCIES THEY NEED TO DEVELOP? What are the styles of Top and Senior level Managers? To what extent the styles are helpful in developing learning culture? What are the main blocks in developing learning culture? How are the line managers supporting their juniors in developing? What needs to be done to make them more supportive? What is the extent of support given by Top Management to HRD? Is there a separate budget for HRD? How the same is allocated and what is the support of Top Management? What is the HRD philosophy and values? What the core competencies of each department and of the organisation as a whole? What is relationship between Personnel and HRD Departments? Is there need for further strengthening Integrating or differentiating the functions or activities of the two? What the strengths and weakness in the following systems of your organisation: i. Performance Appraisal. ii. Counseling. iii. Training. iv. Career Planning and Development. v. Succession Planning for strategic roles. vi. Job Rotation. vii. OD and Team Building interventions. viii. Research and System Development.

ix. Mentoring. x. Culture- Building Exercises. xi. Quality improvement interventions. *****

INTERVIEWS WITH LINE MANAGERS: OBJECTIVE: TO UNDERSTAND THEIR PERCEPTIONS ABOUT THEIR: a. HRD needs. b. Current status. c. Expectations. d. Competencies. e. Commitment to HRD.] f. Etc.. FORMULATION OF INTERVIEW QUESTIONNAIRE, BASED ON ABOVE DIMENSIONS: What are the HRD needs of your department and yourself? What kinD of help do you get from HRD Department for competency and commitment building? What the HRD System that you feel happy about? What are the HRD System that you have contributed and contributing in achieving business goals? What are the strengths of your HRD functions? What are the weak areas of HRD? What are your expectations from HRD? What are the training needs of your department? Are your training needs taken care of? What are your career growth? Are they taken care of? What do you see as future growth of the opportunities and business directions of the company? What the core competencies are skills and knowledge the company has? What skills and knowledge do you thing are required to run the business (or to perform better in your job)? What is good about your HRD sub-systems: Performance Appraisal? Training? Job Rotation? Career Planning and development?

What should the HRD Department start doing or do more? What it should stop doing or do less. *****

INTRVIEWS WITH WORKERS AND THEIR REPRESENTATIVES: OBJECTIVE - TO FIND OUT: THEIR CURRENT DEVELOPMENT NEEDS VIS--VIS BUSINESS GOALS OF THE COMPANY. THEIR MOTIVATIONAL LEVEL. CULTURE PREVAILING IN THE ORGANISATION. GOOD AND BAD PRACTICES OF THE ORGANISATION. FOMULATING INTERVIEW QUESTIONNAIRE, BASED ON ABOVE: How to you feel working in your organisation? What are the strengths of your organisation? What are the areas that need improvement? What do you know about the business plans and opportunities for your company? What do you know about the competition your company is facing today or is likely to face in the future? What are some of the things your company should do to face the changing environment? What is being done to ensure that you all have the skills needed to meet the current needs or future challenges of the company? What motivates you here? What more do you think needs to be done to help you contribute better to the organisation? What kind of training do you get here? Are you satisfied? What more do you think need to be done in the interest of the company? What are the facilities available for you in the plant and colony. What do you think can be done to improve quality, save costs and make people feel happy to work for the company. What are your expectations from the HRD Department? What are you happy about? What are your suggestions for them to serve you better.

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H.R.AUDIT METHODOLOGY (GROUP INTERVIEW METHOD HOW TO INTERVIEW AND FRAME QUESTIONS?) GROUP INTERVIEWS Advantages: 1. Wider coverage of issues. 2. Larger involvement of employees. 3. Verification of data and significant points. 4. Assessment of impact of feelings related to any issue and problem or satisfiers and dissatisfiers.

GUIDELINES FOR SELECTING SAMPLES FOR GROUP INTERVIEWS

Middle level Managers:

Minimum 10% and Maximum 100% group-wise or department-wise. In any audit, 100 Managers individually or in groups should be interviewed. Supervisors and Staff:

10% or 5-6 groups from different functions and workplaces may be selected for audit.

Workmen: To be interviewed in large groups. 5-10 groups are advisable.

GUIDELINES FOR INTERVIEWS IN GROUPS A. Auditors to be introduced to the group by a representative from H.R. Department. B. Auditors to brief about the HRD Audit and its purpose and usefulness to the company. Thereafter, questions relating to various systems can be either asked questions or given a questionnaire to answer in about 30 Minutes and after collecting the feedbacks, discussion for another about 30 minutes can be held to know the intensity of the feelings. In either case, notes should be taken. C. Auditors to consolidate the feedbacks.

FORMULATION OF QUESTIONNAIRE FOR GROUP INTERVIEWS:

As per your view, what are the Strengths and Weaknesses in respect of the following components of HRD: Commitment of Top Management to HRD. Performance Review discussions. Recruitment of competent people. Separations. Retention of competent people. Quality Circles. Identification of fast-track-employees. Participative Management. Mentoring System. Shopfloor Committees. Training (In-house & outside). Delegation. Induction. Personnel Policies. Career Planning. HRD Department and Staff. Succession Planning. Communication. Job Rotation. HRD Culture. Performance Appraisal. Others. INTERVIEW AREAS, DIMENSIONS AND QUESTIONS FOR ASSESSING HRD SYSTEMS

POSSIBLE INTERVIEW AREAS, DIMENSIONS, ISSUES AND QUESTIONS CAN BE IN THE FOLLOWING HRD SYSTEMS: CAREER SYSTEM: Manpower Planning and Recruitment. Potential Appraisals and Promotions, Career Planning and Development. WORK PLANNING: Role Analysis (goal setting), Contextual Analysis, Performance Appraisal. DEVELOPMENT SYSTEM: Training and Learning, Performance Coaching/Counseling, 360-Degree performance feedback, Job Rotation/Mentoring, Staff (worker) Development. SELF-RENEWAL SYSTEMS: Role efficacy, O.D., Action-Oriented Research. CULTURE SYSTEMS: HRD Climate, Values, Quality orientation, Reward and Recognition, Information, Communication, Empowerment. TWO EXAMPLES:

HRD SYSTEM/SUB-SYSTEM POSSIBLE INTERVIE AREAS, DIMENSIONS, ISSUES AND QUESTIONS

WORK PLANNING: Performance Appraisal What is the existing system of performance appraisal? What re the components? What are the objectives? What is it currently being used for? How is it linked to other systems? What are the roles played by the system? Are the line managers taking it seriously? Are they trained for and are they constantly kept educated? What are the strengths, Weaknesses and suggestions for improvement?

DEVELOPMENT SYSTEM: Training and Learning

What are the suggestions for improvement in the training? What is the training budget? Do line managers take the training seriously? What is the process of sponsoring employees for training? What are the other learning mechanisms being used for competency building? What are the new learning mechanisms that can be used? What are the attitudes of the line managers and the top management for training? What are the strengths and Weaknesses of the training as it is being managed? WHAT TO OBSERVE IN AUDIT IN HRD SYSTEM TWO EXAMPLES:

HRD SYSTEM/ SUB-SYSTEM SECONDARY DATA

WORK PLANNING: PERFORMANCE APPRAISAL Study the pattern of ratings for leniency, rater wise trends and department-wise

trends to ascertain the leniency and conservativeness in assessment. Study interdepartmental variations in ratings and rewards to ascertain the possible biases, etc.. Investigate this, only if necessary.

DEVELOPING SYSTEM: TRAINING AND LEARNING Assess the expenditure on training level-wise, department-wise and location-wise. Assess, if the training programmes sponsored are in line with the training needs stated in the appraisal formats. Analyse the training budget to assess, if the budgets are prepared appropriately and if the full expenditure is taken into consideration in the assessment.

WRITING H.R.AUDIT REPORT

OBJECTIVE: 1. TO HIGHLIGHT AREAS THAT NEEDS IMPROVEMENT. 2. TO BE ACTED UPON. PURPOSE: TO HELP THE TOP MANAGEMENT AND AND THE HRD STAFF TO RECOGNISE AND RETAIN THE COMPANYS STRENGTHS. POINTS TO REMEMBER FOR WRITING REPORT: A. SIMPLE LANGUARE SHOULD BE USED. B. IT SHOULD BE SHORT AND PRECISE. C. BULLET FORM HIGHLIGHTING THE STRENGTHS AND WEAKNESSES,SHOULD BE USED.

MODEL OUTLINE: HR AUDIT REPORT

The audit processThe HR audit process is conducted in different phases. Each phase is designed to build upon the preceding phase so that the organization will have a very strong overview of the health of the HR function, at the conclusion of the audit. These phases include: Pre-Audit Information: This phase involves the acquiring and review of relevant HR manuals, handbooks, forms, reports and other information. A pre-audit information request is forwarded to the client who compiles the necessary information for review by auditors. Pre-Audit Self-Assessment: In order to maximize the time spent during subsequent portions of the audit, a pre-audit self-assessment form, if sent to the client can be of use. The self-administered yes/no questionnaire asks a number of questions about current HR policies and practices. The completion of this self-administered questionnaire allows auditors to identify key areas for focus during the HR audit. On-site Review: This phase involves an on-site visit at the clients facility interviewing staff regarding HR policies and practices. A very in-depth HR audit checklist is completed. Records Review: During the on-site visit, a separate review is conducted of HR records and postings. Employee personnel files are randomly examined as well as compensation, employee claims, disciplinary actions; grievances and other relevant HR related information are checked. Audit Report: The information gathered is used to develop an HR audit report. The audit report categorizes action needs into four separate areas. The areas that are urgent and important (UI), not urgent needs but important (NUI), not urgent but not important needs (NNI)), and important opportunities needs (IO). As a result of this scheme of classification, managements can prioritize their steps.

The critical areasThe comprehensive HR audit covers all areas of HR management like recruitment practices, training and development, compensation and benefits, employee and union relations, health, safety and security, miscellaneous HR policies and practiceswelfare, strategic HR issues, manpower planning/budgeting. Besides classifying needs in each of the above areas, the HR audit also cites relevant laws, cases and research to support the recommendations. Preparation for an audit Auditor engagement: If external firm carrying out the audit, it is preferable to set terms in writing defining and agreeing on scope .If using internal resource, it is better to appoint them formally with clarity on scope and select persons who are non political or those who are not high on hierarchy. Also, if internal persons are auditing there must be training in auditing. Documents, manuals, handbooks, forms and reports auditor must have access to relevant information contained in employee files and other confidential documents of the organization. Auditors must be given unrestricted access to records, once they sign agreement for confidentiality.

Data gathering: Completion of a self-assessment questionnaire significantly expedites the audit process and allows for better audit planning. On-site access: The on-site portion of the audit is the most critical.