7/31/2019 HR Audit Bridge Towards Healthy Capitalism

1/2

ests of all stakeholders and ischaracterised by consciousleadership, which emphasisesmentoring and motivating, de-

veloping and inspiring ratherthan command and control ormotivating through fear orgreed. A comprehensive Hu-man Resource Auditis a step inthe direction of establishinghealthy or conscious capitalismand is a must for any organisa-tion.

Model of HR auditThe HR audit should focus onpersonnel functions of the or-ganisation, review of corporatestrategies, managerial compli-ance of policies and proceduresand the impact of these on em-ployees, community and envi-

ronment. Conceptually, HR au-dit works on a broader canvassand hence the following can bea model.Corporate strategy:Organ-isations should not be only prof-it-oriented and social responsi-bility of business should be anintegral part of corporate strat-egy. We have seen widespreadglobal recession caused by ir-responsible and greedy busi-ness practices. Corporate fraudis a serious issue too and HRaudit can act as a preventivemeasure to safeguard the inter-

HR audit: Bridge towards healthy capitalismLEARNING LESSONS A comprehensive Human Resource Audit is a must for any organisation, opine experts.

V Pradeep Kumar

T

he global recessionwas an outcome of a

vici ous circ le ofgreed, short termstrategies and lack ofsystems and controls.

The Satyam fiasco was a prod-uct of corporate greed in collu-sion with management and theaudit team, and severely dentedthe Indian corporate pride. Allthis happened at the height ofcapitalism when the ascent ofmoney was the only focus.

The lessons of the massiverecession have shown us the di-rection ahead. Scholars andeconomists are bringing newideas and concepts to the corpo-rate world for discussion and

implementation. The brutalityof capitalism perhaps is givingway, albeit slowly to healthycapitalism which is the newbuzz word. Eminent businessprofessor, author and thinker,Raj Sisodia, who is also Chair-man and Co-Founder of Con-scious Capitalism Institute[CCI] says: A Conscious Busi-ness has a higher purpose thattranscends profit maximisation.It is clear about and focused onfulfilling that higher purpose,which evolves dynamically overtime. It looks to align the inter-

audit, determines the infra-structure required to conductthe audit. The final design ofthe audit depends on organisa-

tional priorities and resourcesavailable. There are also clearadvantages in outsourcing theaudit, such as affordability andfacilitating an objective assess-ment. Content of the audit re-port together with an actiontaken report, should be avail-able to all stake holders. It isideal to conduct the audit year-ly and the report considered bythe board of directors. Like afinance audit, similar processof variance analysis and expla-nations from concerned depart-ments should be included.

Advantages of HR audit

HR audit examines all as-pects of human resources andhence, can trigger dramatic im-provements. The most visiblebenefit would be improved pro-ductivity more than offsettingthe cost of the audit.Changes in ownership, lead-ership, business strategy ormodel, can make an HR auditcritical. In such circumstances,HR audit is a comprehensiveguideline, for major decisions.

Continued on page 3

est of all stakeholders. Qualitative assessment ofhuman resources, structure,systems: The challenge is to as-sess human resource quality,and organisational structureand systems for current and fu-ture needs. Essentially, this isan important corporate tool, tokeep the organisation alert and

ready for any eventuality. HR efficiency: Some com-mon factors to quantitativelyevaluate HR efficiency are:a. Manpower productivity:The best indicator is looking atrevenue and manpower costtrends and, by measuring rev-enue per manpower rupee.b. Recruitment cost/employ-

ee: This can indicate the effi-ciency of the recruitmentprocess.c. Training cost/employee:The emphasis on training is in-dicated by this factor.d. Employee turnover cost:This should take into accountopportunity loss due to non-availability of manpower.

e.Absenteeism:Cost of absen-teeism including loss of busi-ness.f. Opportunity cost: Loss ofbusiness opportunities due toother visible and invisible rea-sons. Managerial complianceand operational style: Organ-isations have policies and set

procedures for its implemen-tation. Further, while imple-menting the policies, a humantouch is required, preserving

the spirit of the policy. The styleof management should have abalance of task and people ori-entation.Health, safety and environ-ment: Organisations are re-sponsible to provide generalhealth and medical facilities foremployees, apart from ensur-ing safety in work environment.Organisations are also respon-sible for external environmentand hence must show concernand act accordingly, irrespec-tive of the existence of a law orotherwise. Statutory compliances:Even though this is an impor-

tant aspect, often this becomesroutine and relegated into thebackground.

The audit processHR audit is a process and mustdeploy different methods suchas interviews, surveys, question-naires, focus group discussions,benchmarking, records verifi-cation, observations and so on.This process must involve em-ployees, management team,shareholders, customers andtrade union. The size of an or-ganisation and the scope of the

7/31/2019 HR Audit Bridge Towards Healthy Capitalism

2/2

The most important group to benefit from anHR audit is the board room. Even though notlegally binding like finance, HR audit is as helpfuland necessary at the board level.

HR audit is a tool for corporate governanceand especially helpful for marketing and humanresources function.

HR audit when designed on a comprehensivebasis, leads to improvement in quality of products

and services marketed by the organisatiolong term benefits.

Importantly, HR audit can analyse failufix responsibilities logically. It free

organisation from politics, blame-game and for non performance, bringing in a new cuprofessionalism.

HR audit therefore is a comprehensive reviehuman aspects of an organisation such as and numbers, structure and systems, skiattitudes, and how appropriate are they, for s