HR AUDIT (An Early Evaluation System)(An Early Evaluation System)

S.Jayaprakash., S.Jayaprakash., M.Sc (IT), PGD.HRM, DLL & ALM.Sc (IT), PGD.HRM, DLL & AL

HR AUDIT - Definition

• The Human Resources (HR) Audit is a process of examining policies, procedures, documentation, systems, and practices with respect to an organization’s HR functions

• It means, a systematic assessment of the strengths, limitations, and developmental needs of HR management in the context of organizational performance

HR AUDIT - OBJECTIVES• To analyze and improve the HR

functions in the organization. • To expose the strengths and

weaknesses in the HR function, and any issues need resolution.

• To evaluate the efficiency and effectiveness of HR functions.

• To ensure whether the HR function is on the right path to achieve and helping company to achieve its goal / objectives or not.

HR AUDIT - Scope

• Audit of all the HR function.• Audit of managerial compliance of personnel• Policies, Procedures and Legal provisions.• Audit of corporate strategy regarding HR• Planning, Staffing, IRs, Remuneration and other HR

activities.• Audit of the HR climate on employee motivation,

morale and job satisfaction.

HR AUDIT - Benefits• To improve contribution of the HR function

to the achievement of our business objectives.

• To develop the professionalism of our HR people

• Reduce the HR cost• Find out the problems and solve them

smoothly.• Provides timely legal requirement.• Sound Performance Appraisal Systems.• Smooth adoption of the changing mindset.

HR AUDIT - Tools• Interview• Document Review• Questionnaire• Sampling

The Audit should be• Proactive• Reactive• Informative• Developmental

HR AUDIT - Nature

An HR audit is a tool for evaluating the personnel activities of an organization. The audit may include one division or an entire company. It gives feedback about the HR functions to operating managers and HR specialists. It also provides feedback about how well managers are meeting their HR duties.

In short, the audit is an overall quality control check on HR activities in a division or company and an evaluation of how these activities support the organization's strategy.

Auditors may adopt any of the five approaches for the purpose of evaluation:

• Comparative approach• Outside authority approach• Statistical approach• Compliance approach• Management by objective approach.

HR AUDIT - Approaches

• In the comparative approach, the auditors identify another company as the model. The results of their organization are compared with those of the model company.

• In the outside authority approach, the auditors use standards set by an outside consultant as benchmark for comparison of own results.

• In the statistical approach, statistical measures of performance are developed based on the company’s existing information.

Contd..,

• In the compliance approach, auditors review past actions to determine if those activities comply with legal requirements and company policies and procedures.

• The MBO approach creates specific goals against which performance can be measured. Then the audit team researches HR by MBO.

Contd..,

Who should conduct the audit?

• The team that is responsible for the audit should represent a cross-section of the organization’s staff, including line staff, middle and upper management, and those responsible for HR functions. or you may use an external consultant to assist.

How it should be conducted? • The audit process consists of a series of

questions covering the following primary components of the HR function:

1. Roles and HR information systems (HRIS) 2. Recruitment 3. Documentation 4. Training and development5. Compensation and benefits 6. Performance management system and evaluation 7. Termination and transition 8. Legal issues and personnel policies 9. Health / Welfare systems 10.Employee Relations and11. Safety

• The main process is to collect information to answer the HR audit questions in each of above categories and all the relevant information.

• The focus is on how these activities and tasks are actually performed in the organization.

• The process of getting information, in and of itself, can be quite informative.

Contd..,

How are needed improvements identified?

• Once information is gathered, the audit team reviews each major section and notes difference between paper and practice.

• This can then be compared to best practice

(what we should do to best support our organization’s mission).

How is follow-up and correction done?

• A work plan with a timeline, accountability, and deliverables should be created after the team reviews the completed audit and identifies areas where improvement is needed.

• Follow-up and review should be a regular

management function, performed on an ongoing basis.

The auditors always prepare and submit an audit report to authority of the organization, which may be clean / qualified. The clean report indicates the appreciative of the department's function, but the latter one represents the gaps in performance and therefore contains remarks and remedial measures.

HR Audit is very much helpful to face the challenges and to increase the potentiality of the HR personnel in the organization.

Conclusion

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