HR AUDIT
HR AUDIT
The Human Resources (HR) Audit is a
process of examining policies, procedures,
documentation, systems, and practices
with respect to an organization’s HR
functions.
The purpose of the audit is to reveal the strengths and
weaknesses in the organization's human resources system
and any issues needing resolution.
The audit works best when the focus is on analyzing and
improving the HR function in the organization.
PURPOSES OF HR AUDIT
Ensuring legal compliance
Keeping HR practices aligned with employer
needs/strategy
Identifying opportunities for improvement
Improving operational e ciency and productivity
Identify root problem areas and cost reduction
opportunities (Economical)
Improve employee morale
Implementing and staying current with world-class
practices
Increasing commitment to continuous improvement
OBJECTIVES
Ef fe ctiveness of performance of HR
Department
Implementation of HR policies, procedures;
To f ind out the reasons for low productivity
and improve HRD Strategies;
Evaluation of the HR sta s & employee;
Modify and Review HR system & challenges
Questioning: To seek answers to : What
happened ? Why did it happen? Why did it
not happen?
BENEFITS OF HR AUDIT
•Identi cation of contributions of HR department
•Helps identify the gaps between the current state and the
standard, thereby streamlining HR work processes
•Encouragement of greater responsibility and
professionalism among HR members
•Clari cation of HR duties and responsibilities
•Stimulation of uniformity of HR policies and practices
•Ensuring timely compliance with legal requirements
•Reduction of HR costs through more e ective personnel
procedures
•A thorough review of HR information systems.
WHEN TO AUDIT?
When a business reaches various milestones
When the business grows to the point where
line managers can no longer make their own
hiring, discipline, promotion and other decisions
without HR assistance
The employer creates or modi es an employee
handbook
A new head of HRM arrives
Employee morale, turnover, a endance or
excessive discipline problems seem to signal
need for evaluation
TYPES OF AUDITS
Compliance audits- Focuses on how well the
company is complying with current laws and regulations
Best practices- Helps the organization maintain or
improve a competitive advantage by comparing its
practices with those of companies identi ed as having
exceptional HR practices.
Strategic -Focuses on strengths and weaknesses of
systems and processes to determine whether they align
with the HR department’s and/or the company’s
strategic plan.
Function speci c- Focuses on a speci c area in the
HR function
HR AUDIT PROCESS
Determine the scope and type of audit
Select research design and data collection
method
Collect the data
Benchmark the ndings
Provide feedback about the results
Create action plans
Foster a climate of continuous improvement
WHO SHOULD CONDUCT HR AUDIT?
The audit can be conducted by internal managers
of the organization, as external HR/Management
expert or by a Labor Law expert.
Whoever is In-charge of audit must have excellent
knowledge about HR policies and should be able to
maintain a check list to check the existing policies with
its present requirements.
An audit conducted by outside HR expert adds extra
value to the whole process apart from giving an
insight into the whole issue.
TASKS OF AUDITORS
Identify who is responsible for each activity.
Determine the objectives sought by each activity.
Review the policies and procedures used to achieve
these activities.
Prepare a report commending proper objectives,
policies, and procedures.
Develop an action plan to correct errors in each
activity.
Follow up the action plan to see if it solved the
problems found through the audit.
METHODS OF HR AUDIT
Individual interview method
Group interview method
Workshop method
Questionnaire method
Observation
Analysis of secondary data
Analysis of reports, records, manuals and other
published literature
SCOPE OF HUMAN RESOURCE AUDITS
•Audit of Corporate Strategy
The organization is going to gain competitive advantage.
•Audit of the Human Resource Function
Human Resource Information System, Sta ng and
Development, and Organization Control and Evaluation.
•Audit of Managerial Compliance
Human resource policies and procedures.
•Audit of Employee Satisfaction
To learn how well employee needs are met.
RECRUITMENT
How are candidates sourced?
How are candidates selected?
Are legal requirements met?
Are the same processes used for all jobs, all
locations?
Are processes followed consistently?
COMPENSATION AND BENEFITS
What are the di erent policy groups (e.g.
management, clerical, union)?
How is base pay policy set?
What grading/job evaluation systems are used?
Are there up-to-date job descriptions?
What variable pay practices are in place?
How are pay increments decided?
What is the bene ts plan?
Are the same processes used for all jobs, all
locations?
Are processes followed consistently?
TRAINING AND DEVELOPMENT
How much training is given?
How is the training program managed?
Are there any sta development programs?
Are the same processes used for all jobs, all
locations?
Are processes followed consistently?
LEGAL
Are processes in place to manage compliance
issues for all relevant jurisdictions?
Is there any outstanding litigation?
Are the same processes used for all jobs, all
locations?
Are processes followed consistently?
WORKFORCE REVIEW
Are there any critical skills shortages?
Are there any critical succession issues?
Is there anything unusual in the distribution
of worker age, gender etc.?
What workforce planning processes are
used?
What succession planning processes are
used?
Are the same processes used for all jobs,
all locations?
Are processes followed consistently?
