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Auditing the Human Resources Function
The purpose of a Human Resources audit is to assess the effectiveness of the Human Resources function and to ensure regulatory compliance. The audit can be conducted by anyone with sufficient Human Resources experience. Having experience working in more than one company is a plus, as it provides the auditor with a broader perspective. There's an advantage to having the audit conducted by an external consultant. Because the external consultant has fewer biases about the organization and has less personal interest in the outcome than an employee of the company, the external consultant may be more objective.
Assess the mission, vision, strategy, and culture of the organization, from whatever written material there is in the company (check with the department or person who handles public, customer, or shareholder relations).
Collect existing data such as:
Hiring statistics (acceptance rate, hiring rate, hiring projections)
Compensation and benefits philosophy and practice
Exit interview summaries
Employee complaints (discrimination, harassment, safety, other)
Promotion and advancement practices and trends
Human Resources budget and expenditures
Where possible, compare the data you collected with market data. This information will provide you with a point of view for the next phase of the audit: the interviews. If, during the interview, discrepancies arise between the data and the interviewee's answer, you can explore the reasons for the discrepancy(s).
The purpose of the interview is to collect input from the internal customer on their Human Resources needs and how those needs are being met. Begin the interview with top management. Next conduct interviews with a sample of subordinate managers including first line management. The topics to discuss during the interview include:
Perceptions of the company and its goals
Strengths and weaknesses of top management
Employee perceptions of the company and top management
Relations with subordinates
Support of career goals for self and employees
Major Human Resources issues
Which Human Resources functions work well
Which Human Resources functions need improvement
The interviews provide direct feedback on the needs of the organization as stated by the customers. In addition they can provide indirect feedback. For example, the results may indicate that different organizations have conflicting goals. Perhaps a performance management system could correct this problem. Or perhaps communication isn't flowing well in the organization, suggesting a need for communication programs or some training and development.
Some of the information collected during the interviews will be sensitive. Confidentiality must be respected. Get advanced approval from top management on the questions you will ask during the interview phase.
Conduct the Regulatory Compliance Audit
The following areas should be audited as part of the regulatory compliance audit:
Personnel files and recordkeeping (contain only job related information)
Job descriptions (ADA compliance)
Equal Employment Opportunity and Affirmative Action
Forms (applications, internal forms, etc.)
Fair Labor Standards Act
Family and Medical Leave Act
Summarize the Results:-
Consolidate the information you collected. Compare the results with market surveys. Determine which practices are good/popular/effective/competitive. Determine which practices need improvement. Recommend specific improvements referring to the results of both the Effectiveness audit and the Regulatory compliance audit. Justify the recommendations. Determine how to measure whether the improvements are successful.
Obtain Approval from senior Management
Present the preliminary results and recommendations to senior management individually. Point out how these recommendations will support their needs. Obtain their support, then present the final results and recommendations to the senior management staff for final approval.
Implement the Program:-
Consider implementing the program in part of the organization as a pilot program. Monitor and measure success and seek to continuously improve processes. Be prepared to modify the program if an organizational change requires it.
22nd August 2007 From India, New Delhi
OBJECTIVES OF HR AUDIT
• To review every aspect of management of HR to determine the effectiveness of each programmes in an organization.
• To seek explanation and information in respect of failure and success of HR.
• To evaluate implementation of policies.
• To evaluate the performance of personnel staff and employees.
• To seek priorities, values and goals of management philosophy.
TYPES OF HR AUDIT
• Legal Compliance Audit: This audit ensures compliance with all applicable federal, state, and local laws and reviews whether the current HR policies and systems meet the legal requirements.
• Comparative Audit: This audit involves comparing the current procedures of the organization with other organizations in the market that have proved to be successful in practice, in order to gain a competitive advantage.
• Strategic Audit: This audit involves evaluating the SWOT (Strengths, Weakness, Opportunities and Threats) analysis of the HR processes to ensure that they are in alignment with the organization’s strategic plan.
• Function-Specific: This audit focuses on specific functions in HR such as Training, Compensation and Recruitment and helps to measure their effectiveness in relation to long-term business goals.
STEPS FOR SUCCESSFUL HR AUDIT
• Determine the scope: The first step of conducting an HR audit is to determine the scope of the audit. If an HR audit has never been conducted, a comprehensive review of all policies and procedures is recommended. Going forward, businesses may choose to conduct audits that focus on specific HR functions, such as payroll or record keeping.
• Develop a plan: The next step is to develop a plan for conducting the audit. Identify the goals of the audit, assemble the audit team and create a timeline for completing the audit.
• Gather and analyze the data: Once the audit begins, the audit team should gather all the applicable documents and forms under the scope of the audit. The audit team should also review current and potential legal actions.
• Produce a report: After all of the necessary information has been analyzed, the next step is to create a report with the findings of the audit. This report should identify any strengths and weaknesses found during the audit, as well as offer recommendations to correct any instances of noncompliance.
• Create an action plan: Once the audit is complete, company executives should meet with the audit team to discuss the findings and formulate a plan to address each problem or area of concern identified in the report. Action items may include changes to policy, procedures and/or hr practical training practices. Organizations should also consider their available resources when setting a timeline for correcting noncompliance issues, and ensure any corrective actions are realistic and achievable. In addition, organizations should take measures to ensure the audit information is kept confidential and protected from unintentional disclosure.
• Evaluate the progress: Once corrective measures have been implemented, organizations should continuously monitor and periodically review the new processes or procedures to ensure the organization stays compliant.
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12th February 2019 From India, Mumbai