Master of Business Administration- MBA Semester 3 Q1.Define Human Resource (HR) Audit. What is the need for HR Audit?

What are the various approaches to HR Audit? Many organisations now realise that their most important and expensive asset is their human resources. They recognise the need to exercise better control over these assets so that they are able to make an optimum return on their HR investment. ln this regard, HR audit is seen by the organisations as an invaluable tool to inculcate discipline and accountability among the HR people. Audit is one of the important Management Control Devices lts a review and verification of completed transactions to see whether they represent a true state of affairs of business or not. Thus an HR audit refers to: a. The measurement of effectiveness of HRMs missions, objectives, strategies, policies, procedures, programme, activities and thereafter. b. The determination of what should or should not be done in the future. (Bhatia, 2009, HRM in Global Scenario) 'A human resource audit is defined as an investigative, analytical and comparative process that attempts to reflect the effectiveness of the human resource functions. - Jack J. Phillips The human resource audit is defined as an investigation into size, skill, structure, and all other issues surrounding those currently employed by the organisation and its future human resource needs. - David Campbell Need for HR audit Human resource audit is a systematic assessment of the strengths, limitations, and developmental needs of its existing human resources in the context of organisational performance. (Flamholtz,1987). Human resource audits give an account of the skills, abilities and limitation of its employees. The audit of non-managers are called skills inventory while the audit of managers are called management inventories. Basically, the audit is an inventory that catalogues each employees skills and abilities which enables the planners to have an understanding of the organisations work force. (William B. Werther, Jr. and Keith Davies). Thus the need for HR audit is: To make the HR function business-driven. Determining change of leadership. To take stock of things and improve HRD for expanding, diversifying andentering into a fast-growth phase. For growth and diversification. For promoting professionalism among employees and to switch over to professional management. To find out the reasons for low productivity and develop HRD strategies to address that. Dissatisfaction with a particular component. UNCLEAR To become employer of choice or revamping employer branding. To ensure effective utilisation of human resources. To review compliance with laws and regulations. To instill a sense of confidence in the human resource department that it is well-managed and prepared to meet potential challenges and opportunities. ' To maintain or enhance the organisations reputation in a community Approaches Approaches to Human Resource Audit by Walker Walker [1998] differentiates between two approaches relative to HR auditing, i.e., those centred on the functions internal aspect, and those centred on the external aspect. Internal perspective: From an internal perspective, as in any staff function, there is a trend of valuing its actions as a result of the activities undertaken and its costs incurred. The way of judging a departments capability would be on its ability to supply certain services to the organiation at the lowest possible cost.

According to this approach, the operational measurements traditionally used are those which refer to quantity, quality and reliability, or cost and speed, therefore placing the focus on activities, costs, or productivity ratios. External perspective: From an external perspective, if it is understood that the ultimate appraisalof the effectiveness of HR is based on their impact on the companys results, then the measurements should include results obtained outside the function. Though HR audit is a recent concept, it has emerged as an invaluable technique for improving the efficiency of the HR management of an organisation. Due to the growth of the service sector in the economy, the importance of human resources in organisations has increased enormously, and this has hastened the process of the introduction of HR audit. The role of the HR audit in these firms is to streamline managerial control over HR activities. Based on the role and utility of the HR audit, two major approaches have been developed. Internal Approach External Approach

Internal Approach: The HR audit focuses on examining the effectiveness of the contribution of the HR department to the internal operations of the organisation. From this perspective, the emphasis of the HR audit is on the cost benetit of the HR activities measured in terms of organisational at the lowest cost, speed and reliability are some of the criteria used in its activities. Quantity, quality, cost, speed and reliability are some of the criteria used in measuring the performance of the HR department in this method. External Approach: The emphasis of the HR audit is on measuring the contribution of the HR activities to the external performance of the organisation. For instance, the organisation may obtain competitive advantage in the market through the efficiency of the HR department. When the HR department is able to reduce the cost of hiring, training and compensation, it provides the organisation the opportunity to vary the prices of the goods or services to its advantage. Certainly, the ultimate benefit of efficiency of any operation can come only from outside the organisation. Common approaches to HR audit There are five common approaches for the purpose of evaluation of HR in any organisation: Comparative approach: ln this approach, another division or company that has better practices or results is chosen as the model. The audit team audits and compares the audited firms results with the best practices of the model organisation. This approach is commonly used to compare the results of specific activities or programmes. This approach is often used to compare turnover, absence, salary data and staffing levels. lt helps detect areas where improvement is needed. lt also makes sense to compare where a procedure is being used for the first time. Outside authority: ln this approach, standards set by a consultant or taken from published research findings serve as the benchmark for the audit team. The consultant or research findings may help diagnose the cause of problems. Statistical: This approach relies on performance measures drawn from the companys existing information system. From existing records, the audit team generates statistical standards against which activities and programmes are evaluated. With the mathematical standards as a base, the team may uncover errors while they are still minor. Often this approach is supplemented with comparative data from external sources such as other firms, or industry association surveys. The information is usually expressed in ratios or formulas that are easy to compute and use. Compliance approach: This approach reviews past practices to determine if actions taken followed legal requirements and company policies and procedures. The audit team here often examines a sample of employment, compensation, discipline and employee appraisal forms. The purpose of the review is to ensure that the field officers and the operating managers have complied with internal rules and legal regulations, such as minimum wages and equal employment opportunity laws. By sampling elements of the human resources information system, the audit team looks for deviations from laws and company policies and procedures. The 'team can then determine the degree of compliance achieved. This concept of HR auditing is based on a legal outlook. According to Antona [1993] the audit of performance or conformity consists of making an inventory of the social situation of the company, considering the labour law norms and regularly verifying the companys

compliance with the applicable regulations. Thus, this concept is centred on the verification that the current labour laws are being adhered to. The audit should verify if the companys policies, practices, and documents regarding employee hiring, retention, discipline, termination, and post-employment are both fair and legal [Higgins, 1997]. These practices and policies must prohibit discrimination by offering equal employment opportunities; protect the employment seeker from being discriminated against on the basis of age; ensure minimum wages; and contain provisions regarding mental disabilities and reasonable accommodations for disabled workers. Management By Objectives (MBO): ln this management by objectives approach, managers and specialists set objectives in their area of responsibility. Then they create specific goals against which this performance can be measured. The audit team researches actual performance and compares it with the previously set objectives. They can then evaluate the trends in this area. Q2.Write a brief note on staffing. How does employee orientation programs help employees? What are the characteristics of good employee orientation programs? Answer : Staffing is a term used in the sphere of employment. It has been applied to more than one aspect of the working environment. Staffing has been defined as follows by Heneman and Judge in Staffing Organisation Staffing is the process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organizations effectiveness. Staffing is a term that refers to the management of employee schedules. It can be described as the process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organisation's effectiveness. The ideal staffing level for an organisation depends on the amount of work to be done and the skills required for doing it. lf the number and quality of staff employed are greater than necessary for the workload, an organization may be deemed to be overstaffed or if the number of staff is insufficient for the workload, an organisation is deemed to be under-staffed. Effective human resource planning will determine the appropriate staffing level for an organisation at any given point in time. Staffing includes various aspects to ensure the best practices in an organisation. Employee Orientation Programmes Employee orientation programmes are given to new employees at a place of business or work. lt helps employees to speed up and learn the ground rules of the company. This often reduces start-up time, training, and other indirect costs associated with having new employees who are unfamiliar with the company culture. Orientation programmes are aimed at reducing the new employee stress factor. J The employee orientation programme offers the business its best chance in shaping an employees skills / work practices and imbibing its corporate philosophy onto the mind of the new employee, because a new hire comeswith an open mind to learn and create a good impression. The programmes can last from several hours to several days. The process of new employee orientation strengthens the new employees relationship with the organisation. lt fuels their enthusiasm and guides their steps into a long term positive relationship with the organisation. Effective orientation programmes - where new employees are introduced to the company's mission, vision and goals begin to feel they are a vital part of the team - are key to sparking early productivity and improving employee retention. "ln today's labour market, new employees know they can quit and start somewhere else tomorrow," says Mel Kleiman, author of Hire Tough, Manage Easy - How to Find and Hire the Best Hourly Employees. Done poorly, the new employee orientation will leave the new employees wondering why on earth they walked through your door. "Orientation should be geared toward reinforcing new employees' 'buying decisions. The focus must be on convincing them that they made the right choice when they signed on." Good employee orientation programmes; Make a good first impression. Make new employees feel welcome and valued as key players on the team. Explain the mission/ purpose of the company and the job so that employees can see the big picture. Assure them they will be carefully and patiently trained - not thrown in to "sink or swim. Familiarise employees with rules, policies and procedures. Help employees adapt to their new surroundings, as well as learn who all the players are and how they work together. Establish friendly relationships among co-workers and managers.

Ensure new employees have all the information and tools they need to do their jobs. Motivate employees to succeed as an integral part of the team. Develop the long-term commitment you want from every member of your workforce. Tell them what's in it for them -in sum, reinforce their "buying decision.

Q3.What is HR Scorecard? Explain the reason for implementing HR Scorecard. Answer : The HR Scorecard argues that HR measurement systems must be based on a clear understanding of organizational strategy and the capabilities and behaviors of the workforce required to implement that strategy. Thus, an HR Scorecard is a mechanism for describing and measuring how people and people management systems create value in organizations, as well as communicating key organizational objectives to the workforce. The goal of an HR scorecard is to help businesses determine the value of their human resources departments. The challenge often is daunting because unlike most departments or divisions within a company, measurement tools traditionally. The HR scorecard framework was specifically designed for the following reasons: It reinforces the distinction between HR do-ables and deliverables:A good audit system must clearly differentiate between the deliverables that influence strategy implementation and do-ables that do not. Policy implementation is not a deliverable until it has a positive effect on the HR architecture and creates the right employee behaviours that drive strategy implementation. An appropriate HR measurement system will encourage HR professionals to think both strategically as well as operationally. lt helps in controlling cost control and value creation: lt is the responsibility of HR to minimise the cost of the firm but at the same time, HR has to fulfill its strategic goal, which is to create value. The HR scorecard helps HR professionals balance the two and find the optimal solution. It allows HR professionals to drive out costs where appropriate, but at the same time it helps to create value for the firm by retaining good human resources. It measures leading indicators: There are drivers and outcomes in the HR value chain along with leading and lagging indicators in the overall balanced performance measurement system. It is thus important to monitor the alignment of the HR decisions and systems that drive the HR deliverables. Assessing this alignment provides feedback on HRs progress towards these deliverables and lays the foundation for effective HR strategies. lt assesses HRs contribution to strategy implementation: The cumulative effect of the HR scorecards deliverable measures provides the answer to the question regarding HRs contribution to a firms performance. All measures have a credible and strategic rationale. Managers can use these measures as solutions to business problems. It lets HR managers to manage their strategic responsibilities: The scorecard motivates the HR managers to focus on exactly how their decisions shape the successful implementation of the firms strategy. This is due to the systemic nature of the scorecard that covers all the aspects. Therefore it provides a clear framework. lt encourages flexibility and change: ln this era of an ever-changing business environment, standardised patterns do not work well. The changes are required even in the HR policies with the change in business environment. The basic nature of the scorecard with its causal emphasis and feedback loops helps tight against measurement systems getting too standardised. Every decision needs to be taken based on past and future scenarios. One of the common problems of measurement systems is that managers tend to get skilled to obtain the right numbers once they get used to a particular measurement system. The HR scorecard provides the flexibility and change because it focuses on the firms strategy implementation, which constantly demands change. Q4.Competency management. Explain the two frameworks of competency management. Answer : Competency (or Competence) Management Systems are usually associated with, and may include, a Learning Management System (LMS). The LMS is typically a web-based tool that allows access to learning

resources. Competency Management Systems tend to have a more multidimensional and comprehensive approach and include tools such as competency management, skills-gap analysis, succession planning, as well as competency analysis and profiling. Competency Management Framework. HR auditor should pay attention towards the fact that competency management utilises a competency framework to align the strategic objectives of the organisation with the competencies of its human resources. The frameworks are focused on attitudinal and behavioural competencies, rather than those that look at technical skills. HR auditors should be able to address technical gaps in knowledge through established training and development activities. By applying a systematic approach in measuring individual competencies, ongoing snapshots of the overall knowledge capital could be built within the organisation. Competency framework is a method of describing the underpinning values that shape and define the culture of an organisation. lt provides clear focus to support the development of staff in order to deliver the best possible services.There are two general frameworks that an organisation can use and theauditor can check: Management Competency Framework Generic Competency Framework

Management competency framework is generally applied if your job involves supervising or managing other people, or you are in a technical or professional role in which you regularly operate at this level. This framework splits into three levels. The particular level that applies to you depends on the level of your management responsibilities. Generic Competency Framework applies if your job does not include supervisory or management responsibilities. There are a number of competencies in each framework. Under each is a general description of the competency, followed by a list of attitudes/ behaviours that would indicatecompetence in the relevant area. There is also a negative statement at the end of each competency to indicate the sort of behaviour that is activeiy discouraged, as it works against the principie of continual improvement thatvan organisation may be striving for. Q5.Write a brief note on workplace policies and practices. Workplace Policies and Practices

Many smaller companies do not like writing down certain aspects of its ways of conducting business. For such companies, it is a mere formality and they do not appreciate people-oriented culture. However, this should be avoided as it is blatantly illegal since laws require that companies should state very clearly the policies and guidelines laid down for the employees Safeguarding employee information Employees personal information should be safeguarded. Separate tiles should be maintained for personal information as contrasted with employment related information. Main objective behind it to ensure that while deciding the employees career with the company, his personal information should not be considered. The employment decision needs to be made on the basis of work/ performance- related information, not the personal information. For example, while deciding whether to promote an employee or not, instead of his religion, medical history, ethnicity, demography or employees performance at work, job experience and capabilities should be considered. Relevant documents in the work file include information on the employees education, related work experience, and performance evaluations in various positions within the company. An audit can clarify what information must be segregated and the laws that govern employees access to and copyin g of their files. Other employee information that must be safeguarded includes any materials that contain medical information.

Employee performance management An audit can review the companys job descriptions for legal compliance (i.e_, to determine whether the descriptions list the essential functions of the job). Various legal issues can arise from performance related problems of employees. An audit will check whether the following systems are in place or not and then recommend improvements and reviews: 90-day written standard performance evaluation form An annual written standard performance evaluation form A performance management/ performance improvement plan A description of the companys policy for both voluntary resignation and company-initiated termination Wage and salary administration programme, Bonus/ stock option criteria. 11.6.3 Safe work environment Audit practices may also help the companies to know about factors that contribute to a safe work environment. A company may choose to develop an audit sheet tailored to a particular issue, such as the companys zerotolerance policy for harassment. For example, a company may wish to review and evaluate its practices of dealing with inappropriate behaviour at its workplace. Auditing workplace behaviours that support legal compliance A safe, dignified, and respectful work environment is not only mandated by the law, but also increases motivation and productivity of the employees. Safe working environments should be considered, especially for females in offices so as to make them feel conlident and able to concentrate on their work. Q6.What are the areas to be concentrated on for HR Audit? Prepare a questionnaire for conducting an audit for manpower planning.
A Sample Internal Human Resource Audit Questionnaire Company name: ............................. .................................................... Business unit name (if applicable) . Address: .............................................................................................. Street: ................................................................................................. City: ..................................................................................................... State/Province Zip/Postal code: ............................................................ Country: ............................................................................................... Telephone number ............................................................................... Facsimile number: ................................................................................. Fiscal year-end (month/day): .... ............................................................ Company contacts: Name ...... ....... Name .............................................. Position .......................... Position .......................................................... Phone ......................... Phone . industry information.. industry classification: ..... ....................................................................... Manpower planning- Sample Questionnaire 1. Does your workforce formation fit the companys' business objectives? 2. Does the company have a manpower plan? i 3. How do you create a manpower plan? I 4. Do you develop a competency-based approach to staffing? 5. Does every position have competency/requirement? 6. Does every employee understand competency/requirement needed to perform a job/position?

7. Does the company have a clear job description for each job/position? And does each have clear competency map? 8. What is the total number of all employees (head count) at the business unit? managerial level l supervisory level staff/operator level total

9. What are the total number of employees (head count) for the human resources department? managerial supervisory staff total