HR AUDIT

KIRTI SHIVAKUMAR MATS SCHOOL OF BUSINESS

4/30/2012

What is an HR Audit?

An audit is a means by which an organization can measure where it currently stands and determine what it has to accomplish to improve its human resources function. It involves systematically reviewing all aspects of human resources, usually in a checklist fashion, ensuring that government regulations and company policies are being adhered to. The key to an audit is to remember it is a learning or discovery tool, not a test. There will always be room for improvement in every organization.
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Meaning and purpose of HRA

The Human Resources (HR) Audit is a process of examining policies, procedures, documentation, systems, and practices with respect to an organizations HR functions. The purpose of the audit is to reveal the strengths and weaknesses in the organisations 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.
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OBJECTIVES OF HRA

The audit itself is a diagnostic tool, not a prescriptive instrument. It will helps to identify what you are missing or need to improve, and it may even tell you what you need to do to address these issues. It is most useful when an organization is ready to act on the findings, and to evolve its HR function to a level where its full potential to support the organizations mission and objectives can be realized.
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Why Do An Audit

1)To insure the effective utilization of an organizations human resources. 2)To review compliance with a myriad of administrative regulations. 3)To instill a sense of confidence in management and the human resources function that it is well managed and prepared to meet potential challenges. 4)To maintain or enhance the organizations and the departments reputation in the community. 5)To perform a "due diligence" review for shareholders or potential investors/owners.
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What does a full HR Audit entail ?

1)Legal compliance 2)Compensation/Salary Administration 3)Employment/Recruiting 4)Orientation 5)Terminations 6)Training and Development

7)Employee Relations 8)Communications 9)Files/Record Maintenance/Technology 10)Policies and procedures (including employee handbook) 11)Communications

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Common Research Approaches to the HR Audit

A.Comparative Approach
B.Outside Authority Approach C.Statistical Approach D. Compliance Approach E. MBO Approach
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COMPARITIVE APPROACH

In 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 organization. This approach is commonly used to compare the results of specific activities or programs. This best practices approach is often used with turnover, absence, salary data and staffing levels. It helps detect areas where improvement is needed. It also makes sense to compare where a procedure is being used for the first time.

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OUTSIDE AUTHORITY APPROACH

In 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.
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STATISTICAL APPROACH

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 programs 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.
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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 offices 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.
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MBO APPROACH

In 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.
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TOOLS OF A HR AUDIT

Summarize any actions required of your audience Summarize any follow up action items required of you

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