hr audit final

7/31/2019 HR Audit Final

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HUMAN RESOURCE AUDIT

(HR AUDIT)

Presented By:

Anjaly Negi

Adeep Kaur

Harsimran Kaur

Preity Choudhary


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HR Audit Meaning and Definition

Human Resource Audit is a systematic assessment of thestrengths, limitations, and developmental needs of its existing

human resources in the context of organizational performance

(Flamholtz, 1987)

A human resource audit reviews an organization's policies,procedures, and practices. Its purpose is to examine the

technical and practical dimensions of the HR function and to

create a comprehensive system that adds value to the

organization.


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HR Audit Definition

An audit is a means by which an organization can measurewhere 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 andcompany policies are being adhered to. HR Audit also suggest

future improvements based on past activities measurement.

An HR audit is a process to review implementation of your

institutions policies and procedures, ensure compliance withemployment law, eliminate liabilities, implement best practices

and educate your managers.


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HR Audit Significance

1. Essential for Organization success

2. It Provides Required Feedback

3. Managing Rising Labor Costs

4. Increasing Opportunities for Competitive Advantage of HRM

5. HR Audit can avoid Government intervention

6. HR Audit protects Employees interests


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Need for HR Audit

Though HR audit of Policies & Practices is not a legal obligation,some Modern Organizations have started implementing it because

of:

1. Increase in size of Organization & Personnel

2. Change in the Philosophy of Management towards HR

3. Increase in Strength & Influence of Unions


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Some companies for external HR Audit

Vital HR, HR Audit Inc, People Power

These organizations help companies to answer these questions

How effective is your organization at maximizing the

contribution of your human capital?

Why is one or more of your organization's strategic initiatives

languishing?

What steps can you take today, using existing internal resources,

to improve your organizations performance and ROI?


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Examples of some HR Audit Findings

Improper acceptance and retention of resumes and applications

Illegal questions on applications or during interviews

Improper information retained in primary personnel files

Inadequate or improper background and reference checking

forms

Noncompliance with immigration laws


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Examples of some HR Audit Findings Inadequate job descriptions

Benefit plans or Legal Summary Plans etc. not provided

Illegal pay deductions from employees for the time worked

Out-of-date or non-applicable employment laws posters used

Insufficient policies on privacy, electronic communications,

social networking, etc.

Inadequate performance and compensation management tools


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OBJECTIVES OF HR AUDIT

Effectiveness

Implementation

Rectification

Evaluation Modify

Questioning


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1. Effectiveness: To review performance of Human resource

Department and its activities to determine effectiveness.

2.Implementation: To locate gaps, lapses, failings in applying

Polices, Procedures ,rules of the organization.

3.Rectification: To take corrective steps to rectify mistakes,

shortcomings contesting effective work performance of HR

Department.


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SCOPE OF HR AUDIT

Audit of Corporate Strategy

The organization is going to gain competitive advantage.

Audit of the Human Resource Function

Human Resource Information System, Staffing 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.


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Audit of Corporate Strategy

By assessing the firms internal strengths and weaknesses andits external opportunities and threats, senior managementdevises ways of gaining an advantage, such as :

Stresses superior marketing channels

low-cost production, etc.

Understanding the strategy has strong implications for humanresource planning, staffing, compensation, employee relations,and other human resource activities.


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Audit of the Human Resource Function

1. Human Resource Information System Human Resource Plans : Supply and demand estimates .

Job Analysis Information : Job standards, Job descriptions, Job

specifications

Compensation Management : Wage, salary, and incentivelevels , Fringe benefit package .


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3. Organization Control and Evaluation

Performance appraisals : standards and measures of

performance, performance appraisal techniques, evaluationinterview.

Labor-Management Relations : management rights,

dispute resolution problems.

Human Resource Controls : employee communication,

change and development procedures.


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Audit of Employee Satisfaction

It refers to an employees general attitude toward his or her

job.

When employee needs are unmet, turnover, absenteeism, and

union activity are more likely.

The team collects information about wages, benefits,

supervisory practices, career planning assistance, and other

dimensions of job.


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PURPOSE OF HR AUDIT

Basic purpose of HR-Audit is to find:

1. How various units are functioning?

HR audit is a tool which helps to assess effectiveness of

HR functions of an organization.

2.How they met policies & guidelines Pre-agreed upon?

(i.e. focus on analyzing and improving)

3.How to assist Rest of Organization locating gaps betweenObjectives & results? (i.e. to reveal the strength and weakness).


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BENEFITS1. Identifies contribution of HR Department.

2. Improves HR Departments Professional Image.3. Fosters greater Responsibility & Professionalism amongst HR

Staff.

4. Classifies HR Departments Responsibilities & Duties.

5. Stimulates Uniformity of Personnel Policies & Practices.

6. Identifies Critical personnel problems.

7. Ensures Timely Legal Compliance Requirements.

8. Reduces HR Costs.

9. Creation of increased acceptance of changes in HR

department.

10.A thorough review of HR information systems


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PITFALLS

Full audit may be time consuming.

May not be as objective and impartial as desired.

Impact of certain actions may not be clear.


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HR AUDIT PROCESS

Briefingand

orientation

Scanningmaterial

information

Surveyingemployees

Conductinginterviews

Synthesizing

Reporting


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CHALLENGES FOR HRD

Globalization. Value chain for global competitiveness and HR services.

Growth of organization.

Building organizational capabilities.

Managing change.

Making technology viable.

Attracting and retaining competent people.

Transforming organization.


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FIVE APPROACHES TO HR AUDIT

1. Comparative Approach.

2. Outside Authority Approach.

3. Statistical Approach.

4. Compliance Approach.

5. MBO Approach

Auditors may choose any of the five approaches for the purpose of

Evaluation.


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Comparative Approach

Auditors Identify another Company as a MODEL.

Result of their Organization compared with those ofModel Company.

Statistical approach-

Statistical measures are performed considering

the companys existing information.

Outside Authority Approach

Often, Auditors use standard set by Outside Consultant asBENCHMARK for comparison of own Results.


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Compliance Approach :

Auditors review Past Actions to determine if those activities comply

with legal requirements and Company Policies, & Procedures. A Final

approach is for Specialists & Operating Managers to set objectives intheir areas of responsibility.

Management By Objectives Approach :

Creates Specific Goals against whichperformance can be measured. Then the Audit

Team Researches ACTUAL

PEERFORMANCE and COMPARES WITH

THE OBJECTIVES.


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Sample Human Resource Audit question

How effective is the selection process in ensuring that people are placed in

appropriate positions? Explain.

How effective is the appraisal process in accurately assessing performance? Explain. How effective are rewards (financial and non-financial) in driving performance?

Explain.

How effective are the training, development, and career planning activities in driving

performance? Explain.

How effective is the appraisal process in differentiating performance levels for

justifying reward allocation decisions? Explain. How effective is the appraisal process in identifying developmental needs of

individuals to guide training, development, and career planning? Explain.

How effective are the training, development, and career planning activities in

preparing people for selection and placement into new positions in the organization?

Explain.

Overall, how effectively are the five components integrated and mutually supportive?Explain.


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Organization and Structure

Is there an organizational chart?

Does the chart include both employees names and position titles?

Does the chart show reporting relationships?

Is the chart updated as changes occur? As the needs of the organization change, does its structure change?

HR Department Organization

Is the department sufficiently staffed for the industry and the size of organization?

Is the budget in line with other organizations of similar size and industry?

Has the company been involved in any employment lawsuits?

If there have been suits, what were the outcomes?

Is there a job description for each position in the department?

To what position does the top HR position report?

Does the HR Department have a mission statement?

Is the HR mission statement consistent with the vision and mission of the

organization?

Functions of the Human Resource Department

1. For what functions is the HR Department responsible?

( Payroll ,Recruitment, Safety Benefits, Training, Strategic planning ,Salary

administration ,Labor relations Others

2. Should the HR Department be responsible for all of the functions listed above?

3. Should the HR Department be responsible for functions that are not listed above?


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RESEARCH APPROACHES TO HR AUDIT

1. Interviews with employees and managers are one source

of information about human resource activity. Employees

and managers comments help the audit team find that

need improvement.

Another useful source of information is the exit interview.

Exit interview are conducted with departing employees to

learn their views of the organization.


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2) Questionnaires/surveys: Because interviews are time-

consuming, costly, and often to only few people, manyhuman resource departments use questionnaires. Through

questionnaire surveys, a more comprehensive picture of

employee treatment can be developed. Questionnaire may

also lead to more candid answers than face-to-faceinterviews.

- employee attitude about supervisors

- Employee attitude about their jobs

- Perceived effectiveness of human resource department


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3) Historical analysis:Not all the issues of interest to human

resource audit are revealed through interviews or

questionnaires. Sometimes insight can be obtained by an

analysis of historical records, such as:

- Safety and health records

- Grievances records

- Compensation studies

- Scrap rates

- Turnover and absenteeism records

- Selection records

- Affirmative action plan records- Training program records


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4) External information:Outside comparisons give the

audit team a perspective against which their firmsactivities can be judged.

example:Through Department of Labor, industryassociation, professional association numerous statistics

and report are compiled.These organizations regularly publishes information aboutfuture employment opportunities, employee turnover rates,work force projection, area wage and salary survey, workforce demography, accident rates, and other data that can

serve as benchmark for comparing internal information.


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Audit Report

The Prog comes to end with preparation of Report. Report may be

Clean or Qualified. It is Qualified if HR Performance contains

Gaps for which remedies suggested. Report is Clean wherePerformance is fairly Satisfactory

Naturally any audit will be done annually. Though it is

preferred to conduct Human Resource Audit annually, but it isadvisable to conduct audit once in three years or five years,

keeping in view the fact that the realization of the

Organizational goals may not be identified within a year.

PERIOD OF AUDIT

THE AUDIT REPORT


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THE AUDIT REPORT

Findings of research are used to developed a picture of the

organizations resource activities. For this information tobe useful, it is compiled into audit report.

The audit report is a comprehensive description of humanresource activities that includes both commendations foreffective practices and recommendations for improvingpractices that are less effective.

Audit report often contain several sections.

for line managers,

for manager of specific human resource function,

for the human resource manager.


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Report for line managers

How line managers handle their duties such as:

Interviewing applicants Training employees

Evaluating performance

Motivating workers

Satisfying employee needs The report also identifies people problems. Violations of

policies and employee relations law are highlighted


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Report for the HR Specialist

The specialists who handle employment training,compensation, and other activities also need feedback.

Such feedbacks are :

1. Unqualified workers that need for training

2. Qualified workers that need for development3. What others company are doing

4. Attitude operating managers toward personnel policies

5. Workers pay dissatisfaction


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THANK YOU !

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