HRM Auditing – Principles, Practice and Process

HRM AUDITING – PRINCIPLES, PRACTICE AND PROCESS

CHARLES COTTER Ph.D. candidate, MBA, B.A (Hons), B.A www.slideshare.net/CharlesCotter

IMPLATS, SPRINGS21-22 SEPTEMBER 2017

2-DAY, TRAINING PROGRAMME OVERVIEW

• Introduction and Preview

• HRM Auditing – Principles and Practices

• HRM Auditing Process

• Case Study

• Conclusion and Review

HR/PEOPLE RISK MANAGEMENT

HRM AUDITING

INTRODUCTORY LEARNING ACTIVITY

• Refer to page 3 of the Learner Manual

• Complete the following statement by inserting one (1) word.As a HR Manager, in order to effectively conduct a HRMaudit at Implats, I need to/tobe…………………………………………………………………..

• Jot this word down and find other learners who havewritten down the same word.

• Write this word down on the flip-chart. Each learner will beallowed the opportunity to elaborate on their respectivechoice of words.

THE FUNDAMENTALS OF HRM AUDITING

• Defining a HRM Audit

• The driving forces of HRM Auditing

• The purpose, objectives and functions of HRM Auditing

• Benefits and costs (drawbacks) of HRM Auditing

ORIGIN OF THE WORD, “AUDIT”

• The word audit originates from the Latin word‘audire’ which means to “listen”.

• An audit is a systematic, objective riskmanagement tool for how well the workplace iscomplying with regulatory and policy requirements.

DEFINING HRM AUDIT

• An HR Audit as “an intensely objective look at the company’s HR policies, practices, procedures and strategies in order to protect the company, establish best practices and identify opportunities for improvement.”

(SHRM)

• A Human Resources Audit is a review of current Human Resources practices, policies, procedures, documentation and systems and will assist

you to identify strengths and needs for improvement.

• It will provide direction and recommend the courses of action to be taken to ensure compliance with ever-changing laws, rules and regulations.

• A HR audit is a way to diagnose problems in a company’s HR department.

• Auditing is evidence based.

DRIVING FORCES OF HRM AUDITING

• Alignment of HR strategies and practices with strategic objectives of the organization;

• Managing employment practice liability risks;

• Government compliance (skills audit);

• Understanding and determining the impact of HR policies, procedures andpractices;

• People investments need to be quantified to demonstrate a return on investment; and

• Roughly, over two-thirds of an organization’s money is spent on people.

PURPOSE OF HRM AUDIT – V-C-R

• Value

• Compliance

• Risk

MAIN GOALS OF HRM AUDIT

• The goal is the independent and objective evaluationof the efficiency and quality of a company´s HRmanagement, including its compliance with the legalrequirements of employment.

• Determine whether company's employment-relatedmaterials and practices are complying with the lawand the employer's own policies; and

• Identify and bring into compliance, any area that maynot be in compliance. An audit should identify what theemployer is doing right or wrong, as well as grey areasthat could use improvement.

5 C’s – THE KEY BENEFITS OF A HRM

AUDIT

• Compliance

+

• Competitive

+

• Cash

+

• Credibility

+

• Competence

= Clean HRM Audit

V-I-P HRM AUDITING

• Valid (accurate & correct

Measurement)

• Interrogative (3rd degree)

• Protective (against HR, people & reputational risks)

8 CRITICAL SUCCESS FACTORS OF HRM AUDITING

• #1: Organizational readiness for HRM Auditing

• #2: Adequate resources

• #3: The right people

• #4: The audit requires the support of all trade unions and key role players in the SBU

• #5: Guided by a policy

• #6: Under the supervision of a subject matter expert.

• #7: The auditing of HR should be put in the HR calendar and should synchronise properly with other business processes in the organization

• #8: Senior management commitment and support and the general co-operation of key stakeholders

10 KEY PRINCIPLES OF HRM AUDITING

• #1: Need for independence;

• #2: Audit activities should be budgeted for properly;

• #3: Acknowledgement that there are many types of audits;

• #4: Each type of an HR audit has its own purpose andobjectives;

• #5: Establish timeframes for every phase/step of the audit;

10 KEY PRINCIPLES OF HRM AUDITING

• #6: Training of auditors is a must;

• #7: Set standards for the HR Audits;

• #8: Agreement on reporting template;

• #9: Auditors should sign a confidentiality agreement; and

• #10: Auditors should agree beforehand on communication strategy.

LEARNING ACTIVITY 1

• Build a business case for efficientand effective HRM Auditing byperforming a cost-benefit analysisat Implats.

• By referring to the 8 CSF’s and 10Key Principles, critically review andevaluate current HRM Auditingpractices. Identify gaps andrecommend improvementstrategies.

• Present a summary of groupdiscussion

70-20-10% APPROACH TO

HRM AUDITING

• Primary - HRM Audit conducted by HRM department (70%)

• Secondary – HRM Audit conducted by

internal/external audit (20%)

• Tertiary – HRM Audit conducted by external

verifier and/or professional authority e.g.

SABPP (10%)

THE SCOPE OF HRM AUDITING

THE SCOPE OF HRM AUDITING

• Evaluation of the organization’s operational HR policies, practices and processes and their effectiveness in achieving

strategic organizational goals.

• Assessment of current HR metrics for reasonableness andresults.

Efficient

Effective

Ethical

Economic use of talent to achieve organizational goals.

TYPES OF HR AUDITS

• Skills audits;

• Effectiveness audits;

• Performance audits;

• Value-add audit;

• Cultural audits;

• HR systems audit;

• Compliance;

• Best Practices;

• Strategic;

• Function-Specific

HR AUDIT MEASURES

• Planning and staffing

• Recruitment efficiency

• Recruitment effectiveness

• Compensation measures

• Benefits

• Orientation cost per employee

HR AUDIT MEASURES

• Counseling/disciplinary costs

• Lost time costs

• Turnover rates

• Training and development costs/measures

• Organization development measures

HRM AUDITING PROCESS

HRM AUDITING PROCESS

• Design and develop HR policies, procedures andpractices for your organization;

• Assess current HR policies, procedures andpractices against set criteria;

• Analyse the results from evidence; and

• Take action: to close gaps,make recommendations/set improvement goals.

HRM AUDITING PROCESS - ILLUSTRATED

HRM AUDIT ACTION PLAN

• Phase 1: Foundational/Initiation

• Phase 2: Assessment

• Phase 3: Concluding and Reporting

PHASE 1: FOUNDATIONAL/INITIATION

• Audit set-up actions

• Audit planning actions

Determine the purpose and objectives of the audit

Determine the scope of the audit

Determine the organizational components to be audited

Determine the auditing tool to be used

Determine costs and resources needed to perform the audit

Determine audit team governance

LEARNING ACTIVITY 2

• Apply phase 1:Foundational/Initiationof the HRM Auditingprocess at Implats.

Audit set-up actionsAudit Planning actions

• Present a summary ofgroup discussion

PHASE 2: ASSESSMENT

• General comments

• Identify key organizational metrics - determineemployment issues accountability

• Formulating auditing methodology and tools

• Developing a checklist (Refer to Annexure A)

LEARNING ACTIVITY 3

• Apply phase 2:Conducting theAssessment of the HRMAudit cycle at Implats.

• Refer to Annexure A

• Present a summary ofgroup discussion

PHASE 3: CONCLUDING AND REPORTING

• Report preparation

• Report presentation

Quantify your results - start with outcomesInclude an executive summary

Identify risksIdentify and prioritize solutions to problems identify. Where

possible, frame your solutions from a bottom line perspective, i.e., Calculate the benefits and costs of proposed solutions

Evaluate and discuss the organizational, financial and employee relations impact of action or inaction

• Develop a HR improvement plan

HRM ACTION PLAN (INTERVENTION) TEMPLATE

LEARNING ACTIVITY 4

• Apply phase 3:Concluding andReporting of the HRMAudit cycle at Implats.

• Present a summary ofgroup discussion

CASE STUDY: STREAMLINING HRM AUDITING AND RISK MANAGEMENT (24 HOUR FITNESS)

• Refer to and review pages 55-57

Timeliness of the reports

Accuracy of the information

Customer Service

Compliance

• “By working closely with our new partner, we finallyachieved what every HR team longs for: more time todevote to meaningful strategic human resourceinitiatives.”

LEARNING ACTIVITY 5

• Identify and discuss thecritical success factorsthat 24 Hour Fitnessapplied in terms ofHRM Auditing and RiskManagement.

• What HRM auditingbest practice guidelinesand lessons can bedrawn from 24 HourFitness?

CONCLUSION

• Key points

• Summary

• Questions

• Training Administration

• Certification

CONTACT DETAILS

• Charles Cotter

• (+27) 84 562 9446

• charlescot@polka.co.za

• LinkedIn

• Twitter: @Charles_Cotter

• http://www.slideshare.net/CharlesCotter