HR AUDIT Presentation.pdf

Good Morning!

Ginny Champney, SPHR

HR Consulting Solutions LLC

Providing a full range of HR Services

802-498-5786

Is Your Company like the “Emperor without Clothes?”

Remember the story about the Emperor’s new clothes? The Emperor convinced himself and his loyal subjects that he was wearing the finest clothes, when in fact he was exposed to the elements.

Remember connect-the-dots puzzles?

Without a numbered path to define the picture, the answer typically remains a mystery. In solving the puzzle of effective human resource and risk management, organizations similarly need a structured

approach.

A Human Resources Audit is a method to review current human resources policies, procedures, documentation and systems to identify needs for improvement and enhancement of the HR function as well as to ensure compliance with ever-changing rules and regulations. An Audit involves systematically reviewing all aspects of human resources ~ Connecting the Dots!

What is a Human Resources Audit?

Can also ensure that policies and procedures are fair and consistent thus strengthening employee satisfaction.

By maintaining a satisfied and productive workforce, an employer lessens the expense associated with costly turnover of staff. Losing one employee is estimated to cost a company 50 – 150% of the lost employee’s salary in time and money spent to replace that employee.

Value of the HR Audit

It helps organizations:

1) assess current HR management and employment practices;

2) identify and diagnose systemic problems;

3) evaluate and predict the impact of corrective measures;

4) develop a plan of action; and

5) determine the ROI of such actions.

The Value of an HR Audit

HR audits are evolving from a simple checklist of dos and don’ts and periodic affirmative action plans to a comprehensive process that: Is an integral part of the organization’s

internal auditing and risk management activities;

Includes external auditing practices;

HR Audit Evolution

Strategic HR Audits

Compliance HR Audits

Types of Audits

Impact of HR on Bottom Line Recognition that Employees are the

Competitive Edge

Heightened concern about organizational culture

Increasing interest in strategic perspective

Strategic HR Audits: Why?

A comprehensive process that:

Is a fundamental element of the organization’s strategic management activities;

Emphasizes internal controls;

Strategic HR Audit

A comprehensive process that:

Reviews the effectiveness and efficiency of operations

Reliability of financial reporting

Compliance with applicable laws and regulations

Strategic HR Audit

Assess alignment of HR management activities with organizational objectives

Assess and manage human capital related risks

Protect and enhance the value of the organization’s human capital

Strategic HR Audit

Ensure compliance

Assist in due diligence

Strategic HR Audit

HR strategies and objectives Human Capital-Talent management issues

Culture, values, and mission

Employee staffing and competencies

Strategic HR Audits: Areas Frequently Audited

Alignment with organizational objectives, budgets, culture, values, and mission

The impact on organizational activities and competitiveness, revenues, and profitability

Organizational structure

Strategic HR Audits: Areas Frequently Audited

Ask organizational leaders to complete a self assessment.

Generally, it is a questionnaire that includes yes/no type questions; for example, "The hiring process is timely. (1 = Never, 5 = Always)."

Interviews are conducted with management.

Strategic HR Audit: Tools

Employee surveys to assess the effectiveness of HR programs, performance management, etc.

Interviews are conducted with management.

Extensive interviews of HR Staff to cover all areas of the function.

Strategic HR Audit: Tools

Focused on verifying compliance to federal and state regulations.

Primarily involves HR staff.

Specific list of items to be reviewed.

Compliance Focused HR Audits

Employment policies, practices, procedures, and processes

Compensation and benefits

Employment posters and notices

Compliance HR Audits: Areas Frequently Audited

Compliance HR Audits: Areas Frequently Audited

Form review

Job descriptions

Contractual relationships

Facilities inspection

Process control

I-9s

Hiring and Orientation

Benefits

Compensation

Performance evaluation process

Sections of review include:

Termination process and exit

interviews

Job descriptions

Personnel file review

Sections of review include:

Many company liability issues arise from improper employment records maintenance & retention

Lawsuits & penalties for violations of laws relevant to:

Medical Privacy

Non-Discrimination

Personnel Records Audit:

I-9s

Identity Thefts

Record Retention & Destruction

Personnel Records Audit:

PERSONNEL RECORDS: Audit

Are your employment records kept locked and confidential?

Are personnel files up to

date? Are documents getting filed in a timely manner?

Are documents going into the correct files?

PERSONNEL RECORDS: Audit

Are security procedures for maintaining medical and other protected information continually updated to be in compliance with new laws and best practices to avoid new risks?

Letters of recognition.

Disciplinary notices or documents.

Performance evaluations and goal setting records.

Termination records.

PERSONNEL FILE: What should be

included?

Job descriptions.

Records relating to job offers, promotion, demotion, transfer, layoff, rates of pay and other forms of compensation, and education and training records.

Records relating to other employment practices (including policy acknowledgments).

PERSONNEL FILE: What should be included?

Medical/insurance records (medical questionnaires, benefit enrollment forms, doctors notes, leave of absence records and accommodation requests).

Child support/garnishments.

Litigation documents.

Workers' compensation claims.

PERSONNEL FILE: What should NOT

be included?

EEO/invitation to self-identify disability or veteran status records.

Interview notes and employment test results.

Reference/background checks/credit reports.


be included?

Drug test results.

Immigration (I-9) forms.

Requests for employment/payroll verification.


be included?

Investigation records.

Only any relevant disciplinary action, counseling or other direct communications would be placed in the employee’s personnel file.


be included?

Ask yourself:

1. Is the document relevant for a manager making an employment decision?

2. Is it related to the employee’s performance, knowledge, skills, abilities, and/or behavior?

3. If it is, then it should be placed in the employee’s personnel file as long as it doesn’t include non-work related data!

PERSONNEL FILE GUIDELINE

Determine the purpose and objectives of the audit. Why are you conducting an HR audit?

Determine the scope of the audit. What issues and areas will be audited?

Determine the organizational components to be audited. Who will be audited?

Determine: Who will conduct the audit? Who will be part of the audit team? Who will be the audit team leader?

Developing an HR Audit Plan

Determine the audit tools to be used.

Checklist

Employee surveys

Internally developed assessment tools

Determine the costs and resources needed to perform the audit. Develop a budget.


Determine audit team governance.

Ensure there is top management commitment for the audit and to correct identified problem areas.

Review audit plan and activities with the organization’s counsel. Protect discoverability


Determine key organizational metrics. Organizations measure what they treasure.


The purpose of an HR Audit is to recognize strengths and identify any needs for improvement in the human resources function.

A properly executed Audit will also provide recommendations and suggestions for the remedy of these problems. (Perhaps, more HR Staff!)

Remember…

It is a learning or discovery tool

NOT a test or a judgment

There will always be room for improvement in every organization.

Remember…

Documents

HR AUDIT Presentation.pdf