hrm-hr audit

8/7/2019 hrm-hr audit

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Human Resource AuditsHuman Resource Audits


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What is an HR audit?What is an HR audit?An HR audit is a process to review

implementation of organizations policies and procedures, ensure compliance withemployment law, eliminate liabilities,

implement best practices and educate your

managers.


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Human Resource Audit?Human Resource Audit?A human resource audit evaluates theA human resource audit evaluates thepersonnel activities used in an organization.personnel activities used in an organization.

The audit may include one division or entireThe audit may include one division or entirecompany. It gives feedback about :company. It gives feedback about :

1.1. The function of operating managerThe function of operating manager2.2. The human resource specialists.The human resource specialists.

3.3. How well managers are meeting theirHow well managers are meeting theirhuman resource duties.human resource duties.

In short, the audit is an overall quality controlIn short, the audit is an overall quality controlcheck on human resource activities in acheck on human resource activities in a

division or company and how thosedivision or company and how thoseactivities support the organization s strategyactivities support the organization s strategy


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P ersonnel/Human Resource Audit P ersonnel/Human Resource Audit

Involves:Involves:Measurement and evaluation of personnelMeasurement and evaluation of personnelprogrammes, policiesprogrammes, policies and practicesand practicesIdentification of gap between objectivesIdentification of gap between objectivesand resultsand resultsDetermination of what should or shouldDetermination of what should or shouldnot be done in future.not be done in future.


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Benefits of A Human ResourceBenefits of A Human Resource

Audit Audit Identifies the contribution of the personnelIdentifies the contribution of the personneldepartments to the organizationdepartments to the organizationImproves professional image of the personnelImproves professional image of the personneldepartment department Encourages greater responsibility andEncourages greater responsibility andprofessionalism among members of theprofessionalism among members of thepersonnel department personnel department Clarifies the personnel department s dutiesClarifies the personnel department s dutiesand responsibilitiesand responsibilitiesFinds critical personnel problemsFinds critical personnel problems


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The audit should be:The audit should be:Proactive

Reactive

Informative

Developmental


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The Scope of Human ResourceThe Scope of Human Resource

AuditsAuditsAudit of Corporate StrategyAudit of Corporate Strategy

Corporate Strategy concerns how the organization is going to gain competitiveCorporate Strategy concerns how the organization is going to gain competitiveadvantage.advantage.

Audit of the Human Resource FunctionAudit of the Human Resource FunctionAudit touches on Human Resource Information System, Staffing and Development,Audit touches on Human Resource Information System, Staffing and Development,and Organization Control and Evaluation.and Organization Control and Evaluation.

Audit of Managerial ComplianceAudit of Managerial ComplianceReviews how well managers comply with human resource policies andReviews how well managers comply with human resource policies and

procedures.procedures.

Audit of Employee SatisfactionAudit of Employee SatisfactionTo learn how well employee needs are met.To learn how well employee needs are met.


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Audit of Corporate StrategyAudit of Corporate StrategyHuman resource professionals do not set Human resource professionals do not set corporate strategy, but they stronglycorporate strategy, but they stronglydetermine its success.determine its success.By assessing the firm s internal strengths andBy assessing the firm s internal strengths andweaknesses and its external opportunitiesweaknesses and its external opportunitiesand threats, senior management devisesand threats, senior management devisesways of gaining an advantage, such as :ways of gaining an advantage, such as :stresses superior marketing channels,stresses superior marketing channels,lowlow--cost production, etc.cost production, etc.Understanding the strategy has strongUnderstanding the strategy has strongimplications for human resource planning,implications for human resource planning,staffing, compensation, employee relations,staffing, compensation, employee relations,and other human resource activitiesand other human resource activities


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Audit of the Human ResourceAudit of the Human Resource

FunctionFunction1. Human Resource Information1. Human Resource InformationSystemSystem

-- Human ResourceP

lans : Supply and demandHuman ResourceP

lans : Supply and demandestimates; skill inventories; replacement estimates; skill inventories; replacement charts and summariescharts and summaries

-- Job Analysis Information : Job standards, JobJob Analysis Information : Job standards, Job

descriptions, Job specificationsdescriptions, Job specifications-- Compensation Management : Wage, salary,Compensation Management : Wage, salary,

and incentive levels; Fringe benefit and incentive levels; Fringe benefit package; Employerpackage; Employer- -provided servicesprovided services


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2 . Staffing and Development2 . Staffing and Development

Recruiting : sources of recruits, availability of Recruiting : sources of recruits, availability of recruits, employment applicationsrecruits, employment applications

Selection : selection ratios, selectionSelection : selection ratios, selection

procedures, equal opportunity.procedures, equal opportunity.Training and development : orientationTraining and development : orientationprogram, training objectives and procedures,program, training objectives and procedures,

learning rateslearning rates

Career development : internal placement,Career development : internal placement,career planning program, human resourcecareer planning program, human resource

development effortsdevelopment efforts


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3 . Organization Control and3 . Organization Control andEvaluationEvaluation

P erformance appraisals : standards andP erformance appraisals : standards andmeasures of performance, performancemeasures of performance, performance

appraisal techniques, evaluation interview.appraisal techniques, evaluation interview.

LaborLabor--Management Relations : LegalManagement Relations : Legalcompliance, management rights, disputecompliance, management rights, dispute

resolution problems.resolution problems.

Human Resource Controls : employeeHuman Resource Controls : employeecommunications, discipline procedures,communications, discipline procedures,change and development procedures,change and development procedures,


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Tasks of AuditorsTasks of AuditorsIdentify who is responsible for each activity.Identify who is responsible for each activity.Determine the objectives sought by eachDetermine the objectives sought by eachactivity.activity.

Review the policies and procedures used toReview the policies and procedures used toachieve these activities.achieve these activities.P repare a report commending properP repare a report commending properobjectives, policies, and procedures.objectives, policies, and procedures.

Develop an action plan to correct errors inDevelop an action plan to correct errors ineach activity.each activity.Follow up the action plan to see if it solvedFollow up the action plan to see if it solvedthe problems found through the audit.the problems found through the audit.


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Audit of ManagerialAudit of Managerial

ComplianceComplianceCompliance with laws is especiallyCompliance with laws is especiallyimportant. When safety, compensation,important. When safety, compensation,or labor laws are violated, theor labor laws are violated, thegovernment holds the companygovernment holds the companyresponsible.responsible.If managers ignore policies or violateIf managers ignore policies or violate

employee relations laws, the audit employee relations laws, the audit should uncover these errors so that should uncover these errors so that corrective action can be started.corrective action can be started.


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Audit of Employee SatisfactionAudit of Employee SatisfactionEmployee satisfaction refers to an employee sEmployee satisfaction refers to an employee s

general attitude toward his or her job.general attitude toward his or her job.When employee needs are unmet, turnover,When employee needs are unmet, turnover,

absenteeism, and union activity are moreabsenteeism, and union activity are morelikely. To learn how well employee needs arelikely. To learn how well employee needs are

met, the audit team gathers data frommet, the audit team gathers data fromworkers.workers.

The team collects information about wages,The team collects information about wages,benefits, supervisory practices, careerbenefits, supervisory practices, careerplanning assistance, and other dimensions of planning assistance, and other dimensions of

jobjob


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Bef or e you b eg in th e audit proc essBef or e you b eg in th e audit proc ess

1. Determine who will conduct the audit.

Internal vs . Ex ternal

2. Secure senior management commitment.

a. A re they ready to fi x whats broken, even if it costshighly?

b. Do t hey agree wit h the met hodology?

c. W ill t hey allow access to all departments/information?

d. W ill t hey publicly support t he process?


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3 . Define the parameters.

a. W ho will be audited?

b. W hat do you want to audit?

c. W hat audit tools will you use?

d. How will t he process be rolled out?

e. How will results get reported?

f . W ho will get t he results?


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4 . I ntroduce the audit process to your managers.


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D epartm ental AuditsD epartm ental Audits

What should you b e conc ern ed about?What should you b e conc ern ed about?

R ecord Keeping

S ick and vacation trackingO vertime reportingT emporary worker trackingA ccessibility/safety/security of recordsA ccuracy of records

E mployee FilesW hat is and isnt in t heemployee fileA ccess to t he file

S afety and security of t he files


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Audit Tools:Audit Tools:

Interview

Q uestionnaireHistorical analysis

Ex ternal Information


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Research approaches to auditsResearch approaches to audits1. Interviews1. Interviews with employees andwith employees and

managers are one source of informationmanagers are one source of informationabout human resource activity.about human resource activity.

Employees and managers commentsEmployees and managers commentshelp the audit team find that needhelp the audit team find that needimprovement.improvement.Another useful source of information isAnother useful source of information isthe exit interview. Exit interview arethe exit interview. Exit interview areconducted with departing employees toconducted with departing employees tolearn their views of the organization.learn their views of the organization.


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2. Questionnaires/surveys2. Questionnaires/surveys

Because interviews are time

Because interviews are time- -consuming,consuming,costly, and often to only few people, manycostly, and often to only few people, many

human resource departments usehuman resource departments usequestionnaires. Through questionnairequestionnaires. Through questionnaire

surveys, a more comprehensive picture of surveys, a more comprehensive picture of employee treatment can be developed.employee treatment can be developed.Questionnaire may also lead to more candidQuestionnaire may also lead to more candidanswers than faceanswers than face- -toto--face interviews.face interviews.

-- employee attitude about supervisorsemployee attitude about supervisors-- Employee attitude about their jobsEmployee attitude about their jobs-- P erceived effectiveness of human resourceP erceived effectiveness of human resource

department department


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3. Historical analysis3. Historical analysis

Not all the issues of interest to human resource audit Not all the issues of interest to human resource audit are revealed through interviews or questionnaires.are revealed through interviews or questionnaires.Sometimes insight can be obtained by an analysis of Sometimes insight can be obtained by an analysis of historical records, such as:historical records, such as:

-- Safety and health recordsSafety and health records-- Grievances recordsGrievances records-- Compensation studiesCompensation studies-- Scrap ratesScrap rates-- Turnover and absenteeism recordsTurnover and absenteeism records-- Selection recordsSelection records-- Affirmative action plan recordsAffirmative action plan records-- Training program recordsTraining program records


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4 . External information4 . External information

Outside comparisons give the audit team aOutside comparisons give the audit team aperspective against which their firm sperspective against which their firm s

activities can be judged.activities can be judged.Through Department of Labor, industryThrough Department of Labor, industry

association, professional associationassociation, professional associationnumerous statistics and report are compiled.numerous statistics and report are compiled.These organizations regularly publishesThese organizations regularly publishes

information about future employment information about future employment

opportunities, employee turnover rates, workopportunities, employee turnover rates, workforce projection, area wage and salaryforce projection, area wage and salarysurvey, work force demography, accident survey, work force demography, accident

rates, and other data that can serve asrates, and other data that can serve asbenchmark for comparing internalbenchmark for comparing internal

information.information.


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How do you introduc e the HR audit toHow do you introduc e the HR audit toyour mana gers?your mana gers?

1. Ex plain the reason for it.

a. To protect t hem and t he institution

b. To help t hem understand policies, procedures, andlaws

c. To gain a better understanding of t heir department

d. To help t hem set best practice procedures

e. To avoid costly and time consuming litigation


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The audit report The audit report

Findings of research are used to developed aFindings of research are used to developed apicture of the organization s resourcepicture of the organization s resourceactivities. For this information to be useful, it activities. For this information to be useful, it is compiled into audit report.is compiled into audit report.The audit report is a comprehensiveThe audit report is a comprehensivedescription of human resource activities that description of human resource activities that includes both commendations for effectiveincludes both commendations for effectivepractices and recommendations for improvingpractices and recommendations for improvingpractices that are less effective.practices that are less effective.Audit report often contain several sections.Audit report often contain several sections.One part isOne part is for line managersfor line managers, another is, another is forformanager of specific human resource functionmanager of specific human resource function, ,and the final part isand the final part is for the human resourcefor the human resource

manager.manager.


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R eportin g the R esultsR eportin g the R esults

Compile your findings in a draft letter

A llow department head/manager to reviewyour draft and make comments/corrections

C ompile final version

Present report to senior management

C opy department head/manager


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Report for line managersReport for line managers

How line managers handle their dutiesHow line managers handle their dutiessuch as:such as:Interviewing applicantsInterviewing applicants

Training employeesTraining employees

Evaluating performanceEvaluating performanceMotivating workersMotivating workers

Satisfying employee needsSatisfying employee needs

The report also identifies peopleThe report also identifies peopleproblems. Violations of policies andproblems. Violations of policies andemployee relations law are highlightedemployee relations law are highlighted


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Report for the HR Specialist Report for the HR Specialist The specialists who handle employment The specialists who handle employment training, compensation, and other activitiestraining, compensation, and other activitiesalso need feedback. Such feedbacks are :also need feedback. Such feedbacks are :

1.1. Unqualified workers that need for trainingUnqualified workers that need for training2.2. Qualified workers that need forQualified workers that need for

development development 3.3. What others company are doingWhat others company are doing4 .4 . Attitude operating managers towardAttitude operating managers toward

personnel policiespersonnel policies5.5. Workers pay dissatisfactionWorkers pay dissatisfaction


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Report for HR ManagerReport for HR Manager

It is contains all the information given to bothIt is contains all the information given to bothoperating managers and staff specialists. Inoperating managers and staff specialists. Inaddition, HR Mangers gets feedback about :addition, HR Mangers gets feedback about :

Attitude operating managers and employeesAttitude operating managers and employeesabout services given by HRDabout services given by HRDA review of HRD plansA review of HRD plansHuman resource problems and theirHuman resource problems and theirimplicationimplicationRecommendations for needed changes andRecommendations for needed changes andpriorities for their implementationpriorities for their implementation

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hrm-hr audit