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The purpose of the audit is to reveal the strengths and weaknesses in the
organization’s human resources system, and any issues needing resolution.
The audit itself is a diagnostic tool, not a prescriptive instrument. It will help
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 it’s full potential to support the organization’s mission and
objectives can be realized. Other aims of the audit are to:-
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5) Perform a "due diligence" review for shareholders or potential
investors/owners.
6) Identify the HR programs that are most important to achieving your
organization's objectives.
7) Find out how well your HR department is delivering those programs.
8) Benchmark your HR work to ensure continuous improvement.
9) Promote change and creativity.
10) Focus the HR staff on important issues.
11) Bring HR closer to the line functions of the organization.
12) Assess the effectiveness of the Human Resources function
13) Ensure regulatory compliance.
SCOPE OF AUDIT:
Generally, no one can measure the attitude of human being and also their
problems are not confined to the HR department alone. The audit is very
broad in nature and covers the following HR areas:
• HR function.
• Managerial compliance of personnel policies, procedures and legal
provisions.
• Corporate strategy regarding HR planning, staffing, interpersonal
relations, remuneration and other HR activities.
• Climate on employee motivation, morale and job satisfaction.
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• Make specific recommendations to improve the efficiency and
performance of your HR function
The audit process consists of a series of questions covering the eight primary
components of the HR function:
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II. The criteria followed to define the content of the training
programs, the evaluation criteria of the efficacy of the training
programs
III. The percentage of the HR budget dedicated to training
IV. The average number of hours of training per employee
V. The percentage of employees that participate in training programs
by work place categories.
5.)Compensation and benefits :The average wage per employee and wage
difference among employees; the fixed and variable components of
retribution; the percentage of remuneration linked to the employee’s yield
and the internal equity and external competitiveness of the retribution
system.
PHASES OF HR AUDIT
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Pre-Audit Self-Assessment: In order to maximize the time spent during
subsequent portions of the audit, a pre-audit self-assessment form, if sent to
the client can be of use. The self-administered yes/no questionnaire asks a
number of questions about current HR policies and practices.
On-site Review: This phase involves an on-site visit at the client's facility
interviewing staff regarding HR policies and practices. Assess the mission,
vision, strategy, and culture of the organization, from whatever written
material there is in the company (check with the department or person who
handles public, customer, or shareholder relations).
Where possible, compare the data you collected with market data. This
information will provide you with a point of view for the next phase of the
audit: the interviews. If, during the interview, discrepancies arise between
the data and the interviewee's answer, you can explore the reasons for the
discrepancy(s).
Conduct Interviews
The purpose of the interview is to collect input from the internal customer on
their Human Resources needs and how those needs are being met.The
interviews provide direct feedback on the needs of the organization as stated
by the customers. In addition they can provide indirect feedback. For
example, the results may indicate that different organizations have
conflicting goals. Perhaps a performance management system could correct
this problem or perhaps communication isn't flowing well in the organization,
suggesting a need for communication programs or some training and
development.
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Begin the interview with top management. Next conduct interviews with a
sample of subordinate managers including first line management. The topics
to discuss during the interview include:
Records Review
Audit Report: The information gathered is used to develop an HR audit report. The audit report
categorizes action needs into three separate areas. The areas that are urgent and important (UI),
not urgent needs but important (NUI), not urgent but not important needs (NNI)), and important
opportunities needs (IO). As a result of this scheme of classification, managements can prioritize
their steps. Possible actions that can be taken after the audit report include:-Modification of the
employee handbook, changes in the policy statement or training hr personnel in the recruitment
and hiring process.
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b. Pay equity
c. Job descriptions
d. Legal postings
e. Equal Employment Opportunity and Affirmative Action
f. Forms (applications, internal forms, etc.)
g. Workers' Compensation/ Work injury benefits Act
h. Legal reporting
Consolidate the information you collected. Compare the results with market
surveys. Determine which practices are good/popular/effective/competitive.
Determine which practices need improvement. Recommend specific
improvements referring to the results of both the Effectiveness audit and the
Regulatory compliance audit. Justify the recommendations. Determine how
to measure whether the improvements are successful.
BENEFITS OF HR AUDIT:
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6. Provides timely legal requirement.
7. Sound Performance Appraisal Systems.
8. Systematic job analysis.
9. Smooth adoption of the changing mindset.
Conclusion:
The auditors always prepare and submit an audit report to authority of the
organization, which may be clean or qualified. The clean report indicates the
appreciative of the department's function, but the latter one represents the
gaps in performance and therefore contains remarks and remedial
measures. HR Audit is very much helpful to face the challenges and to
increase the potentiality of the HR personnel in the organization.
References: