HRM

Does the organisation regularly forecast the supply of and demand for
employees in various categories?
Do job analyses exist for all positions in the organisation?
Are all potential sources of recruitment identified and evaluated?
Are measurable selection criteria developed and used while filling up jobs?
Do effective training and development programmes exist?
Is there a performance evaluation system that helps assess past and potential
performance?
Is the remuneration programme designed to motivate employees?
Is the plant unionised?
Does a grievance procedure exist?
Does the organisation have high quality of work life?
Does the HRM practice contribute to organisational effectiveness?
Does the management underestimate the capacity of HRM to contribute to
organizational effectiveness?

Who
HR Manager is also interested in knowing
depts effectiveness
Errors do happen. Policies and practices
become outdated. Dept is not infallible.
Everybody is interested in finding problems
before dept bfr they become serious. Done
correctly the evaluation process can build a
strong rapport betwn dept and operating
managers.

why
Outdated assumptions, if any can be changed
in consultation with operating managers to
meet Depts objectives and future challenges.
Personnel function must establish credibility
Personnel function must demonstrate how it
contributd to the attainment of organisational
goals.
We must have proper HR audit to respond to
above mentioned questions/issues

Definition
Human Resource Audit means the systematic
verification of job analysis and design,
recruitment and selection, orientation and
placement, training and development,
performance appraisal and job evaluation,
employee and executive remuneration,
motivation and morale, participative
management, communication, welfare and social
security, safety and health, industrial relations,
trade unionism, and disputes and their
resolution.

Benefits of HR Audit
1. Identification of the contributions of HR dept
to the Orgn
2. Improvement of the professional image of
the HR dept
3. Encouragement of greater responsibility and
professionalism among HR employees
4. Clarification of duties and responsibilities of
HR dept

Benefits of HR Audit
5. Finding critical HR problems
6. Ensuring timely compliance of legal
requirements
7. Reduction in HR costs through more effective
HR procedures
8. Maintenance of uniformity of HR policies and
practices
9. Thorough review of the departments
information system.

Audit Approaches
The following approaches are adopted for
purpose of evaluation:
Comparative approach
Outside authority approach
Statistical approach
Compliance approach
Management by objectives (MBO) approach

Audit Process

AUDITING PROCESS : Essential steps in Human Resource Auditing

Though the process would vary from organization to organization, generally it

involves steps:
1) Briefing and orientation:
This is a preparatory meeting of key staff members to:

discuss particular issues considered to be significant,

chart out audit procedures, and
develop plans and programme of audit.
2) Scanning material information:
This involves scrutiny of all available information pertaining to the personnel,
personnel handbooks and manuals, guides, appraisal forms, material on
recruitment, computer capabilities and all such other information considered
material.

Audit Process

3) Surveying employees:
Surveying employees involves interview with key managers, functional executives,
top functionaries in the organisation, and even employees representatives, if
necessary. The purpose is to pinpoint issues of concern, present strengths,
anticipated needs and managerial philosophies on human resources.
4) Conducting interviews:
What questions to ask? The direction which audit must follow is based on issues
developed through the scanning of information gathered for the purpose.
However, the audit efforts will get impetus if clarity is obtained as to the key
factors of human resource management selected for audit and the related
questions that need to be examined.
The following model depicts the various key factors on which information needs
during human resource audit need to be focussed. It is developed from the
interview guide used in an electronics company. It covers a wide range of topics of
profound interest relating to human resource management practices in the
organisation

HR Audit Methodology
Audit should be comprehensive
Involvement of those matter in HRD including
suppliers, disseminators, users of HRD
Multiple methods to carry out Audit
Questionnaires
Interviews
Observations
Analysis of records

What is HRD Audit?

It is a Comprehensive Evaluation of Human
Resource Development
Strategies, Systems and Practices,
Structures and Competencies
Styles and Culture

And their appropriateness to achieve the

short and long term business goals of the
organization

Methodology of HRD Audit

Examines long term and short term plans and
vision to assess Competency Requirements
Identifies broad Competency requirements for
future Business Goals
Examines the existing HRD strategies, systems
and practices and assess their appropriateness
to have the required competencies

Methodology of HRD Audit

Examines the adequacies and inadequacies of
HRD structure, staff and their competencies,
line managers and their attitudes, top
management and their support, unions and
their role in competence building for future
Suggests mechanisms for improving all these
in the business context

Methodology Adopted
Interviews
Individual and group
Top Management
Line Managers
HRD Staff
Workmen and others

Questionnaires
Observation
Analysis of records and secondary data

Methodology
Workshops could be used
Task forces and internal teams could also be
used
External Auditors have a significant role
Benchmarking of questionnaire data may be
of use

Reasons for HRD Audit

For expanding, diversifying and entering into a
fast growth phase.
For promoting more professionalism and
professional management.
Bench-marking for improving HRD practices.
Growth and diversification
Dissatisfaction with any component
Change of leadership

Role of HRD Audit in Business

Improvements
HRD audit is cost effective
It can give many insights into a company's
affairs.
It could get the top management to think in
terms of strategic and long term business
plans.
Changes in the styles of top management
Role clarity of HRD Department and the role
of line managers in HRD

Role of HRD Audit in Business

Improvements
Improvements in HRD systems
Increased focus on human resources and human
competencies
Better recruitment policies and more professional staff
More planning and more cost effective training
Strengthening accountabilities through appraisal
systems and other mechanisms
Streamlining of other management practices
TQM Interventions

Good HR Practices
Research has shown Good HR Practices and
policies influence business growth & dev.
Good HR practices
Financial incentives for excellent performance
Practices that motivate employee effort and
capture the benefits of know-how and skill
Rigorous selection and selectivity in recruiting
Higher than average wages

Good HR Practices
Employee share-ownership plans
Extensive information sharing
Decentralisation of decision making and
empowerment
Work organisation based on self managing teams
High investment in training and skill development
People do multiple jobs and job rotation
Elimination of status symbols

Good HR Practices
A more compressed distribution of salaries
across and within levels
Promotion from within
A long term perspective
Measurment of HR practices and policy
implementation
Coherant view of employment relation

Benefits of HR Practices
Building critical organisational capabilities
Enhancing employee satisfaction
Improving customer and shareholder
satisfaction

Organisations that Have done HRD

Audit
Aditya Birla Group has been doing it for the last 8
years
Rajashree Cement, Vikram Cement, Hindalco, IndoGulf Fertilisers, Gwalior Grasim, Harihar Fibres etc.

L&T, Crompton Greaves

Gujarat Guardian
Gujarat Gas
Apollo Tyres
Alexandria Carbon Black

Some Organisations using HRD Audit

Godrej Soaps
GVFL
BPL
Tyco International
Gati Cargo Management Services
Wokhardt Hospitals
visit: www.hrdaudit.com

Audit Methodology: Interviews

Advantage is to capture primary concern of
stakeholder
Interviews make the assessment dynamic
Interview method is quick and adequate for a
comprehensive HRD Audit. Interviews of
CEO
Top Management
HR Head & HR Staff
Line Managers
Workmen, Field Staff & their Representatives

CEO & Top Mgt Interview Purpose

The purpose of interviewing senior
management is
It helps Auditor to know expectations of Mgt
Auditor explain scope & limitations of Audit
Ground work for getting co-operation of staff
and legitimise the exercise
Provides an opportunity to sow the seeds for
effective utilisation of audit results

Interview with CEO

Independent interview or Group Session

Group Session can be a Briefing session to explain
HRD Audit and its methodology
Audit Schedule
Know the expectations of CEO
Clarify expectations ,if any cannot be met
Questions asked are:What are documents giving idea of new plans,
diversifications, new products, new businesses?
What competency gaps do you see as existing in the staff at
present?
How are you proposing to develop new competencies?

Objectives of HR Head Interview

To understand current systems/ level of skills with HR staff ,
top mgt styles, & their congruence with HR philosophy
To plan out sampling and other details of study
To prepare a checklist of documents
To understand the internal customer framework of HR Dept
How time is spent by department
Swot analysis of HRD system
His perception of competencies of HR dept or line
managers, of unions and their involvement with HR related
issues

Sample Questions
How are strategies of HR & HR plans formulated? What its role in
stratgic planning?
What are strengths & weaknesses of System such as Performance
Appraisal, Counselling, Training, Career Dev, Succession Planning,
Job rotation, OD and team building interventions, worker dev,
culture building etc
How do you characterise the styles of top and Sr. Managers ? How
much conducive are they for developing a learning culture?
How line Managers play development role to Juniors?
Is there a separate budget for HRD?
Is there a well articulated HR philosophy and values
How are linkages betwn HR and Personnel Dept ? Is there a need
for further strengthening or differentiating the functions?

Interviews with Line Managers

Objectives are to understand their perception of HRD needs, current
status, expectations, competencies, comitment to HRD. Questions
What kind of HRD needs do you or your dept have?
What help do you get for culture building ?
What are HRD systems you are happy about
What are training needs?
What are your career growth needs? Are they being taken care of?
What skills or knowledge you require to perform better
What are areas where your HR can do better?
What is good about your HR systems Performance Appraisal, Counselling,
Training, Career Dev, Succession Planning, Job rotation, OD and team
building interventions, worker dev, culture building etc
What should HRD stop doing or do less?

Interview with Workers or their

Representatives
Objective would be to find current status of their dev
needs vis--vis business goals, motivation levels, good
practices of Mgt etc
What are strengths of this company?
What do you know about business plans and
opportunities of this company?
What do you know about business competition?
What motivates you? What can be done to improve
quality, save cost, make people happy to work with this
orgn?
What are your expectations from HR? what are your
suggestions for them to serve you better?

Group Interviews
Group interviews cover wide variety of areas
Wider participation of employees
Sr. Manager, leader, opinion makers individual
interviews preferred
Others in teams of 7 or 8
Cross functional groups
Preferably same level of hierarchy
Advantages of Group Interviews
1. Wider coverage of issues and therefore you may
not miss any significant issue

Group Interviews
2) Larger involvement of employees
3) Verification of data and significant points
4) Assessment of the intensity of feelings
associated with any issues or problems
5) Education of employees about their own
roles and responsibilities as line managers

Group Interview guidelines

Top Mgt
One hour duration of individual interview
One group briefing session by the top mgt
team to auditors bfr individual interviews
begin
Supervisory staff
Sample of 10% or 5 or 6 groups from diff
functions or work places

Group Interview guidelines

Managers
Individual interviews with heads of dept, divisions,
SBUs, Sections,
As a spl case individual interviews with managers with
strong +attitude or negative attitude
Group interviews with middle level managers upto 10
% or all if less than 100 managers in all working
Better to interview 100 to max 300 managers
Workmen
Relatively large group
5 to 10 groups may be interviewed.

Interview Questions
What in your view are strengths and weaknesses
as they exist today in relation to the following
components of HRD
1. Top Mgr commitment to HRD
2. Recrutiment of competent people into co
3. Retention of competent people
4. Identification of fast-track employees
5. Mentoring system
6. Training (in-house and outside)
7. Induction

Interview Questions
8. Career planning
9. Succession planning
10.Job rotation
11.Performance appraisal
12.Separations
13.Quality circles
14.Participative management
15.Shopfloor committees
16.Personnel policies

17.Communications
18.HRD Culture
19.HR Information system
20.Others
21.Sometimes group is administered a
Questionnaire and then group interviews are
conducted to gauge intensity of feelings and
to gain an in-depth understanding.

Audit Methodology: Observation

Observation is a way to look at the things as they
exist.
Use of various senses
Drawing meanings to the things we see or hear
Evaluator may observe following: Physical facilities & living conditions
Meetings, discussions and other transactions
Celebrations/ events
Training including classrooms, library
Forms, formats, reports etc

Objective
To assess the current status of the physical facilities and
their organisation in the work as well as the living
environment and examine their motivational or demotivating value to employee satisfaction or productivity
Layout of factory & work environment
Layout of office and seating arrangement
Work condition and facilities
Record keeping and filing
House keeping, Toilets and their cleanliness/up keep
Canteen, school, educational facilities
Transportation and other conveniences
Sports, games and other facilities

Meetings, Discussions
Orgns use small group, task forces, committee
quality circles, open houses, in an effort to bring
change
Assumption is participation has a motivational
value and groups give greater value
The observation of a sample of such group can
help to ascertain the value addition, human
competency or motivational losses or gains due
to conduct and processess of meetings
Teamwork and meeting management is a skill

Observation of meetings

Meetings that can

Quality circles
Shop floor councils
Departmental meetings
Cross functional teams
Open houses and open
forum
Daily production meetings
Performance review
committee
Presentation by outsiders,
vendors etc

Specialised sessions
PA and counselling sessions
Conflict resolution sessions
Union negotiations or
meetings
Union or association
meetings
Training need identification
sessions
Communication meetings
by CEO

What they observe?

To evaluate the extent to which they are
serving purpose say performance
improvement
Some meetings provide information that is
essential to perform the job
Identity establishment meetings to allow
employees feel that they are part of co.
Following guidelines can help evaluation
process

What they observe?

Do people come adequately prepared for meeting

Is the agenda circulated well in advance
Are objectives clear to all?
Do people share their goals?
How well meeting coordinated?
How well meetings are being participated?
Is the leader of meeting sensitive to individual differences in participation? Does
he ensure equal participation by all?
Do people listen to each other
How conflicts are being handled?
Are people habituated only to speak and do not listen to each other!
Are there narrow depatmental loyalties hindering organisational problem solving?
Is problem solving resulting into clear action plans
Do such meetings add value or waste of time?
What critical competencies will make meetings more productive?

Celebrations & Events

Annual days and other celebrations
Cultural events
Special day like environment day founders day,
sports day etc
Opening ceremonies of new facilities, depts
Celebration of festivals
Birthday celebrations
Celebrations of accomplishments such as co
getting a trophy for safety, sports, Quizzes etc

What they observe?

Participation , eagerness and enthusiasm and
spirited participation
Organisational aspects : are there efforts made to
involve everyone?
Status differences in terms of participation ,
seating
Ceremonial roles of top mgt? do they indicate
respect for labour?
Is it helping people to get we feeling or is
causing a drift?

Training facility
Symbolic reflection of extent to which orgn values
systematic learning and competency building of
employees
Ambience of training facility
Training rooms
Library, books, its variety and facilities
Classrooms and classroom facility
Photocopying and fax machines
Audio visual aids, LCD, overhead projectors
Flip charts
Seating arrangements, chairs, cushion