Human Resource Audit

(HRA)
HRA is a systematic assessment of the
strengths, limitations, and developmental
needs of the existing human resources of
an organization in the context of its
(organizational) performance.
It is a critical analysis of the existing
human resource within the organization.
It is a systematic review and assessment
of human resource management
philosophies, policies, systems and
practices.

HRA continued
Need & purpose of HRA:
Felt concern by Top management,
External compulsions for HRA to be more
competitive and for survival,
Changing business factors & environments,
An urge on the part of HR professionals to
improve & advance existing policies,
practices & systems. To keep the manpower
dynamic, not to miss opportunities & cope
up with the changes.

HRA continued
HRA is essential for effective HRP. All
evaluated qualitative & quantitative
information of manpower is made available
for HRP through HRA.
Scope of HRA may focus on a particular HR
function ( like T & D, recruitment, appraisals
etc ) OR focus on all HR functions. This is
decided by the Management before
initiating HRA. It is to collect all information
on human resource policies, practices,
systems, adequacy to meet changes etc.

HRA & Statutory

Financial audit.
Statutory financial audit & HRA:
The annual financial audit is mandatory as
per Companies Act. But, HRA is neither
mandatory nor statutory.
Financial audit is somewhat a fault-finding
exercise, even though it produces good
results. But, HRA is to assess the
strengths, weaknesses, limitations &
developmental needs of existing human
resource, reviewing existing policies,
practices, systems of human resource.

HR auditing process
HRA is usually conducted by
outside consultants to ensure
greater objectivity &
impartiality. It need not be
routine.
The steps in HRA are :
Briefing and orientation: This is
preparatory meeting of all
employees to discuss issues
involved, chart out audit

Steps in HRA
Scanning material information : This
involves scrutiny of all information of
personnel, manuals, HRIS data,
appraisals, compensation , computer
capabilities to store & process data etc.
Surveying employees: It involves
interview with managers, Top
management, all key employees to
pinpoint out issues, present strengths,
limitations, anticipated needs,
management philosophies etc.

Steps in HRA
Conducting interviews with
questionnaires prepared in
advance: The key factors in the
questionnaire may focus on :
Information : Coverage, source,
adequacy, gaps etc
Forecasting: Methodology,
reliability, testability, budgeting,
time orientation , technology
perspective.

Steps in HRA
Training & development: need
assessment, selection criteria,
level & frequency, internal vs
external training, quality of
training, evaluation of training,
HRD climate, budget for training,
benefits for employees after
training etc.
Management succession
planning: Policy, and present

Steps in HRA
Compensation policies, job study
details, reward system, grievance
procedures, industrial relations status
etc.
Affirmative action : Efficiency of action
programmes, lessons for the future
Need inter-relationships: Future
outlook on HRM, Clarity on HRA etc
The staff function & HRM department
details.

Steps in HRA
Synthesizing : This involves assessing current
situation, priorities, staff pattern, issues
identified etc.
Identification of future needs, criteria for HR
development, specific recommendations and
an action plan (time-bound) for development.
Reporting: This involves a number of planned
meetings with all concerned to clarify issues
and avoid communication gap. At the end, a
formal report is submitted to the Top
management for approval and action.