HR AUDIT

Tarandeep Singh

Click to edit Master subtitle style

HR AUDIT
3/28/2008

22

To start with?

The unexamined work life is not worth living Socrates (469-399 BC)

The things that get measured gets managed Kaplan (2000)

HR AUDIT (GROUP 10)

3/28/2008

33

What is an HR Audit?
An HR audit is a process to review implementation of organizations policies and procedures, ensure compliance with employment law, eliminate liabilities, implement best practices and educate your managers.

HR AUDIT (GROUP 10)

3/28/2008

44

HR Audit
A human resource audit evaluates the personnel activities used in an organization. The audit may include one division or entire company. It gives feedback about : 1. The function of operating manager 2. The human resource specialists. 3. How well managers are meeting their human resource duties. In short, the audit is an overall quality control check on human resource activities in a division or company and how those activities support the organizations strategy
HR AUDIT (GROUP 10) 3/28/2008

55

HR Audit involves

Measurement and evaluation of personnel programs, policies and practices Identification of gap between objectives and results Determination of what should or should not be done in future.

HR AUDIT (GROUP 10)

3/28/2008

66

Why conduct HR Audit?

Ensure compliance Improve HR practices Train your managers Prepare for potential government audit or litigation Gain an understanding of departments environment Show a good faith effort Correct errors
3/28/2008

HR AUDIT (GROUP 10)

77

Scope of HR Audits
n

Audit of Corporate Strategy

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

Audit of the Human Resource Function

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

Audit of Managerial Compliance

Reviews how well managers comply with human resource policies and procedures.

HR AUDIT (GROUP 10)

Audit of Employee Satisfaction

To learn how well employee needs are met.

3/28/2008

88

1. Audit of Corporate Strategy

n

Human resource professionals do not set corporate strategy, but they strongly determine its success. By assessing the firms internal strengths and weaknesses and its external opportunities and threats, senior management devises ways of gaining an advantage, such as : stresses superior marketing channels, low-cost production, etc.

n n n

Understanding the strategy has strong implications for human resource planning, staffing, compensation, employee relations, and other human resource activities 3/28/2008 HR AUDIT (GROUP 10)

99

2. Audit of human resource functions

1.

HR INFORMATION SYSTEM:

HR Resource Plans Job Analysis Information Compensation Management

2.

STAFFING AND DEVELOPMENT:

Recruiting Selection Training and Development Career Development

3/28/2008

HR AUDIT (GROUP 10)

1010

Contd

3.

ORGANIZATION CONTROL AND EVALUATION

Performance Appraisals Labor Management Relations Human Resources Control

HR AUDIT (GROUP 10)

3/28/2008

1111

3. Audit of Managerial Compliance

n

Compliance with laws is especially important. When safety, compensation, or labor laws are violated, the government holds the company responsible. If managers ignore policies or violate employee relations laws, the audit should uncover these errors so that corrective action can be started.

HR AUDIT (GROUP 10)

3/28/2008

1212

4. Audit of Employee Satisfaction

n

Employee satisfaction refers to an employees general attitude toward his or her job. When employee needs are unmet, turnover, absenteeism, and union activity are more likely. To learn how well employee needs are met, the audit team gathers data from workers. The team collects information about wages, benefits, supervisory practices, career planning assistance, and other dimensions of job
3/28/2008

HR AUDIT (GROUP 10)

1313

Before you begin the audit process

1. Determine who will conduct the audit.

Internal vs. External

2. Secure senior management commitment.

Are they ready to fix whats broken, even if it costs highly? Do they agree with the methodology? Will they allow access to all departments/information? support the 3/28/2008

HR Will they 10) AUDIT (GROUP publicly

1414

Before you begin the audit process

3. Define the parameters.
a. b. c. d. e. f.

Who will be audited? What do you want to audit? What audit tools will you use? How will the process be rolled out? How will results get reported? Who will get the results?

4. Introduce the audit process to your managers.

HR AUDIT (GROUP 10) 3/28/2008

1515

Auditors
The following are the likely auditors who can use this system: 1. External Auditors 2. Internal Auditors 3. Internal Team of auditors consisting of HR specialists 4. In-House Team or Internal Task Force consisting of line managers and HR specialists 5. In-House Team without any HR specialists
HR AUDIT (GROUP 10) 3/28/2008

1616

Who is an Auditor?
An auditor is a person who is specially trained in HR Audits. A trained HR auditor has the following knowledge, attitude and skills: 1. A thorough knowledge of various HR systems, their objectives, relevance, functioning and various benchmarks available. 2. Knowledge of HR departments, their competencies, and HR Competency models. role,

3. Knowledge of the principles of human development and growth. 4. Knowledge of the role of line managers, and appreciation of roles played by top management and their styles.
HR AUDIT (GROUP 10) 3/28/2008

1717

Contd

5. Knowledge of various assessment models, methods, tools and techniques. 6. Assessment skills in terms of skills in observation, questionnaires, use of secondary data, and interviews. 7. A positive attitude to audit an attitude to view audit as an empowering tool and not a faultfinding tool. 8. Communication skills in terms of presenting audit reports verbally, or in writings, etc.
HR AUDIT (GROUP 10) 3/28/2008

1818

Tasks of Auditors
n n

Identify who is responsible for each activity. Determine the objectives sought by each activity. Review the policies and procedures used to achieve these activities. Prepare a report commending proper objectives, policies, and procedures. Develop an action plan to correct errors in each activity.

Follow up the action plan to see if it solved the problems found 3/28/2008 HR AUDIT (GROUP 10) through the audit.

1919

Audit tools
1. INTERVIEWS: Interviews with employees and

managers are one source of information about human resource activity. Employees and managers comments help the audit team find that need improvement. Another useful source of information is the exit interview. Exit interview are conducted with departing employees to learn their views of the organization.

HR AUDIT (GROUP 10)

3/28/2008

2020

Contd
2. QUESTIONNAIRES / SURVEYS: Because interviews are time-consuming, costly, and often to only few people, many human resource departments use questionnaires. Through questionnaire surveys, a more comprehensive picture of employee treatment can be developed. Questionnaire may also lead to more candid answers than face-to-face interviews.
-

Employee attitude about supervisors. Employee attitude about their jobs. Perceived effectiveness department. HR AUDIT (GROUP 10) of human resource
3/28/2008

2121

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

Safety and health records Grievances records Compensation studies Scrap rates Turnover and absenteeism records
HR AUDIT (GROUP 10)

Selection records

Affirmative action plan records

3/28/2008

2222

Contd
4. EXTERNAL INFORMATION: Outside comparisons give the audit team a perspective against which their firms activities can be judged. Through Department of Labor, industry association, professional association numerous statistics and report are compiled. These organizations regularly publishes information about future employment opportunities, employee turnover rates, work force projection, area wage and salary survey, work force demography, accident rates, and other data that can serve as benchmark for comparing internal information.
HR AUDIT (GROUP 10) 3/28/2008

2323

HR Scorecard

HR AUDIT (GROUP 10)

3/28/2008

2424

Scorecard grading
These four indices consist of the four pillars of HRD effectiveness. All the four dimensions are assessed using following ten point rating system. A* A B* B C* C D* D F Highest Score and Highest Maturity Level Very High Maturity level High Maturity Level Moderately High Maturity Level Moderate Maturity Level Moderately low Maturity level Low Maturity Level Very low Maturity level Not at all present

U Ungraded
HR AUDIT (GROUP 10) 3/28/2008

2525

1. HR Systems Maturity

The HRD systems maturity assesses the extent to which various HRD subsystems and tools are well designed & are being implemented.

The systems should be appropriate and relevant to business goals. It should focus on current and future needs of the corporation. The HRD strategies and systems should flow from the corporate strategies.
3/28/2008

HR AUDIT (GROUP 10)

2626

Contd

The systems should be well designed and should have a structural maturity. They should be implemented well.

The employees should be taking them seriously implemented well. The employees should be taking them seriously and follow meticulously what has been envisaged in each system. The overheads of implementation should be low.

The subsystems should be well integrated and should have internal synergy. They should be adequate and should take care of the HRD requirements of the organisation.
3/28/2008

HR AUDIT (GROUP 10)

2727

2. HR Competencies
This dimension indicates the extent to which HRD competencies are well developed in the organisation.

The HRD Staff The Top Management Line managers and Supervisory Staff Union and Association leaders Workmen, Operators and Grass root level employees
3/28/2008

HR AUDIT (GROUP 10)

2828

Contd

Each of the groups is assessed on :

The level of HRD skills they possess Their attitudes and support to learning and their own development Extent to which they facilitate learning among others in the corporation and those who work with them. Their attitudes and support to HRD function and systems the HRD function
3/28/2008

Internal efficiency of HR (HRD (GROUP 10) AUDIT Department)

2929

3. HR Culture and Values

The extent to which the leadership and managerial styles are empowering and competence building is assessed by studying the leadership and supervisory styles. The extent to which the HRD culture and values are practised and stabilised in the corporation are measured.

The HRD culture is culture that promotes Human potential development. It is also a culture that promotes a learning organisation.
3/28/2008

HR AUDIT (GROUP 10)

3030

4. HR Business Linkages

This score indicates the extent to which HRD efforts (tools, processes, culture etc.) are driven to achieve business goals. The business goals includes:

Business Excellence including profitability and other outcomes the organization is expected to achieve; Internal operational efficiencies; Internal Customer satisfaction; External Customer satisfaction; Employee motivation and commitment; Cost effectiveness and cost consciousness among employees; Quality orientation;

HR AUDIT (GROUP 10)

3/28/2008

3131

Role of hr 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
3/28/2008

HR AUDIT (GROUP 10)

3232

Contd

Improvements in HRD systems. Increased focus on human resources and human competencies. Better recruitment professional staff. policies and more

More planning and more cost effective training. Strengthening accountabilities through appraisal systems and other mechanisms.
3/28/2008

HR AUDIT (GROUP 10)

3333

HR Audit Benefits

It provides the various benefits to the organization. These are: It helps to find out the proper contribution of the HR department towards the organization. Development of the professional image of the HR department of the organization. Reduce the HR cost. Motivation of the HR personnel. Find out the problems and solve them smoothly.
3/28/2008

HR AUDIT (GROUP 10)

3434

Contd

Provides timely legal requirement. Sound Performance Appraisal Systems. Systematic job analysis. Smooth adoption of the changing mindset.

HR AUDIT (GROUP 10)

3/28/2008

3535

Conclusion
HR Audit is certainly a comprehensive account of the HR practices in operation in an organization appointing various tools mainly on account of these four categories:
1. 2. 3. 4.

HR Systems and Strategies. HR Competencies HR Culture and Values HR Impact and Business Linkages
3/28/2008

HR AUDIT (GROUP 10)

3636

THANK YOU

HR AUDIT (GROUP 10)

3/28/2008