HR Audit

HR Audit Procedure

By AASHISH SINGH

What is HR Audit?

A Human Resources Audit (or HR Audit) is a comprehensive method to review current human resources policies, procedures, documentation and systems to identify needs for improvement and enhancement of the HR function as well as to assess compliance with ever-changing rules and regulations. An Audit involves systematically reviewing all aspects of human resources, usually in a checklist fashion.

SECTIONS OF HR AUDIT:

  • Hiring and Onboarding
  • Talent Audit and Job Architecture
  • Compensation & Benefits ( R&R)
  • Learning & Development Eco- System
  • Policies and Processes
  • Succession Planning Review and road path
  • Standard Operating Procedures
  • Skill-Gap Analysis
  • Personnel file review
  • Statutory Compliance review
  • Exit process and exit interviews

WHY HR AUDIT?

The purpose of a HR Audit is to recognise strengths and identify any needs for improvement in the human resources function. A properly executed Audit will reveal areas that need to be re-modelled or refined and provide recommendations and suggestions for the remedy of these areas.

SOME OF THE REASONS TO CONDUCT HR AUDIT INCLUDE:

  • Ensuring the effective utilisation of the organisation’s human resources
  • Reviewing HR compliance in relation to administration of the organisation
  • Instilling a sense of confidence in management and the human resources function
  • Maintaining or enhancing the organisation preparedness for future business growth plan
  • Performing “due diligence” review for shareholders or potential investors/owners
  • Establishing a baseline for future improvement for the function

Because of the multitude of laws affecting each stage of the employment process, it is extremely important for an employer to regularly conduct an HR analysis of their policies and practices. This helps to identify regulatory compliance issues if they exist and avoids potentially costly fines and/or lawsuits, if otherwise ignored

PHASES OF HR AUDIT

PHASE 1 OF HR AUDIT
PHASE 2 OF HR AUDIT

OUTCOME OF THE AUDIT SHOULD INCLUDE:

 

  • A detailed and structured analysis of HR Policies, processes, coverage, effectiveness, weaknesses and strengths of the HR function
  • A full cost critique of all HR-related services using relevant industry benchmarks. 
  • Confirmation on the legal statutory compliance of services. 
  • Feedback on the views of Management and Employees on HR: its performance and cost-effectiveness. 
  • A detailed report with recommendations for immediate and medium-term actions and their associated costs and efficiency benefits.

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