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1. Define Human Resource (HR) Audit. Explain the need for HR Audit. What are the
benefits of HR Audit?
A: It is mechanism to review the current HR policies, practices and systems to ensure that they fulfill the
rules and regulations. The audit also helps in identifying the areas of improvement in the HR function.
Nowadays, the audit is done regularly in the organizations.
The HR audit covers various functions of HR like Recruitment, Compensation & Benefits, Performance
evaluation, Termination Process and exit interviews etc.
Advantages: A properly conducted audit helps in the following
1. To recognize strengths
2. To reveal problem areas
3. Confirms compliance with latest regulations
4. Ensures effective HR policies
5. Builds confidence in HR function
Need for HR Audit:
A HRD audit is a comprehensive evaluation of the current human resource development strategies,
structure, systems, styles and skills in the context of the short and long-term business plans of a company.
Conducting HR audits is an integral part of an HR professionals role in any company. Not only will an
HR audit help a company ensure its in compliance and conformance with the law, but it will help HR
professionals standardize processes, identify risk areas, and tie HR goals to strategic business goals. There
are various types of audits designed to accomplish a variety of objectives.
1. To increase the size of the organization and personnel in several organisations.
2. To change the philosophy of management towards HR
3. To increase the strength and influence of trade unions
4. To change HR management philosophy and thereby personnel policies and practices throughout the
world, and
5. To increase the dependence of the organization on the HR system and its effective functioning.
Benefits of HR Audit:
Several benefits associated with Human Resource audit are listed below. An audit reminds member of HR
department and others its contribution, creating a more professional image of the department among manager
and specialist. The audit helps clarify the departments role and leads to greater uniformity, especially in the
geographically scattered and decentralized HR function of large organisations. Perhaps most important, it finds
problems and ensures compliance with a variety of laws and strategic plans in an organization.
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 focused. 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.
5) Synthesizing:
The data thus gathered is synthesized to present the
current situation
priorities
issues identified.
Similarly, future needs are identified and appropriate criteria developed for spotlighting the
human resource priorities and specific recommendations made.
6) Reporting:
Just as the planning meetings of briefing and orientation, the results of the audit are discussed
within several rounds with the managers and staff specialists. In the process, the issues that get
crystallized are brought to the notice of the management in a formal report. Follow-ups are
necessary after an audit to see if the action plan used to solve problems found this the audit
worked Or not.
In conclusion, human resource audit is an important approach to human resource planning. It is
practical because if correctly conducted, it should increase the effectiveness of the design and
implementation of human resource policies, planning and programmes. A periodic and
systematic audit helps human resource planners develop and update employment and programme
plans.
3. What is HR Scorecard? Explain the reasons for implementing HR Scorecard framework.
A: An HR scorecard is a visual representation of key measures of human resource department
achievements, productivity and other factors important to the organization. Factors measured
include costs, hiring, turnover, training, performance management and alignment with corporate
goals. Many companies are using Balance Scorecard metrics to evaluate performance of their HR
department by key performance factors.
Plans work and carries out tasks without detailed instructions; makes constructive suggestions;
prepares for problems or opportunities in advance; undertakes additional responsibilities;
responds to situations as they arise with minimal supervision; creates novel solutions to
problems; evaluates new technology as potential solutions to existing problems.
Judgement
Makes sound decisions; bases decisions on fact rather than emotion; analyzes problems
skillfully; uses logic to reach solutions.5.
5. Write a brief note on effectiveness of Human Resource Development Audit as an
intervention.
A: In any firm, along with the optimal utilisation of other resources, human resources should
also be exploited to its maximum potential. Businesses which utilize their human resources in an
effective way have better chances of success in the future. Sustainability and progress of business
will depend on new competencies, methods, strategies and value creating processes. Every
organisation has accepted that human resource is the most valuable asset of an organisation
though its value is not mentioned in the balance sheet. Lack of information regarding human
capital was seen as a serious handicap for decision making, both for the managers, investors
(Srivastava 1979: 83) and for the human resource development process itself. Perhaps India is
the first country to formally establish a totally dedicated HRD (Human Resources development)
Department separated from the Personnel Department. This was designed in the year 1974 when
the term HRD itself was not very popular in the USA. Two consultants from the Indian Institute
of Management , Ahmadabad after reviewing the effectiveness of the performance appraisal
system and training in Larsen & Toubro recommended an Integrated HR System to be
established and the department dealing with development issues be separated out from the
personnel department and be called the HRD. The nature of interventions undertaken by the
HRD departments include:
Cultural change through new performance management systems
TQM based interventions (in most cases these are undertaken also by a separate group of
professionals) Survey Feedback
Role clarity and Role negotiation exercises
Training
Career Planning and Succession exercise
Assessment Centers and promotion policies Visioning and value clarification exercises
Performance coaching workshops Team building interventions The Academy of Human
Resources Development has come up with a concept of IOAC (Individual and Organizational
Assessment Center) which is becoming popular as an intervention by the HRD departments. In
this concept the HRD department establishes an Assessment Center with the purposes of
The HR Climate has an impact on employee motivation, morale and job satisfaction. The quality
can be measured by examining employee turnover, absenteeism, safety records and attitude
surveys.
Employee turnover: It refers to the process of employee leaving an organisation. Higher
turnover involves high cost of recruitment, selection, training etc.
Absenteeism: It refers to the failure on the part of the employees to report to work. In other
words, unauthorized absence continues absenteeism.
Accidents: Organisation maintains records related to the accidents. Organisation must have
safety plan, implement it and evaluate its effectiveness.
Attitude surveys: Attitude surveys are the most powerful indicators of the organisational
climate.
Audit of corporate strategy: HR professional dont set corporate strategy but they strongly
determines its success.