Human

Resource
Audit
Shreya Misra B-01
Smita Gavli B 11
Sanya Kapur B 24
Chandrima Nath B- 22
HR Audit
a method to evaluate the efficiency of
human resource at all levels throughout the
organization, in order to ascertain whether
sound management prevails throughout, and
to recommend its effectiveness where such is
not the case

(Willion B. Werther & Keith Davis, 1996)
Process of examining policies, procedures,
documentation, systems, and practices with
respect to an organisations HR functions

Major focus on:
Reveal strengths and weaknesses
Analyse and improve HR functions


Objectives of HR Audit
To review the whole system of management programmes
of the organisation

To evaluate the extent to which HR policies are initiated
and implemented by managers

To review the HR system in comparison with other
organizations

To locate the gaps, lapses, shortcomings in the
implementation of the policies, procedures, practices,
directives of the HR department



To evaluate the effectiveness of various HR
policies and practices

To evaluate the HR staff

To seek answers to such questions as
what happened?
why it happened?
why it did not happen?
Benefits of HR Audit
Identification of the contributions of HR department to
the organization.

Improvement of the professional image of the HR
department.

Encouragement of greater responsibility and
professionalism among members of the HR department.

Clarification of the HR department's duties and
responsibilities.
Stimulation of uniformity of HR policies and practices.

Finding critical personnel problems.

Ensuring timely compliance with legal requirements.

Reduction of HR costs through more effective personnel
procedures.


Creation of increased acceptance of the necessary
changes in the HR department.

A thorough review of the department's information
system.

Approaches to HR Audit

Comparative approach

Outside authority approach

Statistical approach

Compliance approach

Management by Objectives (MBO) approach
Comparative approach- model company.

Outside authority approach- standards set by
outside consultant.

Statistical approach- statistical measures of
performance


Compliance approach- review of past actions by the auditors.


Management by Objectives- specific goals are determined
against which performance can be measured.

Types of HR
Audit
Complian
ce
Best
practices
Strategic
Function-
Specific
Compliance focuses on how well the company
is complying with the current federal, state and
local laws and regulations.

Best-practices helps the organization to
maintain or improve a competitive advantage
by comparing its practices with the other
companies who are identified of having
exceptional HR practices.
Strategic focuses on strengths and
weaknesses of processes or systems.

Function-specific focuses on a specific area
in the HR function. e.g. payroll,
performance management, retention,
compensation etc.
THE PROCESS
Getting Started

Developing a Checklist
After audit goals and success criteria have been
defined, it is helpful to develop a checklist that can be
used to determine the presence or absence of certain
practices, and to compare and contrast practices with
policy or legal requirements. For example:
What policies should be audited?
What practices should be audited?
What records should be reviewed?
What analysis will be done?



Description:
Questions to be asked during the audit should be
framed to solicit a written or oral description; for
example: What are the key objectives? What is the
mission?

Clarity:
Once descriptive information has been collected, the
next step is to probe for common understanding. Often,
discrepancies among individuals as to what something
means is the result of poor communication.
Fit:

Individuals may be clear and agree on a course of
action, but clarity and agreement are not an indication
that a particular action is the right one to take.

The organization may not have the resources to
implement the action; managers may not know how to
carry it out; and, most important, the action may be
undesirable from the user's or customer's perspective.



Planning Questions

Develop a systematic set of questions

For example, the auditor may start with an open-
ended question and immediately follow with some
specific and quantifiable follow-up questions.
Collecting Data

Collecting information can be laborious and time-
consuming.

Depending on the size of the target audience, the
available time, and the type of data to be collected, it
may be necessary to use and blend the strengths of a
number of different data collection methods.

Such methods include interviews, questionnaires, a
review of relevant records, observation, or a
combination of these methods.
Analyzing Audit Data

After data are collected, it is important to examine
the information with an eye toward assessing
readiness for change and identifying possible
reasons for resistance to change.


Next Steps

Ultimately, to be useful, an audit must clearly
communicate its findings and their consequences,
and suggest ideas for improvement.

To the extent that management can see the
benefits of any suggested changes-and believes
that the cost of acting is reasonable-the likelihood
that changes will be implemented is higher.
Components of HR audit
HR audit process consists of a series of questions covering
the eight primary components of the HR function.
Roles , head count, and HIRS
Staffing ( recruitment & selection) process
Personnel records documentation
Training , development and career management
Compensation, rewards and benefit systems
Performance measurement and evaluation
Termination/demotions/transfers
Legal actions/ issues and personnel policies.
Sample Audit Questions

This is an example of the kind of questions that
can be asked to determine the effectiveness of the
human resources function as an organizational
unit, as a specialized staff resource, and as a
service provider.
Example
Employee Name______________ Date of Employment_______ Dept._________

Q1. How were you recruited?
Through a series of interviews
Through a panel interview
Through a written interview
A combination of written and direct interviews
I was just called for the job without any interviews

Q2. Have you ever been involved in training and development activities
since joining this organization? ___________
If yes, state when__________
Did you find the training beneficial for purposes of enhancing your job
performance? ____________

Q3. Do you fully comprehend your rights to compensation and organization
benefits? ______
Q4. Are you a member of any employee or
trade union? _______
If not, why?
____________________________________
Q5. Do you have insurance cover?
Q6. Do you understand fully this organizations
policy regarding security and personal safety?
________
Q7. For how long have you been working in the
same position? _____________



Conclusion
Given that the human factor is a prime
strategical element, which explains a
company's dierentiation capacity, it is
logical that a measurement eort of the way
this function is undertaken in the company is
made. That is the content of the HR audit,
which goes beyond the simple investigative
function, and is an extension of the traditional
concept of the accounts audit.
The HR audit is the first step towards the
quality and personnel function.
Thank You