Cracking HR Audits – 3Essential Tips for an Efficient Internal HR Audit

Oh my god…the A-word – Most managers cringe at the prospect of conducting an audit. More often than not, this loathing is the result of a hunch that HR audits are bound for failure. This we tell you isn’t true! HR audits are crucial for the evaluation of HR policies and practices, to understand how effective the training programs and services are, how well the HR division is delivering on these services and programs, and to find opportunities to enhance or cut down on specific activities.

Experts say an HR audit is as important for your organization as your visit to the doctor! To make HR audits a little ‘less cringe-worthy’, here are three essential tips on how you can get the best out of an internal HR audit:

1.      Take the Right Approach

Start the audit by reviewing the hiring system, the offer letters, on-boarding processes and the paperwork associated with all these processes. Then assess how well your HR division informs and educates employees on the company’s policies and practices. This can be done by asking questions like, Is the personnel policy manual/employee handbook up to date, are new hires given a hard copy of the handbook or shown how to access it online, what health and safety training is imparted to employees, how is this training tracked, is the organization capable of mandating sexual harassment prevention training for managers, etc.

Then, review the systems that support the company’s relationship with employees. These include evaluation of performance management systems, assessment of compensation structures, analysis of training and development programs and the employee grievance redress mechanism. One must also analyze the employee reward systems in place. Finally, the HR audit should end by assessing how well the organization manages exiting employees. Are they given their final paychecks on time, are critical forms and personnel files retained for an appropriate period of time, are they informed about post-retirement benefits, etc. The efficiency of an HR audit lies in this step-wise breakdown of the audit process. 

2.      Know Where You are Going

Before an audit is actually conducted, it is essential to determine which aspects of which HR function require evaluation. Is it the overall function that needs to be evaluated, or is there a need for an in-depth consideration of all or specific functional areas?Is the company in compliance, does it meet employee and customer demands, is each program and service in alignment with these goals and demands? These are some of the questions that can be asked before embarking on an audit to make it more focused and efficient. 

3.      Focus on More than Just Turn-Over

Of the many blunders that managers do in an HR audit is the tracking of turn-over only. Auditors just track turn-over without any particular regard to other aspects of it. Rather, they should track what percentage of the turn-over is among the high performing, skilled and experienced staff. Even if the turn-over is low, it is a matter of concern if a large proportion of it comprises of top performers. On the other hand, a high turnover could actually be advantageous if it is more among those with low productivity or those with unacceptable conduct.

Follow these three tips and you can sail smoothly through any internal HR audit by making it more efficient and useful. 

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