Audit in general means examination of existing state of affairs as they are currently with respect to what is expected. Likewise, HR audit is a systematic process that is used to examine and assess the strengths, weaknesses and improvement areas of the existing human resources to gauge the difference between the current status and the desired status. It is the process of evaluating policies, procedures and practices of human resources department in order to determine their effectiveness. HR audit is a method that is investigative, analytical and comparative. It is performed to analyze if the activities done and policies followed are leading towards the organizational goals and it is taken up to determine the lapses and gaps in implementation HR functions and to provide remedial suggestions if any.
Why is it important?
Per the human resources consultancy professionals HR audit is an important management control tool to assess an organization’s performance and effectiveness of HR management. Conducting an HR audit periodically has great significance and helps the organization in many ways.
- Identifying policies and procedures that require being updated as per law
- Identifying policies and procedures which are not followed appropriately and figure out the reasons for the same
- Exposing the unwritten practices being followed and the risks associated with those practices
- Identifying scope for new policies or procedures that minimize risks and bring effectiveness
- Ascertaining if records are being kept properly
- Ascertaining if any additional training is required for the compliance of set policies and procedures
HR consulting firms can help organizations in conducting an effective HR audit which gives a detailed report on the audit results and includes recommended actions for better HR functioning.
Types of HR audit:
HR auditing can be categorized on different basis like kind of auditors, the frequency of audits, and goals to be accomplished. Let us look at these different types of HR audit.
Kind of auditors
- Internal – Audit conducted by a specialized team in the company on the basis of internal procedures and standards
- External – Audit conducted by an external organization like Accuprosys, which is a human resources consultancy. These external organizations conduct audit upon the company’s request.
Frequency of audits
- Planned – This kind of audit is usually carried out on an annual basis. But, if required other periods can also be considered.
- On request – When the management deems it to be necessary, an HR audit can be carried out. This is generally in cases of any complaints or fraud being detected.
Goals to be accomplished
- Compliance – This is done for the purpose of systematic comparison of the practices against the pre-set company policies or regulations. The audit report lists out all the gaps and disparities between the existing scenario in the company and what is expected.
- Continuous improvement – This is done with the objective of identifying gaps and variations in the HR department’s present performance with respect to what it should be. The audit report lists out the opportunities to improve and increase HR effectiveness and efficiency at functional and organizational levels.
- Merger and Acquisition – This is done to evaluate the risk factors associated with HR management. The audit report lists out the analysis of current state of HR functions, risk assessment including the monetary aspect of the risk factors, and the need of HR practices’ alignment of the companies’ that are going for merger or acquisition.