Human Resource Audit & Key Elements
The HR (Human Resource) Audit is the process to evaluate a human resource department's performance. It examines various aspects of the HR tasks in a company. These can be policies, processes, procedures, documentation, and systems. The goal is to look for trouble spots and/or identify ways you can improve. You can hire an outside company to perform the audit or you can instruct your HR department to perform an internal audit.
Scrutinising & Auditing the Affairs & Process of a HR Department.
Depends upon case to case basis
- Scrutinising & Auditing the Affairs & Process of a HR Department.
- Business or Individual planning to improve and verify their HR Audit Processes.
- Purchase of Plan
- Expert Assigned
- Share the details as requested
- Team of Experts conducts the On Site Audit.
- Company Profile
- Salary & Payroll Registers
- Payroll Portal Access
- Registration Certificates & Filing Details of Labour Laws
- Additional as per the case.
What is an HR or Human Resource Audit?
The HR (Human Resource) Audit is the process to evaluate a human resource department's performance. It examines various aspects of the HR tasks in a company. These can be policies, processes, procedures, documentation, and systems.
In ascertaining these, an HR Audit looks into the various fronts of human resource personnel's work. Some of these are:
- Hiring Procedure
- Employee Onboarding
- Compensation Plan
- Benefits Package
- Performance Review
- Termination of Tenure
- Exit Interview, etc
These sections form a crucial part of the HR functions in a company. Therefore, a study into these fronts gives a fair idea of the HR performance in the company.
Besides reviewing the HR professional's work, an HR audit also serves many other purposes. Here is a quick look at a few of these purposes.
What is the Purpose of HR or Human Resource Audit?
- Ensuring compliance of the company's working with the governing laws
- Helping the HR Department understand how to improve itself
- Reviewing and the proper resource allocation for human resources
- Being an act of "due diligence" for potential investors and stakeholders of a company
- A basis for improvements in the future
These were some of the purposes for conducting an HR Audit. However, based on the different purposes, there are also different HR Audit types to consider. Some of these are as follows.
What are the different types of HR Audit?
1. I-9 Audit
These audits take place to ensure that there is an I-9 form for all employees in the company. The I-9 form is a legal requirement for companies to verify that all their workers have valid employment authorization. This step is a must for employment in the United States of America.
An I-9 Audit checks for any mistakes in the filling procedure of this form. It also looks into the need for further documentation in the future.
An audit on policies reviews the company's current and upcoming policies to ensure consistency. Policy audits are also necessary to ensure that they have full compliance with the governing legal norms.
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3. Legal Compliance Audit
Compliance Audits ensure that the company's practices are one with all employment laws. These audits look into the leave structure, disability structure, health and safety, hr policies, payroll, etc.
This kind of audit specifies all its efforts in one department. It can be payroll, benefits, performance, etc. Departmental audit keeps on changing departments to review different divisions of a company.
5. Salary and Working Hours
This audit looks into uncovering mistakes in the company's salary structure and working hours for its workers. It reviews the legal working hours for everyone, salary computations, overtime compensation calculations, etc.
A safety audit looks into the steps necessary to ensure employee health. While working onsite or even at the office, a worker may be vulnerable to many aspects challenging its health. This audit makes sure that a company does everything possible to limit risk in the workplace.
As the name suggests, a hiring audit reviews the hiring process of a company. It ensures that the hiring strategies are consistent, effective, efficient, and fair.
8. Employee Training
This audit checks up on the employee training and development programs in a company. It identifies where new training programs are necessary and how to improve on the old ones.
9. Benefits & Compensation Package
A benefits & compensation package audit checks up on the salary and benefits package. This audit looks upon minimum wage, compensation as per the company's objectives, appropriate employee benefits, etc.
These were a few HR Audits that a company must undertake to review its legal standpoint and performance. While performing these checks, there are also a few other things you must check.
HR Audit Checklist
HR Audit Checklist
An HR checklist is a list of things you must keep an eye on while performing HR Audits on different divisions. These checklists are generally very long, but here are some critical points for various departments to keep it short today.
- The first thing is to check the working of your Human Resource Information System (HRIS). You must have a proper HRIS to track and search the information efficiently.
- Ensure that you have the I-9 forms in order and all other personnel files.
- Keep the sensitive information of the employees separate. One example here can be the health information of the workers.
- Have a legal counsel look at the national, state, and local laws for employment that may have a say in your office policies.
- Conducting an annual checkup on the handbook to ensure no mistakes take place
- Making the workforce aware of any new changes in the handbook and getting their acknowledgment for the same.
Hiring & Onboarding Process
- Reviewing that your Applicant Tracking System (ATS) is working at par and as per your requirements.
- Ensuring and checking up on the viability of the recruitment tools the company uses
- Appraise the idea of implementing a buddy or mentor system for new hires
- Check up on the national pay scale to offer a competitive salary package and locate any pay disparity based on race, disability, gender, caste, etc.
- Build up a system to establish how you determine a hike in salary.
- Review the governing salary law to check up on issues like average salary, minimum wages, etc.
- Have a look at the performance appraisal tool you're using currently and see if it is meeting your requirements
- Decide on an appropriate period to judge the performance of the workforce. Also, decide on a system to determine employee promotion and employee demotion.
- Check up on any favoritism in the workplace harming the performance appraisal process.
- Check up and update the current employee benefits package to offer a more competitive package to workers.
- Effectively communicate the benefits package to the working staff. Most workers don't understand what advantages they have in the first place. An example of this is the ESIC benefit that most individuals don't know how to use.
- Get to know what benefits your employees require the most. You may turn to pulse surveys to understand different employee persona and which benefits would suit them best, etc.
- Decide on the training programs for new hires of every department.
- Consider having a mentorship program within a company to train juniors by seniors.
- Conducting yearly corporate Equal Employment Opportunity (EEO) training.
What Specific Areas Do HR Audits Examine?
What Specific Areas Do HR Audits Examine?
When you conduct an HR audit you can look into one or more of the following areas, depending on your concerns, budget, and time frame.
Any human resource leadership team will want to know that they are compliant. An HR compliance audit focuses on how well your business is complying with current local, state, and federal employment laws and regulations. This is a risk mitigation audit. Your goal is to ensure you aren’t violating any laws or leaving yourself open to liability lawsuits.
Is your human resource management team at the top of their game? An HR best-practices audit compares your HR processes and policies with the accepted industry standards. This type of audit can be greatly beneficial to a growing company because it can help ensure you’re on the right track as you increase payroll, create handbooks, establish job descriptions, and set expectations for your new employees.
An HR performance audit involves a review of personnel files with the goal of evaluating the quality of feedback your managers are giving their staff. A lack of quality feedback can inhibit the growth of employees. A performance audit can identify problems with your review and feedback process before employee development suffers
What kind of compensation packages have your HR managers put together? Are your wages, salaries, and benefit packages competitive? An HR competitiveness audit looks into all areas of employee compensation and benefits to assess whether your business is doing what it needs to do to attract the best-qualified employees. Even if you can’t compete on wages or salaries, a competitiveness audit can identify other areas (such as telecommuting opportunities and flexible work schedules) that can improve how attractive you are to applicants.
A function-specific audit is a kind of mini-audit where you examine just one area of your HR processes or policies. You might choose to investigate an area such as payroll management, employee review policies, record-keeping efficiency, etc.