Human Resource Audit- Meaning, Types, Objective
Overview
HR audit is an important management control device. It is a tool to judge organisations performance and effectiveness of HR management. According to Dale Yoder, “Personnel audit refers to an examination and evaluation of policies, procedures and practices to determine the effectiveness of personnel management.”
It is an analytical, investigative and comparative process. It gives feedback about HR functions to operating managers and HR specialists. It enables to know about the effectiveness of personnel programmes. It further provides feedback about how well managers are meeting their HR duties. It provides quality control check on HR activities. It refers to determine the effectiveness and efficiency of HRM.
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.
2. Policies
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.
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.
4. Departmental
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.
6. Safety
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.
7. Hiring
As the name suggests, a hiring audit reviews the hiring process of a company. It ensures that the hiring strategy 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 benefit, 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.
The essential features of HR audit
(1) The measurement and effectiveness HR management’s mission, goals, strategies, policies, programmes and activities, and
(2) To determine the action plan for future in response to the results from such measurement.
Objectives of HR Audit
(1) To review every aspect of management of HR to determine the effectiveness of each programme in an organisation.
(2) To seek explanation and information in respect of failure and success of HR.
(3) To evaluate implementation of policies.
(4) To evaluate the performance of personnel staff and employees.
(5) To seek priorities, values and goals of management philosophy.
Need for Human Resource Audit
Though there is no legal obligation to have HR audit as in case of financial accounts but the managements have realized its need and usefulness. Therefore, they have taken up HR audit voluntarily.
It is done to fulfil the following needs:
(1) The managements of organisations have realized the need for HR audit because of powerful influence on motivation of employees at work due to participation of employees in decision making.
(2) Growth of organisation needs HR audit. Large organisation requires continuous feedback for improvement in performance of its employees.
(3) Mounting pressures from trade unions of employees and their participation in formulating employment policy and questioning of managerial competence have raised the need for HR audit.
(4) An effective two way communication system has also facilitated the need for HR audit.
(5) Many plants are located at large distances. This also made the HR audit compulsory.
(6) The HR audit becomes essential because of delegation of authority and decentralization of power.
Approaches to HR Audit
According to William Werther and Keith Davis, there are five approaches for the purpose of evaluation.
These are briefly outlined as under:
(1) Comparative Approach:
Under this approach auditors identify one model company and the results obtained of the organisation under audit are compared with it.
(2) Outside Authority Approach:
In outside authority approach a benchmark is set to compare own results. A standard for audit set by outside consultant is used as benchmark.
(3) Statistical Approach:
Under statistical approach the statistical information maintained by the company in respect of absenteeism, employee turnover etc. is used as the measures for evaluating performance.
(4) Compliance Approach:
Under compliance approach the auditors make a review of past actions to determine to see whether those activities are in compliance with the legal provisions and in accordance with the policies and procedures of the company.
(5) MBO Approach:
Under MBO approach specific targets are fixed. The performance is measured against these targets. The auditors conduct the survey of actual performance and compare with the goals set.
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It is understood that each case is fact specific and that the appropriate solution in any case will vary. Finally, the owner will not be accountable for any loses injuries or damages from the exposures or usage of this information