Professional Documents
Culture Documents
Audit
Group members:
Danish Choudhari (40) (T.L)
Jaffer Choudhari (41)
Khatija Daudi (06)
Mayuri Joshi (08)
1
Acknowledgement
2
Sr. No. Contents Pg.
No.
1 Introduction 4
2 Approaches To 5
HR Audit
3 Scope Of HR 6
Audit
4 Benefits of HR 9
Audit
5 HR Audit 12
Process
6 HR Audit 16
Checklist
7 Methods of HR 18
Audit
8 HR Audit 28
Report
9 HR Audit Inc. 32
10 Vital HR 34
11 Conclusion 36
3
12 Bibliography 37
INTRODUCTION
HRM includes different functions like HRP, job analysis and design, recruitment,
selection, induction, performance appraisal, safety and health, welfare, industrial relations
and many more. These functions are performed in furtherance of certain social, functional
and personal objectives. At this stage several questions crop up, for example:
• Does the organization do the HRP regularly in various categories?
• Does job analysis exist for all positions in the organization?
• Are all potential sources of recruitment identified and evaluated?
• Is there a performance evaluation system that helps asses past and potential
performance?
• Is remuneration programme designed to motivate employees?
• Does the HRM practice respond to individual employee needs and aspirations?
• Does the organisation have high quality of work life?
It is necessary to take a look at these questions. HR audit is highly useful for this
purpose. The Human Resources (HR) Audit is a process of examining policies,
procedures, documentation, systems, and practices with respect to an organization’s HR
functions. The purpose of the audit is to reveal the strengths and weaknesses in the
nonprofit’s human resources system, and any issues needing resolution. The audit works
best when the focus is on analyzing and improving the HR function in the organization.
The audit itself is a diagnostic tool, not a prescriptive instrument. It will help you identify
what you are missing or need to improve, but it can’t tell you what you need to do to
address these issues. It is most useful when an organization is ready to act on the
findings, and to evolve its HR function to a level where it’s full potential to support the
organization’s mission and objectives can be realized.
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Definition:
HR Audit means the systematic verification of job analysis and design, recruitment
and selection, orientation and placement, training and development, performance
appraisal and job evaluation, employee and executive remuneration, motivation and
morale, participative management, communication, welfare and social security, safety
and health, industrial relations, trade unionism, and disputes and their resolution. HR
audit is very much useful to achieve the organizational goal and also is a vital tool which
helps to assess the effectiveness of HR functions of an organization.
APPROACHES TO HR AUDIT
There are five approaches for the purpose of evaluation of HR in any organization:
• Comparative approach
• Outside authority
• Statistical
• Compliance approach and
• Management By Objectives(MBO)
1. Comparative approach: In this, the auditors identify Competitor Company as the
model. The results of their organization are compared with that of the Model
Company/ industry.
2. Outside authority approach: In this, the auditors use standards set by an outside
consultant as benchmark for comparison of own results.
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considering the company’s existing information.
Scope of audit
Generally, no one can measure the attitude of human being. Hr audit must cover the
activities of the department and extend beyond because employees’ problems are not
confined to the HR department alone. So it is very much broad in nature. It should
evaluate the personnel function, the use of its procedures by the managers and the impact
of these activities on the employees. It covers the following HR areas:
1. Audit of all the HR function.
2. Audit of managerial compliance of personnel policies, procedures and legal
provisions.
3. Audit of corporate strategy regarding HR planning, staffing, IRs, remuneration and
other HR activities.
4. Audit of the HR climate on employee motivation, morale and job satisfaction.
1. Audit of HR function: This involves audit of all HR activities. For each activity,
auditor must (i) determine the objective of each activity, (ii) identify who is
responsible for its performance, (iii) review the performance, (iv) develop an action
plan to correct deviation, if any (v) follow up the action plan. The following criteria
would help measure effectiveness of HR function. Each statement has a four point
rating scale varying from ‘very true to not true’.
a. In your company, all issues are closely related to every other business
process.
b. The HR department is represented in strategy building sessions of top
management.
c. The performance of HR department and the organisation are linked.
d. The HR function is given more importance than other functions
e. The HR managers have sufficient powers to suggest strategic initiative to the
top management.
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f. The services of HR department are equally available to everyone.
g. The HR department plans the company’s manpower need proactively.
h. The HR department links appraisal and compensation to corporate
objectives.
i. The HR department meets individuals and organisation’s training needs.
j. The HR department does not handle staff-welfare canteens, or payrolls
management.
k. HR department has knowledge of behavioral sciences and industrial
psychology.
l. The Hr department gets feedback on its performance from other employees.
m. HR practices are audited, their costs computed and then effectiveness
evaluated.
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a. Employee turnover: It refers to the process of employees leaving an organization.
Higher turnover involves high cost of recruitment, selection, training, etc. High
turnover may also lead to disruption of production, problems in quality control, etc.
Resignation, retirement, death and transfers are unavoidable labour turnover. The
specific actions that will reduce employee turnover are better hiring practices,
orientation and training, working condition, better remuneration and growth
opportunities.
4. Audit of corporate strategy: Hr professionals do not set corporate strategy but they
strongly determine its success. Corporate strategy helps the organization gain
competitive advantage. By SWOT analysis, top management devises the ways of
gaining and advantage. Whether the company stresses superior marketing channels,
service, innovation, or some other approach, HRM is affected.
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Benefits of HR Audit
The team that is responsible for the audit should represent a cross-section of the
organization’s staff, including line staff, middle and upper management and those
responsible for HR functions. It provides the various benefits to the organization. These
are:
2. Clarifying the role of the HRD department and line managers in HRD: In
almost all cases, the HRD audit has been found to draw the attention of employees
at various levels to the important role of the HRD department in current as well as
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the future. Enhanced role clarity of HRD department and HRD function and
increased understanding of line managers about their HRD role have been the
uniform results of HRD audit. The degree may vary from organization to
organization depending on other factors.
4. Better recruitment policies and more professional staff: An HRD audit points
out to the competence base required. It sets the stage and gives direction for the
competency requirements of employees at various levels and thus provides a base
for recruitment policies and procedures. In some companies, it has resulted in
strengthening the recruitment policies and procedures. As a result of HRD audit,
new recruitment and retention strategies have been worked out.
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6. Improvements in HRD systems: The HRD audit has helped most of the
organisations in taking stock of the effectiveness of their HRD systems and in
designing or re-designing the HRD systems. The most frequently changed or
renewed systems include performance appraisal, induction training, job-rotation,
career planning and promotion policies, mentoring, communication, and training.
7. More planning and more cost-effective training: HRD audits have been found to
raise questions about the returns on training. One of the aspects emphasized in the
HRD audit is to calculate the investments made in training and ask questions about
he returns. The process of identifying training needs and utilization of training
inputs and learning for organisation growth and development are assessed. As
direct investments are made in training, any cost-benefit analysis draws the
attention of the top management and HRD managers to review the training
function with relative ease. One organization strengthened its training function by
introducing a new system of post-training follow-up and dissemination of
knowledge to others through seminars and action plans. Many organisations have
developed training policies and systematized their training function. Assessment of
training needs has also become more scientific in these organisations.
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9. Strengthening accountabilities through appraisal systems and other
mechanisms: An HRD audit can give significant inputs about the existing state of
the accountabilities of employees. This gets assessed through performance
appraisals as well as through the work culture and other cultural dimensions. A
number of organisations have introduced systems of performance planning, sharing
of expectations and documenting the accountabilities of staff.
HR audit process
The HR audit process is conducted in different phases. Each phase is designed to
build upon the preceding phase so that the organisation will have a very strong overview
of the health of the HR function, at the conclusion of the audit. These phases include:
1. Pre-Audit Information: This phase involves the acquiring and review of relevant
HR manuals, handbooks, forms, reports and other information. A pre-audit
information request is forwarded to the client who compiles the necessary
information for review by auditors.
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2. Pre-Audit Self-Assessment: In order to maximize the time spent during
subsequent portions of the audit, a pre-audit self-assessment form, if sent to the
client can be of use. The self-administered yes/no questionnaire asks a number of
questions about current HR policies and practices. The completion of this self-
administered questionnaire allows auditors to identify key areas for focus during
the HR audit.
3. On-site Review: This phase involves an on-site visit at the client’s facility
interviewing staff regarding HR policies and practices. A very in-depth HR audit
checklist is completed.
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8. Data gathering: Completion of a self-assessment questionnaire significantly
expedites the audit process and allows for better audit planning.
9. On-site access: The on-site portion of the audit is the most critical.
10.Using audit findings: How does an organisation use HR audit results? Since the
HR audit results are classified, an important aspect is already taken care of. Critical
needs should be the first ones to be addressed. Organisations generally have three
options for dealing with audit results.
a. Use the HR audit as a blueprint or action plan for addressing HR needs.
b. Address as many needs as possible using the organisation’s internal
expertise and resources.
c. Contract out those need areas where internal expertise and resources are
not available or do not fit in the core competencies of the organisation.
An HR audit is much like an annual health check. It can perform the same function for
the organisation. An audit is a means by which an organisation can measure where it
currently stands and determine what it has to accomplish to improve its HR functions. It
involves systematically reviewing all aspects of human resources, usually in a checklist
fashion, ensuring that the government regulations and company policies are being
adhered to. The key to an audit is to remember that it is a tool to discover and not to test.
There will always be room for improvement in every organisation.
Recognized as setting the standard in HR auditing, the new edition of the ELLA®, the
Employment-Labor Law Audit™, the leading HR auditing tool, incorporates the five
critical components of an HR audit into the HR audit process. These five critical
components, which should be addressed in every HR audit, are shown and discussed
below in the HR Audit Model™.
2. Behaviors: Behaviors in this context are actions and conduct that affect either
positively or negatively the implementation or effectiveness of the organization’s
policies, practices, procedures, and programs, and demonstrate the organization’s
commitment to stated goals and objectives. Examples of Behaviors include: the
creation of a corporate culture that values and promotes equal employment
opportunities, diversity, and compliance; the visible and unequivocal support by
senior management for the organization’s diversity efforts; and the budgeting of
sufficient resources to achieve EEO compliance and diversity goals. Behaviors are
frequently assessed using qualitative measures, such as culture scan and employee
satisfaction surveys.
4. Internal Controls: Internal controls are processes, tests, and assessments that
help ensure compliance, manage risks, identify fraud, and help ensure the
achievement of organizational goals. HR auditing activities include: 1) assessments
of the effectiveness and efficiency of HR management processes, policies, practices,
and procedures; 2) the reliability and accuracy of HR management reporting; and 3)
the level of compliance with: laws and regulations; industry and professional
standards; codes of conduct and ethics; organizational policies; and budgets.
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5. Outcomes: Outcomes are quantitative and qualitative measurements and metrics
that measure and help assess the achievement of organizational goals and objectives.
HR auditing activity includes the identification of metrics used by the organization to
measure organizational and individual performance; the assessment of results by
comparing actual results against projected results, budgets, internal and external
standards; and a description of the activities, behaviors, internal controls that are
needed to maintain or improve future results.
HR Audit Model™
HR audit checklist
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What is the Purpose of the Audit?
Sources of Data
Basics
• How many employees are there in HR (and related departments e.g. training)?
• What is the org chart for the HR department?
• What is the HR budget?
Recruitment
• What are the different policy groups (e.g. management, clerical, union)?
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• How is base pay policy set?
• What grading/job evaluation systems are used?
• Are there up-to-date job descriptions?
• What variable pay practices are in place?
• How are pay increments decided?
• What is the benefits plan?
• Are the same processes used for all jobs, all locations?
• Are processes followed consistently?
Workforce Review
Industrial Relations
Legal
• Are processes in place to manage compliance issues for all relevant jurisdictions?
• Is there any outstanding litigation?
• Are the same processes used for all jobs, all locations?
• Are processes followed consistently?
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HR Technology
Strategic HR
METHODS OF HR AUDIT
There are four methods of conducting HR audit. For HR audit, either combination of
methods or all the methods are used.
I. Individual interview method: Top level management and senior managers are
interviewed, individually. It helps in following:
a. Knowing their thinking about future plans and opportunities available for the
company.
b. Knowing about their expectations from the HR Audit.
c. Getting sensitive information pertaining to working styles and culture.
d. Union leaders, departmental heads, some strategic clients and informal
leaders are also interviewed, individually.
e. In case of small companies, manned by professionals, interviews can be
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extended with selected employees from different levels and functions.
Interview Questionnaire:
a. What is HRD?
b. What is HRD audit?
c. What is required of the line managers in individual or group interviews?
What have been the findings of group?
d. What do you see as the competency requirements for the future?
e. What competency gap do you see in the existing staff?
f. What new competencies need to be developed in the staff and how do you
propose to do that?
2. Interview with the HRD chief:
Interview questionnaire:
a. What are the objectives of your department?
b. When and how was it set up?
c. What are the significant milestones and contributions of the department?
d. What are its current activities?
e. What is the organizational structure?
f. How are the strategies of HR and HR plans formulated? What is the role of
the department in strategic planning?
g. What are the main competencies of HRD staff? Which are the competencies
they need to develop?
h. What are the styles of Top and Senior level Managers? To what extent the
styles are helpful in developing learning culture?
i. What are the main blocks in developing learning culture?
j. How are the line managers supporting their juniors in developing? What
needs to be done to make them more supportive?
k. What is the extent of support given by Top Management to HRD?
l. Is there a separate budget for HRD? How the same is allocated and what is
the support of Top Management?
m. What is the HRD philosophy and values?
n. What the strengths and weakness in the following systems of your
organisation:
• Performance Appraisal.
• Counseling
• Training
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• Career Planning and Development
• Succession planning for strategic roles
• Job Rotation
• Research and System Development
• Mentoring
• Culture- Building Exercises
• Quality improvement interventions
Interview questionnaire:
a. What are the HRD needs of your department and yourself?
b. What kind of help do you get from HRD Department for competency and
commitment building?
c. What are the HRD System that you have contributed and contributing in
achieving business goals?
d. What are the strengths and weaknesses of your HRD functions?
e. What are your expectations from HRD?
f. What are the training needs of your department? Are your training needs
taken care of?
g. What are your career growths? Are they taken care of?
h. What skills and knowledge do you thing is required to run the business (or to
perform better in your job)?
i. What is good about your HRD sub-systems: Performance Appraisal,
Training, Job Rotation, Career Planning and development?
Interview questionnaire:
II. Group Interview Method: Group interviews and discussions with the
employees and/or executives of large companies for HR Audit facilitate collection
of information about effectiveness of existing systems.
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• Verification of data and significant points
• Assessment of impact of feelings related to any issue and problem.
Interview questionnaire:
As per your view, what are the Strengths and Weaknesses in respect of the following
components of HRD?
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• Career system: Manpower Planning and Recruitment. Potential Appraisals and
Promotions, Career Planning and Development.
• Work planning: Role Analysis (goal setting), Contextual Analysis and
Performance Appraisal.
• Development system: Training and Learning, Performance Coaching/Counseling,
360-Degree performance feedback, Job Rotation/Mentoring, Staff (worker)
Development.
• Self-renewal systems: Role efficacy, O.D., Action-Oriented Research.
• Culture systems: HRD Climate, Values, Quality orientation, Reward and
Recognition, Information, Communication, Empowerment.
A.Performance Appraisal
• What is the existing system of performance appraisal?
• What re the components?
• What are the objectives?
• What is it currently being used for?
• How is it linked to other systems?
• What are the roles played by the system?
• Are the line managers taking it seriously? Are they trained for and are they
constantly kept educated?
• What are the strengths, Weaknesses and suggestions for improvement?
What to observe: Study the pattern of ratings for leniency, rater wise trends and
department-wise trends to ascertain the leniency and conservativeness in assessment.
Study interdepartmental variations in ratings and rewards to ascertain the possible biases,
etc. Investigate this, only if necessary.
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• What are the attitudes of the line managers and the top management for
training?
• What are the strengths and weaknesses of the training as it is being
managed?
III. Workshop method: In some cases of HR Audit, instead of Individual and Group
Interviews, Workshop Methods i.e. Large Scale Interactive Process (LSIP) is
conducted, as under:
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b. Individuals or groups are asked to assemble in a room or hall are explained
the objective and process of HR Audit. They are then given questionnaires.
c. They submit the questionnaire, duly filled in, to the HR Auditor.
d. The HR Auditor compiles the feedbacks, makes observations, conclusions
and recommendations.
e. Audit Results are informed to the Participants before the report is submitted.
HR AUDIT QUESTIONNAIRE
With human resources audit becoming a mandatory annual undertaking in most
organizations, there is no denying the vital role that the HR audit questionnaire plays.
The HR audit is conducted for purposes of gauging the overall well-being of the human
resource (workforce) in an organization.
Through data compiled from such audits, the HR department is then able to figure
any lapses or gaps that may exist in the workforce. The audit is also vital in comparing
set systems, policies and targets with implementation. In addition, the HR department is
able to determine if the organization is sufficiently staffed, whether the HR resources are
maximally utilized and whether the workforce complies with set industry laws. Following
is the example of audit questionnaire:
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Q1. How were you recruited?
Q2. Have you ever been involved in training and development activities since joining this
organization? _________
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?
______
Q6. Do you understand fully this organization’s policy regarding security and personal
safety? ________
Q7. For how long have you been working in the same position? ___________
HR audit report
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The objectives of the audit report are:
• To highlight areas that needs improvement.
• To be acted upon.
The purpose of preparing the audit report is to help the top management and the HRD
staff to recognize and retain the company’s strengths.
4 Career Systems
5 Work Planning
6 Development System
7 Self-Renewal System
8 HRD Culture
9 HRD Function
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• Culture-building mechanisms
Chapter 4 - CAREER SYSTEMS: This chapter will include Findings of the audit on
the following and Importance of the following including the Strengths, Weaknesses and
Recommendations of each:
• Manpower planning and utilization
• Recruitment
• Potential appraisal and fast track
• Career planning and development
• Succession planning
Chapter 5 - WORK PLANNING: This chapter will include the Strengths, Weaknesses
and Recommendations of each related to work planning system:
• Introduction (Concept of work planning and the component of systems)
• Contextual analysis
• Role clarity
• Performance appraisal system
Chapter 8 - HRD CULTURE: This chapter will include the Strengths, Weaknesses and
Recommendations of each related to HRD culture:
• Introduction
• HRD culture
• Values
• Quality orientation
• Rewards and recognition
• Information
• Communication
• Empowerment through participation, decentralization, shop floor committees
Chapter 9 - HRD FUNCTION: This chapter will include the Strengths, Weaknesses
and Recommendations of each related to HRD function:
• General observations
• Industrial relations and HR
• Personnel policies and HRD
• HRD function – structure
• HRD department – competencies
• HRD strategies
• HRD activities and priorities
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Introduction:
HR Audit, Inc. has been providing human resources, management practices and
organizational development services since 1998. While located near Milwaukee,
Wisconsin, HR Audit, Inc. provides services to companies nationally, from Radisys Corp.
near Portland, OR to Monster.com in Maynard, MA.
Co-founder and managing director Jim Bastian has 18 years of senior management
experience including serving as senior vice president and officer of a Fortune 50
company. He also served as a member of a post-acquisition assimilation team during an
aggressive growth period involving over a dozen transactions. Holding an undergraduate
degree in psychology/education and an MBA, Jim serves as company's senior auditor. He
is a frequent speaker on managing change, conflict, and diversity and performance
accountability. The audit staff has a minimum of 12 years of senior management
experience, has conducted dozens of audits and has an advanced degree in a related field.
Services:
Audit Areas:
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Audit Training:
HR Audit, Inc. trainers are uniquely qualified to help human resource department
heads and internal auditors conduct more thorough, expedient and valuable human
resource audits. While they often customize programs to meet specific client needs,
training typically is designed around one of the following three options.
OPTION ONE: consists of a 3 ½ hour training program at your site on how to conduct
a human resources or organizational audit, efficiently, expediently, objectively
and thoroughly. This training program includes a PowerPoint, handouts and
templates needed for conducting internal audits.
At the end of the session, participants will have a template to use for auditing
human resource functions, instruction on sample selection, review and analysis processes,
regulatory requirements and best practices that should be included, and other information
necessary to conduct internal HR audits. Cases, examples, situational analysis and other
activities are incorporated to ensure a “hands on” learning experience. Questions are
always welcome thorough out.
OPTION TWO: goes beyond the classroom and includes an audit of one of your
locations, (typically your corporate site)conducted by your organization’s
internal auditor(s) the HR Director and/or his/her designee(s) using an audit
process template we provide and with an HR Audit, Inc. auditor on-site providing
guidance, direction and coaching. This option typically takes 2 days on-site.
At the conclusion of the second day, you will have gone through a full audit
process, have the data, sample results, and all other information and materials needed to
draft an audit report/summary and the experience of having completed an audit prior to
“soloing”.
OPTION THREE: consists of HR Audit, Inc. completing an audit of one location while
representatives of your organization look on and participate as appropriate
This process facilitates the collection of vital information that is often not available to
internal auditors, frees participants to address work demands while learning and while the
audit process continues and results in your receipt of a complete written audit report
which is followed by a presentation and de-brief on your site with the HR Audit, Inc.
auditor.
HR Audit, Inc. will provide quotes upon request. All prices quoted are “not to
exceed” figures and will include all costs. Options two and three also include unlimited
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telephone support for 12 months following the on-site visit to answer questions, provide
recommendations or simply serve as a sounding board.
VITAL HR
Introduction:
Founded in 2005 by Jo and Jon Darling, Vital HR set out to provide practical HR
solutions to organisations requiring assistance with HR problems.
Stephen Knight: Steve spent over 20 years in four business sectors beginning
with production management in food manufacturing, with Bowyers,
followed by various management training posts both at tactical and
managerial levels with Bass and Peugeot. More recently he worked in an
executive capacity handling strategic human resource issues for a rapidly
expanding international distributor, RS Components. Steve is an
accomplished coach and able facilitator, being as comfortable in the boardroom as the
shop floor. He is qualified to use a wide range of psychometric and ability tests and has
extensive experience in their practical application in both assessment and development
situations. He has an Honors Degree, Diploma in Personnel Management and is
CMCIPD.
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development programmes. He was a senior instructor with Outward Bound responsible
for the design and development of progressive management development training
initiatives. Prior to that, he was a technical skill training instructor with the RAF
Mountain Rescue Services. He has worked with the European Youth Parliament,
organizing and delivering team awareness events throughout Europe. Currently he is
associated with the Welsh Assembly, where he assessed senior civil servants as part of a
leadership development programme which he is now delivering. His current clients
include Welsh Assembly Government, Barclay Bank, Unilever, Cleanaway, Styles
∓ Wood, E-On, DHL and Beresford’s Solicitors
Services:
2. Employment Contracts and Handbooks: Vital HR will review all existing contracts
of employment, policies and procedures in line with current UK employment
legislation. A user friendly Manager’s guide, in support of the handbook, to provide
day to day support in handling HR issues has proven very useful with many clients.
3. HR Support: The basic level of support will always include the following:
• Access to a team of HR professionals who will provide advice, guidance and
support on all employment issues. This will be provided via telephone, e-mail or
attendance at your premises, whatever is most appropriate to the situation.
• Provision of all documentation, guidance notes, letters etc, in relation to the advice
given to ensure that the risk of litigation or successful litigation is minimized on
matters of discipline, grievance, appeals, sickness absence, maternity etc.
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• Issue of employment contracts.
• Take up references.
CONCLUSION
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Reference Books:
Websites:
http://www.citehr.com/16449-hr-audit-notes.html
www.strategiesforabetterway.com/documents/au
dit.pdf
www.hr.com/hr/.../human_resources.../hr_audit/q
uick_hr_audit_checklist_eng.html
www.explorehr.org/.../HR.../HR_Audit_Questionna
ire.html
www.cag.gov.in/html/reports/commercial/2006_9
/chapter_II.pdf
www.mouthshut.com/review/readproduct.php?
cid...r=1
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www.hraudit.com
www.vitalhr.com
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