Human Resource Audit

By

Dr. Parimalendu Bandyopadhyay

Lecturer
B.B. College
Asansol

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.

Scope of Audit:

Generally, no one can measure the attitude of human being and also their problems are not
confined to the HR department alone. So it is very much broad in nature. It covers the
following HR areas:

• Audit of all the HR function.

• Audit of managerial compliance of personnel policies, procedures and legal provisions.
• Audit of corporate strategy regarding HR planning, staffing, IRs, remuneration and other
HR activities.
• Audit of the HR climate on employee motivation, morale and job satisfaction.

Benefits of HR Audit:

It provides the various benefits to the organization. These are:

• It helps to find out the proper contribution of the HR department towards the
organization.
• Development of the professional image of the HR department of the organization.
• Reduce the HR cost.
• Motivation of the HR personnel.
• Find out the problems and solve them smoothly.
• Provides timely legal requirement.
• Sound Performance Appraisal Systems.
• Systematic job analysis.
• Smooth adoption of the changing mindset.
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)

Conclusion:

The auditors always prepare and submit an audit report to authority of the organization, which
may be clean or qualified. The clean report indicates the appreciative of the department's
function, but the latter one represents the gaps in performance and therefore contains remarks
and remedial measures. HR Audit is very much helpful to face the challenges and to increase
the potentiality of the HR personnel in the organization.

References:

William.B.Werther and Keith Davis, Human Resource Management and Personnel Management,
5th edition, McGraw-hill, 1996.

K. Aswathappa, Human Resource Management and Personnel Management, 4th edition,

McGraw-hill, 2006.

mallet
Subject - HR Audit Notes
HUMAN RESOURCE AUDIT

DEFINITION:
Human Resource Audit is a systematic assessment of the strengths, limitations, and
developmental needs of its existing human resources in the context of organizational
performance – (Flamholtz, 1987)

NEED FOR H.R. AUDIT:

Top Management saw solutions to their problems, issues and
challenges in HRD to face business competition and to achieve
organizational goals.

PURPOSE OF H.R. AUDIT:

1. To examine and pinpoint strength and weaknesses related
to H.R. areas and Skills and Competencies to enable an organization to achieve its
long-term and short-term goals.
2. To increase the effectiveness of the design and implementation of human resource
policies, planning and programs.
3. To help human resource planners develop and update employment and program
plans.

SCOPE OF HUMAN RESOURCE AUDIT

Whenever the H.R. Audit it taken up, the scope is decided. Audit need not be
exhaustive, but should be focused on particular function of H.R.M. such as Training
and Development, Performance Appraisal, Compensation, etc.. However, the objective
and approach of H.R. Audit, more or less, remains the same, regardless of scope.

APPROACH TO H.R. AUDIT

1. Self – directed surveys.
2. Task Forces within the organisation.
3. Out side Consultants.

AUDITING PROCESS: STEPS IN H.R. AUDIT

Auditing process varies from organizations to organizations.
Generally involves following STEPS:

STEP ONE: Briefing and Orientation:

Key Staff Members meet:
i. To discuss particular issues considered to be important.
ii. To chart out audit procedures, and
iii. To develop plans and program of audit.

STEP TWO: Scanning material information:

Scrutiny of all available information pertaining
to personnel, personnel handbooks and manuals,
guides, appraisal forms, computer capabilities and
any other related information.

STEP THREE: Surveying employees:

a. Interview with key managers, functional executives,
Top functionaries in the organisation and employees
Representatives, if necessary.
b. The purpose is to pinpoint issues of concern,
Present strengths, anticipated needs and managerial
views on human resources.

STEP FOUR: Conducting interviews:

I. What questions to be asked, are developed during

scanning of information.
II. It is better for H.R. Audit, if clarity about the key
factors of H.R.M. selected for audit and the related
questions that need to be examined.

STEP FIVE: Synthesising:

The data gathered is synthesized to present the

a. Current Situation.
b. Priorities.
c. Staff pattern, and
d. Issues identified.

STEP SIX; Reporting:

1. The results of the audit are discussed with

Managers and Staff Specialists, in several
rounds.
2. Important issues are identified for
inclusion in the formal Report.

H.R. AUDIT
TOPICS (AREAS) FOR INTERVIEW QUESTIONNAIRES
AND RELATED ASPECTS

1. INFORMATION

• COVERAGE
• SOURCE
• ADEQUACY
• GAPS

2. FORECASTING

• METHODOLOGY
• RELIABILITY
• TESTABILITY
• BUDGETING
• TIME ORIENTATION
• TECHNOLOGY PERSPECTIVE

3. TRAINING AND DEVELOPMENT

• NEED ASSESSMENT
• SELECTION CRITERIA
• LEVELS COVERED AND FREQUENCY
• INTERNAL VS EXTERNAL TRAINING
• QUALITY CONSCIOUSNESS
• CHANGING NEEDS
• CLIMATE FOR SELF-DEVELOPMENT

4. PERFORMANCE APPRAISAL

• VALIDITY OF APPRAISAL PROCESS

• FITNESS
• BENEFITS AND/OR
DRAW BACKS/PROBLEMS
• KNOW-HOW OF APPRAISING
• CLEAR OBJECTIVES
• UNIFORMITY IN PROCESS

• UNDERLYING BENCHMARKS
• CONSISTENCY IN RATINGS
• LINKAGES WITH PAY
• FEEDBACK TO EMPLOYEES
• CHANGING NEEDS

5. MANAGEMENT SUCCESSION PLANNING

• POLICY FORMULATION
• IDENTIFYING KEY POSITIONS
• AVAILABILITY OF SUCCESSORS
• MATCHING FUTURE NEEDS
• RESPONSIBILITY FOR GROOMING
AND DEVELOPING
• HANDLING NON/POOR PERFORMERS

6. COMPENSATION

• APPROPRIATENESS OF POLICIES
• COMPANY PHILOSOPHY
• ADEQUACY OF REWARDS
• NATURE OF JOB DESCRIPTIONS
• FLEXIBILITY IN JOB EVALUATION SYSTEMS
• CONTROL OVER COSTS
• RATIONALE OF REWARD SYSTEM
• OPPORTUNITIES FOR IMPROVEMENT

7. AFFIRMTIVE ACTION

• EFFICIENCY OF ACTION PROGRAMMES

• LESSONS FOR FUTURE
8. SPECIAL ASSIGNMEN
(OTHER H. R. FUNCTIONS)

• CLARITY
• COMMENTS
• ACTIVITIES JURISDICTIO

9. NEED INTER-RELATIONSHIPS

• UNIQUENESS
• DISTINCTIVENESS
• PRESENCE AND AWARENESS OF ABOUTCOMPANY’S H. R. POLICY
• CLARITY ON OBJECTIVES OF
H.R. AUDIT
• FUTURE OUTLOOK ON PHILOSOPHY
* CAPABILITIES ON IMPLEMENTATION

10. THE STAFF FUNCTION

(THE H.R. STAFF)

• EXPECTATION FROM HUMAN RESOURCE STAFF

• DEGREE OF SATISFACTION
• ADEQUACY
• ATTIDUDE AND APPROACH
• CAPABILITY AND POTENTIAL
• SUGGFESTION FOR CHANGE

*****
CHALLENGES FOR H.R. DEPARTMENT

EIGHT CHALLENGES IDENTIFIED

BY DAVE ULRICH (1997)

1. GLOBALISATION INVOLVES

• NEW MARKETS
• NEW PRODUCTS
• NEW MINDSETS
• NEW COMPETENCIES
• NEW WAYS OF THINKING

H. R. DEPATMENTS WILL NEED TO CREATE

MODELS AND PROCESSES FOR ACHIEVING:

• GLOBAL ACTIVENESS
• COMPETITIVENESS
• EFFECTIVENESS

2. VALUE CHAIN FOR GLOBAL

COMPETITIVENESS AND HR SERVICES

• BUILDING CUSTOMER-RESPONSIVENESS ORGANISATION THROUGH:

a. Innovation
b. Faster Decision Making
c. Price or Value Advantage
d. Effective linking with Suppliers

3. GROWTH OF ORGANISATION

• By INCREASING Customers
• BY MERGERS
• BY ACQUISITION
• BY JOINT VENTURES

HR ISSUES INVOLVED:

• Having EXECUTIVES with BUSINESS MINDSET.

- For CUTING COST on hiring PEOPLE.

- For overcoming CHALLENGE in New Business.

4. BUILDING ORGANISATIONAL CAPABILITIES

• Reviewing Existing Capabilities

• New Capabilities.
• Aligning Capabilities with Business Strategies.

5. MANAGING CHANGE

• Adopting some new H.R. Practices.

• Learning some New Skills and Attitudes.

• Unlearning some existing skills and Attitudes.

• Modifying Mindset of Executives and Employees.

6. MAKING TECHNOLOGY VIABLE

• Finding out ways and means to

make technology successful.

7. ATTRACTING AND RETAINING

COMPETENT PEOPLE

• Attracting Talented People.

• Retaining them.
• Utilising them suitably.

8. TRANSFORMING ORGANISATION

• Creating fundamental and lasting changes.

*****

PRINCIPLES FOR HRM EFFECTIVENESS

SIX PRINCIPLES OF Dr. T. V. RAO ARE BASED ON HIS OBSERVATIONS AND PERSONAL
KNOWLEDGE ABOUT THE 11 NATIONAL HRD AWARD WINNERS, DURING THE PERIOD
FROM 1989 TO 1997.

DR. RAO OBSERVED, FOLLOWING COMMON TRAITS AND CHARACTERISTICS IN THE

AWARDEES:

i. ROLE MAKERS NOT ROLE TAKERS.

II. INTEGRATION OF HR POLICIES AND PRACTICES
WITH COMPANY BUSINESS.

III.VERSATILITY FOR ONE ROLE TO OTHER.

IV.THRUST FOR LERNING.
V. ALL ARE NOT HR MANAGERS.
VI. READY TO HANDLE LINE RESPONSIBILITIES.
VII. HAVING HIGH APPLIED BEHAVIOURAL SCIENCE ORIENTATION.
¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬_________________________
_______________________________________________

SIX PRINCIPLES FOR BECOMING AN EFFECTIVE

HR MANAGER:

1. RESPECTING EACH OTHER’S TIME.

2. BECOMING TRUSTWORTHY AND PROMOTING TRUSTWORTHINESS.

3. CONTINUOUS INTROSPECTION OF ROLES AND RESPONSIBILITY OF SELF AND THE

GROUP.

4. LEARNING FROM NEIGHBOURS FOR CHANGE AND REFLECTION.

5. PAYING ADEQUATE ATTENTION TO THE CULTURE AND VALUES IN THE COMPANY
AND THE COUNTRY.

6. USING PERSONNEL POLICIES FOR EMPOWERING EMPLOYEES AND PROMOTING

MANAGERIAL EFFECTIVENESS AND NOT FOR BLOCKING CREATIVITY AND
INNOVATION.

H. R. COMPENTENCIES

1. Knowledge of H.R. practices:

- Staffing.
- Development.
- Appraisal.
- Rewards.
- Organisational Planning.
- Communication, Etc...
2. Mastery of Human Resource:
- Every thing about H.R.
3. Knowledge of Business:
It means knowing about:
- Financial.
- Strategic.
- Technological variables and their influence on business.

4. Mastery over Change process and Change Management:

- Creating Meaning.
- Problem Solving.
- Innovation.
- Transformation.
- Relationship Influence.
- Role Influence.

5. Mastery of Business:
It means knowing about following capabilities of the
organisation:

- Business,
- Financial.
- Strategic.
- Technological.
- Organisational.

METHODS OF H.R. AUDIT

FOUR METHODS:
1. INDIVIDUAL INTERVIEW METHOD
2. GROUP INTERVIEW METHOD
3. WORKSHOP METHOD
4. QUESTIONNAIRE METHOD

FOR H.R. 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 H.R.Audit.

C. Getting sensitive information pertaining to working styles and culture.

Union leaders, departmental heads, some strategic clients and informal leaders are
also interviewed, individually.

In case of small companies, manned by professionals, interviews can be extended with

selected employees from different levels and functions.

II. GROUP INTERVIEW METHOD:

Group interviews and discussions with the employees and/or executives of large
companies for H.R. Audit, facilitate collection of information about effectiveness
of existing systems.

COMPOSITION OF GROUP:

1. Ideally, the group should be of 4 to 8 persons.

2. Group should consists of same or similar level of employees from cross functional
areas.

3. In case of large organisation, group interviews for each functional area can be
conducted, separately.

RELAVANT QUESTIONS THAT ARE ASKED IN INDIVIDUAL AND GROUP INTERVIEWS:

a. What do you see as the future growth opportunities and business directions of the
company?

b. What skills and competencies does the company have which you are proud of?
b. What skills and competencies do you need to run your business, or to perform your
role, more effectively at present?

c. What are the strengths of your HRD function?

d. What are the areas where your HRD function can do better?

e. What is good about your HRD subsystems, such as:

• performance appraisal,
• career planning,
• job rotation, training,
• quality circles,
• induction training,
• recruitment policies,
• performance counseling,
• worker development programmes, and
• HRD departments?

f. What is weak about them? What can be improved?

g. What changes do you suggest to strengthen HRD in your company?

h. What do you think are the ways in which line managers

can perform more developmental roles?

III. WORKSHOP METHOD:

In some cases of H.R. Audit, instead of Individual and Group Interviews, Workshop
Methods i.e. Large Scale Interactive Process (LSIP) is conducted, as under:

a. 30 to 300 participants can be asked to gather in a room.

b. They are divided in small groups.

c. They are asked to work either around Systems, Subsystems or

around different dimensions of HRD and do SWOT Analysis.
d. All the groups thereafter give presentations.

e. The H.R. Auditor compiles the views of all groups, makes

own observation, conclusions and prepares a report.

f. The H.R. Auditor announces the audit Results before submitting

the report to top Management.

LSIP WORKSHOP FOR HRD AUDIT ON

PERFORMANCE APPRAISAL SYSTEM

- RELEVANT QUESTIONS THAT HAVE BEEN ASKED

IN ONE OF THE HR AUDIT CONDUCTED BY
Dr. T.V. RAO:

i. What are the three good things in your performance

appraisal system?

ii. What is the one thing you would like to change in your
performance appraisal system?

iii. How would you critically evaluate the job rotation in

your company?

iv. What are the strengths and weaknesses of your training

policies and practices?

v. What three objectives would you use to describe the promotion

policies as they exist in your company?

IV. QUESTIONNAIRE METHOD:

Feed back about various dimensions of HRD, including the competency base of HRD
staff, the styles of line managers, the implementation of various HRD systems, etc are
obtained through a detailed questionnaire from individuals or groups for H.R. Audit.
This method helps in benchmarking.
The process is as follows:

a. Detailed questionnaire is prepared by H.R. Auditor.

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 to the top management.

*****

OSERVATION, ANALYSIS OF SECONDATY DATA, REPORTS, MANUALS AND

OTHER PUBLISHED LITERATURE

OBSERVATION:

In addition to following the said methods, the HR Audit, needs to undertake following
to assess the extent to which a congenial and supportive human welfare-oriented
climate exists in the company:

1. Visit workplace, plant, machinery room, canteen, toilets, training rooms, hostels,
hospital, school, living colony, etc., as applicable.

2. Observations can be made through a checklist.

ANALYSIS OF SECONDARY DATA:

This can provide an insight into the HRD assets and liabilities of the company. For
example in the are of training, it may reveal as to whether employees are given
training systematically or otherwise, the cost involved for training, the age group of
employees attended training programmes, the purpose of training the employees etc..

ANALYSIS OF REPORTS, RECORDS, MANUALS AND OTHER PUBLISHED LITERATURE:

Study and analysis of said documents help in assessing the strengths and weakness of
HRD.

*****
H.R.AUDIT METHODOLOGY
(INDIVIDUAL INTERVIEW METHOD –
HOW TO INTERVIEW AND FRAME QUESTIONS?)

INTERVIEWS BEGIN WITH THE CEO AND

TOP MANAGEMENT

PURPOSE:
• TO KNOW EXPECTATIONS OF CEO.
• TO EXPLAIN SCOPE AND LIMITATIONS OF HRA.
• TO GET COOPERATION FROM STAFF.
• TO KNOW STRATEGIC LONG-TERM AND SHORT-TERM PLAN
OF THE ORGANISATION.

CEO SHOULD BE INTERVIEWED, SEPARATELY.

BRIEFING SESSION WITH CEO, COVERS:

• HRD AUDIT AND ITS METHODOLOGY.

• SCHEDULE OF H.R. AUDIT.
• ASKING CEO OF HIS/HER EXPECTATIONS.
• EXPECTATIONS, WHICH CANNOT BE MET.

IF DESIRED BY CEO, BRIEFING SESSION OF SENIOR AND TOP MANAGERS CAN BE

HELD IN A GROUP:

BRIEFING WILL COVER FOLLOWING QUESTIONS-

• WHAT IS HRD?
• WHAT IS HRD AUDIT?
• WHAT IS REQUIRED OF THE LINE MANAGERS IN INDIVIDUAL
OR GROUP INTERVIEWS?
• WHAT HAVE BEEN THE FINDINGS OF GROUP.

HR AUDITOR TO TELL DURING BRIEFINGS TO CEO AND SENIOR/ TOP MANAGEMENT:

• HR AUDIT IS NOT A PROBLEM-SOLVING EXERCISE.

• IT WILL NOT GIVE FEEDBACK ABOUT INVIDIDUALS, BUT ABOUT STRUCTURE,
COMPETENCY LEVELS, LEADERSHIP,
PROCESSES ETC.
• IT IS COMPREHENSIVE, BUT CAN BE FOCUSED ON ONE OR MORE SYSTEMS.
• ACTION ON HRD AUDIT REST WITH CEO.

FORMULATION OF QUESTIONS FOR INTERVIEW WITH CEO:

WILL BE BASED ON FUTURE PLANS OF THE COMPANY IN THE AREAS, THE

COMPETENCY REQUIREMENTS AND PREPAREDNESS OF H.R.

• DIVERSIFICATION,
• NEW MARKET,
• NEW BUSNESSES,
• NEW AREAS
• SCALE OF OPERATIONS,
• EXPORT,
• ANY CHANGE OR CONSOLIDATION.

INTERVIEW QUESTIONNAIRE:

• WHAT DO YOU SEE AS THE COMPETENCY REQUIREMENTS FOR THE FUTURE?

• WHAT COMPETENCY GAP DO YOU SEE

IN THE EXISTING STAFF?

• WHAT NEW COMPETENCIES NEED TO BE DEVELOPED IN THE STAFF AND HOW DO

YOU PROPOSE TO DO THAT?

INTERVIEW WITH THE HRD CHIEF

OBJECTIVE:

• TO UNDERSTAND THE EXISTING SYSTEMS, STRUCTURE, SKILLS OF STAFF, STYLES

OF TOP MANAGEMENT AND RELATIONSHIP WITH THE HRD PHILOSOPHY, PROBLEMS
ETC..

• TO UNDERSTAND HRD CHIEF’S PERCEPTIONS:

1. ABOUT TOP MANAGEMENT AND THE SUPPORT REQUIRED FROM THEM.

2. ABOUT LINE MANAGERS, THEIR COMPETENCIES AND INVOLVEMENT IN HRD
MATTERS.
3. ABOUT UNIONS AND THEIR INVOLVEMENT
IN HRD RELATED ISSUES.

• THE COMPETENCIES OF HRD DEPARTMENT AND STAFF.

• TO UNDERSTAND THE INTERNAL CUSTOMER FRAMEWORK OF HRD DEPARTMENT.

• TO FIND OUT THE TIME DIVISION AND HOW TIME IS SPENT BY THE DEPARTMENT.

• TO ASCERTAIN VIEWS ON HOW VARIOUS SYSTEMS ARE WORKING.

• TO GET A SWOT ANALYSIS OF HRD SYSTEMS.

• TO PREPARE A LIST OF DOCUMENTS VIS-À-VIS CHECKLIST

OF HR AUDIT.

FRAMING OF INTRVIEW QUESTIONNAIRE, BASED ON SAID DIMENTIONS FOR

INTERVIEW WITH HRD CHIEF:

• WHAT ARE THE OBJECTIVES OF YOUR DEPARTMENT?

• WHEN AND HOW WAS IT SET UP?
• WHAT ARE THE SIGNIFICANT MILESTONES
AND CONTRIBUTIONS OF THE DEPARTMENT?
• WHAT ARE IT’S CURRENT ACTIVITIES?
• WHAT IS THE ORGANISATIONAL STRUCTURE?
• HOW ARE THE STRATEGIES OF HR AND HR PLANS FORMULATED? WHAT IS THE
ROLE OF THE DEPARTMENT IN STRATEGIC PLANNING?
• WHAT ARE THE MAIN COMPETENCIES OF HRD STAFF? WHICH ARE THE
COMPETENCIES THEY NEED TO DEVELOP?
• What are the styles of Top and Senior level Managers?
To what extent the styles are helpful in developing learning culture?
• What are the main blocks in developing learning culture?
• How are the line managers supporting their juniors in developing? What needs to be
done to make them more supportive?
• What is the extent of support given by Top Management to HRD?
• Is there a separate budget for HRD? How the same is allocated and what is the
support of Top Management?
• What is the HRD philosophy and values?
• What the core competencies of each department and of the organisation
as a whole?
• What is relationship between Personnel and HRD Departments? Is there need for
further strengthening Integrating or differentiating the functions or activities of the
two?
• What the strengths and weakness in the following systems of your organisation:

i. Performance Appraisal.
ii. Counseling.
iii. Training.
iv. Career Planning and Development.
v. Succession Planning for strategic roles.
vi. Job Rotation.
vii. OD and Team Building interventions.
viii. Research and System Development.
ix. Mentoring.
x. Culture- Building Exercises.
xi. Quality improvement interventions.
*****

INTERVIEWS WITH LINE MANAGERS:

OBJECTIVE:

• TO UNDERSTAND THEIR PERCEPTIONS ABOUT THEIR:

a. HRD needs.
b. Current status.
c. Expectations.
d. Competencies.
e. Commitment to HRD.]
f. Etc..

FORMULATION OF INTERVIEW QUESTIONNAIRE,

BASED ON ABOVE DIMENSIONS:

• What are the HRD needs of your department and yourself?

• What kinD of help do you get from HRD Department for competency and
commitment building?
• What the HRD System that you feel happy about?
• What are the HRD System that you have contributed and contributing in achieving
business goals?
• What are the strengths of your HRD functions?
• What are the weak areas of HRD?
• What are your expectations from HRD?
• What are the training needs of your department?
• Are your training needs taken care of?
• What are your career growth? Are they taken care of?
• What do you see as future growth of the opportunities and business directions of the
company?
• What the core competencies are skills and knowledge the company has?
• What skills and knowledge do you thing are required to run the business (or to
perform better in your job)?
• What is good about your HRD sub-systems: Performance Appraisal? Training? Job
Rotation? Career Planning and development?
• What should the HRD Department start doing or do more? What it should stop doing
or do less.

*****

INTRVIEWS WITH WORKERS AND THEIR REPRESENTATIVES:

OBJECTIVE - TO FIND OUT:

• THEIR CURRENT DEVELOPMENT NEEDS VIS-À-VIS BUSINESS GOALS OF THE

COMPANY.
• THEIR MOTIVATIONAL LEVEL.
• CULTURE PREVAILING IN THE ORGANISATION.
• GOOD AND BAD PRACTICES OF THE ORGANISATION.

FOMULATING INTERVIEW QUESTIONNAIRE,

BASED ON ABOVE:

• How to you feel working in your organisation?

• What are the strengths of your organisation?
• What are the areas that need improvement?
• What do you know about the business plans and opportunities for your company?
• What do you know about the competition your company is facing today or is likely to
face in the future?
• What are some of the things your company should do to face the changing
environment?
• What is being done to ensure that you all have the skills needed to meet the current
needs or future challenges of the company?
• What motivates you here?
• What more do you think needs to be done to help you contribute better to the
organisation?
• What kind of training do you get here? Are you satisfied? What more do you think
need to be done in the interest of the company?
• What are the facilities available for you in the plant and colony.
• What do you think can be done to improve quality, save costs and make people feel
happy to work for the company.
• What are your expectations from the HRD Department? What are you happy about?
What are your suggestions for them to serve you better.

*****

H.R.AUDIT METHODOLOGY
(GROUP INTERVIEW METHOD –
HOW TO INTERVIEW AND FRAME QUESTIONS?)

GROUP INTERVIEWS

Advantages:
1. Wider coverage of issues.
2. Larger involvement of employees.
3. Verification of data and significant points.
4. Assessment of impact of feelings related to any issue and
problem or satisfiers and dissatisfiers.

GUIDELINES FOR SELECTING SAMPLES FOR

GROUP INTERVIEWS

Middle level Managers:

• Minimum 10% and Maximum 100% group-wise or department-wise. In any audit,

100 Managers individually or in groups should be interviewed.

Supervisors and Staff:

• 10% or 5-6 groups from different functions and workplaces may be selected for
audit.

Workmen:
• To be interviewed in large groups. 5-10 groups are advisable.

GUIDELINES FOR INTERVIEWS IN GROUPS

A. Auditors to be introduced to the group by a representative from

H.R. Department.

B. Auditors to brief about the HRD Audit and it’s purpose and usefulness
to the company. Thereafter, questions relating to various systems can be
either asked questions or given a questionnaire to answer in about
30 Minutes and after collecting the feedbacks, discussion for another
about 30 minutes can be held to know the intensity of the feelings.
In either case, notes should be taken.

C. Auditors to consolidate the feedbacks.

FORMULATION OF QUESTIONNAIRE FOR GROUP INTERVIEWS:

As per your view, what are the Strengths and Weaknesses in respect of the following
components of HRD:

Commitment of Top Management to HRD. Performance Review discussions.

Recruitment of competent people. Separations.
Retention of competent people. Quality Circles.
Identification of fast-track-employees. Participative Management.
Mentoring System. Shopfloor Committees.
Training (In-house & outside). Delegation.
Induction. Personnel Policies.
Career Planning. HRD Department and Staff.
Succession Planning. Communication.
Job Rotation. HRD Culture.
Performance Appraisal. Others.

INTERVIEW AREAS,
DIMENSIONS AND QUESTIONS
FOR ASSESSING HRD SYSTEMS

POSSIBLE INTERVIEW AREAS, DIMENSIONS, ISSUES AND QUESTIONS CAN BE IN THE

FOLLOWING HRD SYSTEMS:
CAREER SYSTEM: Manpower Planning and Recruitment. Potential Appraisals and
Promotions, Career Planning and Development.

WORK PLANNING: Role Analysis (goal setting), Contextual Analysis, 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.

TWO EXAMPLES:

HRD SYSTEM/SUB-SYSTEM

POSSIBLE INTERVIE AREAS, DIMENSIONS, ISSUES AND QUESTIONS

WORK PLANNING:

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?

DEVELOPMENT
SYSTEM:

Training and Learning

• What are the suggestions for improvement in the training?

• What is the training budget?

• Do line managers take the training seriously?

• What is the process of sponsoring employees for training?

• What are the other learning mechanisms being used for competency building?

• What are the new learning mechanisms that can be used?

• 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?

WHAT TO OBSERVE IN AUDIT

IN
HRD SYSTEM
TWO EXAMPLES:

HRD SYSTEM/
SUB-SYSTEM SECONDARY DATA

WORK PLANNING:

PERFORMANCE APPRAISAL

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.

DEVELOPING SYSTEM:

TRAINING AND LEARNING

Assess the expenditure on training level-wise, department-wise and location-wise.

Assess, if the training programmes sponsored are in line with the training needs stated
in the appraisal formats. Analyse the training budget to assess, if the budgets are
prepared appropriately and if the full expenditure is taken into consideration in the
assessment.

WRITING H.R.AUDIT REPORT

OBJECTIVE:

1. TO HIGHLIGHT AREAS THAT NEEDS IMPROVEMENT.

2. TO BE ACTED UPON.

PURPOSE:

TO HELP THE TOP MANAGEMENT AND AND THE HRD STAFF TO RECOGNISE AND
RETAIN THE COMPANY’S STRENGTHS.

POINTS TO REMEMBER FOR WRITING REPORT:

A. SIMPLE LANGUARE SHOULD BE USED.

B. IT SHOULD BE SHORT AND PRECISE.
C. BULLET FORM HIGHLIGHTING THE STRENGTHS AND WEAKNESSES,SHOULD BE
USED.

MODEL OUTLINE: HR AUDIT REPORT

EXECUTIVE SUMMARY

CHAPTER-1 INTRODUCTION
CHAPTER-2 CURRENT STATUS OF THE HRD FUNCTION; SOME FACTS.
CHAPTER-3 GENERAL OBSERVATIONS
CHAPTER-4 CAREER SYSTEMS
CHAPTER-5 WORK PLANNING
CHAPTER-6 DEVELOPMENT SYSTEM
CHAPTER-7 SELF-RENEWAL SYSTEM
CHAPTER-8 HRD CULTURE
CHAPTER-9 HRD FUNCTION

TABLE AND APPENDICES

1. INTRODUCTION

BRIEF DESCRIPTION ABOUT:

• COMPANY LOCATIONS,
PRODUCTS AND SERVICES,
MANPOWER, TURN OVER, AND
MAIN CONCERNS AND TOP MANAGEMENT.
• DATE AND REASON FOR UNDERTAKING THE AUDIT.
• METHODOLOGY ADOPTED FOR THE STUDY:
DETAXILS OF SAMPLES, AND
AUDIT METHODS USED:
* Questionnaires administered,
* Number of individual interviews,
* level-wise records and reports examined,
* Group Interviews, etc..
• HRD SYSTEMS (various sub-systems of HR audit; etc.)

*****
__________________________________________________
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2. CURRENT STATUS OF THE HRD FUNCTION

DETAILS ABOUT HRD FUNCTIONS:

• STRUCTURE AND STAFFING OF HRD FUNCTION,

• HRD DEPARTMENT’s THRUST AREAS AND OBJECTIVES,
• HIGHLIGHTS OF EXISTING HRD SYSTEMS AND SUB-SYSTEMS:
- Performance Appraisal,
- Potential Appraisal,
- Career Planning,
- Mentoring,
- Training,
- Job rotation,
- Quality circles, etc.
• STRENGTHS AND WEAKNESSES OF THE HRD FUNCTION.
• HRD NEEDS: AN OVERVIEW
– Broad highlights of the areas that need attention.
*****

3. GENERAL OBSERVATIONS

SALIENT FESTURES OF THE COMPANY OBSERVED BY THE AUDITORS VIS-À-VIS

PRESENT COMPETENCIES AND FUTURE POTENTIAL, ENCOMPASSING FOLLOWING
DIMENTIONS OF HRD:

* Competence Building,
* Culture Building,
* Commitment Building.

• PRESENT AND FUTURE BUSINESS CONCERNS - HIGHLIGHTS,

• CONPETENCIES AND COMPETENCY REQUIREMENTS FOR FUTURE,
• GENERAL OBSERVATIONS ABOUT COMPETENCIES FOUND.
• GENERAL OBSERVATIONS ABOUT THE COMPETENCY PROMOTING MECHANISMS,
• COMMITMENT AND MOTIVATIONAL PATTERNS,
• COMMITMENT-AND MOTIVATION-PROMOTING MECHANISMS,
• WORK CULTURE AND ORGANISATIONAL CULRURE,
• CULTURE-BUILDING MECHANISMS

- A BRIEF ABOUT IMPORTANCE OF THE ABOVE 3 COMPONENTS FOLLOWED BY

GENERAL STRENGTHS AND WEAKNESSES OF THE COMPANY RELATING TO HR AREAS,
COVERING THE FOLLOWING, CAN BE GIVEN:

* Impact of existing situation in the industry on HRD Culture

of the organisation; Technological Innovations, Customers
expectations, Leadership change or change of Management or
any thing affecting HR function.
* Any excellent or weak parts of the HRD function.
* The general Strengths and Weaknesses of the Company.

*****
__________________________________________________
_____________________

4. CAREER SYSTEMS

FINDINGS OF THE AUDIT ON THE FOLLOWING SHOULD BE INCLUDED:

• IMPORTANCE OF THE FOLLOWING,
• MANPOWER PLANNINGF AND UTILISATION
- Strengths, Weaknesses and Recommendations.

• RECRUITMENT –
- Strengths, Weaknesses and Recommendations.
• POTENTIAL APPRAISAL AND FAST TRACK
- Strengths, Weaknesses and Recommendations.
• CAREER PLANNING AND DEVELOPMENT
- Strengths, Weaknesses and Recommendations.
• SUCCESSIONAL PLANNING
- Strengths, Weaknesses and Recommendations.
*****

5. WORK PLANNING

• INTRODUCTION (Concept of work planning and

the component of systems)
• CONTEXTUAL ANALYSIS
_ Strengths, Weaknesses and Recommendations.
• ROLE CLARITY
_ Strengths, Weaknesses and Recommendations.
• PERFORMANCE APPRAISAL SYSTEM
_ Strengths, Weaknesses and Recommendations.

*****
__________________________________________________
______________________

6. DEVELOPMENT SYSTEM

• INTRODUCTION AND COMPONENTS

• INDUCTION TRAINING
_ Strengths, Weaknesses and Recommendations.
• TRAININGAND LEARNING SYSTEMS
_ Strengths, Weaknesses and Recommendations.
• PERFORMANCE GUIDANCE AND DEVELOPMENT
_ Strengths, Weaknesses and Recommendations.
• WORKER DEVELOPMENT
_ Strengths, Weaknesses and Recommendations.
• OTHER MECHANISMS OF DEVELOPMENT
_ Strengths, Weaknesses and Recommendations.
*****

7. SELF-REENEWAL SYSTEM

• INTRODUCTION
• ROLE EFFICACY
_ Strengths, Weaknesses and Recommendations.
• ORGANISATION DEVELOPMENT
_ Strengths, Weaknesses and Recommendations.
• ACTION ORIENTED RESEARCH
_ Strengths, Weaknesses and Recommendations.

8. HRD CULTURE

• INTRODUCTION
• HRD CULTURE
_ Strengths, Weaknesses and Recommendations.
• VALUES
_ Strengths, Weaknesses and Recommendations.
• QUALITY ORIENTATION
_ Strengths, Weaknesses and Recommendations.
• REWARDS AND RECOGNITION
_ Strengths, Weaknesses and Recommendations.
• INFORMATION
_ Strengths, Weaknesses and Recommendations.
• COMMUNICATION
_ Strengths, Weaknesses and Recommendations.
• EMPOWERMENT THROUGH PARTICIPATION,
DECENTRALISATION, SHOPFLOOR COMMITTEES, ETC.
_ Strengths, Weaknesses and Recommendations.

*****
9. HRD FUNCTION

• GENERAL OBSERVATIONS
• INDUSTRIAL RELATIONS AND HR
_ Strengths, Weaknesses and Recommendations.
• PERSONNEL POLICIES AND HRD
_ Strengths, Weaknesses and Recommendations.
• HRD FUCTION – STRUCTURE
_ Strengths, Weaknesses and Recommendations.
• HRD DEPARTMENT - COMPETENCIES
_ Strengths, Weaknesses and Recommendations.
• HRD STRATEGIES
_ Strengths, Weaknesses and Recommendations.
• HRD ACTIVITIES AND PRIORITIES
_ Strengths, Weaknesses and Recommendations.

What other causes or conditions of termination of

employment exists?
What procedures are used for

− Termination for Cause

− Job Closure

− Resig n atio n
What level of approval is needed before a termination
can occur?
Is there any formal checklist or legal review prior to
termination?
Are exit interviews performed for all employees who
leave?
What documentation is required for all employee
transitions?
How are references handled in your organization?
Who is responsible for internal communications
regarding difficult terminations? (i.e.,
communicating the termination to other employees.)

http://www.scribd.com/doc/9520665/Presentation-on-HR-AUDIT-27122008

Hr audit - Presentation Transcript

1. H uman R esource A udit by Janakiraman

2. What is Audit?

o Review and verification of completed transactions to see whether they represent a true
state of affairs of the business or not

o Examination and evaluation of accounts and records

3. Human Resource Audit

o HR audit refers to an examination and evaluation of policies, procedures and practices

to determine the effectiveness and efficiency of HRM

4. Purpose and Nature of HR audit

o HR audit is a tool which helps to assess effectiveness of HR functions of an organization

o Focus on analyzing and improving

o To reveal the strength and weakness

o HR audit is a diagnostic tool, not a prescriptive instrument

5. Benefits of HR audit

o Identification of the contributions of the HR department to the organization

o Improvement of the professional image of the HR department

o Encouragement of greater responsibility and professionalism among members of the HR

department

o Stimulation of uniformity of HR polices and procedure

6. Contd. Benefits of HR audit

o Finding critical personnel problems

o Ensuring timely compliance with legal requirements

o Reducing of HR costs through mare effective personnel procedures

o Creation of increased acceptance of the necessary changes in the HR dept

7. Area of HR Audit

o Audit of:

o HR function

o Managerial compliance

o HR Climate

o Corporate strategy

8.
o 1. Audit of human resource function

o Determination of objectives of each activity

o Identification of responsibility of performance

o Review of performance

o Developing an action plan to correct deviations between results and goals

o Follow-up of action plan

9.
o 2. Audit of managerial compliance
o This covers audit of managerial compliance of personnel policies, procedures, and legal
and welfare provisions. Compliance with the legal provisions is most important as any violation
makes the management guilty of an offence.

10.
o 3. Audit of human resource climate

o The working culture in any industry has an impact on employee motivation, morale, job
satisfaction, employee absenteeism, safety records and employee welfare.

11.
o 4. Audit of corporate strategy

o This helps the industry to gain a competitive advantage. By analyzing the SWOT
analysis of the industry, the management can take decisions regarding marketing channels, services,
innovations, low cost production and other like decisions.

12. Approaches to HR Audit

o Comparative approach

o Outside authority approach

o Statistical approach

o Compliance approach

o Management by objectives (MBO) approach

13.
o 1. Comparative approach

o In this, the auditors identify Competitor Company as the model. The results of their
organization are compared with that of the Model Company/ industry.

o 2. Outside authority approach

o In this, the auditors use standards set by an outside consultant as benchmark for
comparison of own results.

14.
o 3. Statistical approach

o In this, Statistical measures are performance is developed considering the company’s

existing information.

o 4. Compliance approach

o In this, auditors review past actions to calculate whether those activities comply with
legal requirements and industry policies and procedures.

15.
o 5. Management by objectives (MBO) approach
 o This approach creates specific goals, against which performance can be measured, to
arrive at final decision about industry’s actual performance with the set objectives.

16. Conclusion

o The main functions of human resources audit are to take specific actions that will help
minimize employee turnover orientation training, working conditions, remuneration and benefits and
opportunities for advancement. Therefore, quality of turnover is more important than the quantity of
people leaving and joining the industry. Human resources management should create a work
environment to make employee realize that it makes a sense to work in the industry rather than
staying at home and waste their time.

http://www.scribd.com/doc/9520665/Presentation-on-HR-AUDIT-27122008