HUMAN RESOURCE (HR) AUDIT

HR auditing is something that many companies do annually, just as they audit their financial information. This gives them an accounting of their workforce and the efficiency with which the organization as an entity deals with its people, from recruiting to firing. An HR audit also goes beyond looking at the hiring process into areas like employee retention, budgeting, training, employee compensation, management/employee relations and virtually any process or practice within the company that affects its people. A complete Human Resources Checkup, including administration, employee files, compliance, handbook, orientation, training, performance management, and termination procedures. The intended outcomes include minimizing your liability exposure and introduction or enhancement of human resource best practices. Human Resource Audits give an account of the skills, abilities and limitation of its employees. The audit of non-managers are called skills inventory while the audit of managers are called management inventories. Basically, the audit is an inventory that catalogues each employees skills and abilities which enables the planners to have a understanding of the organisations work force. (William B. Werther, Jr. and Keith Davies).

THE NEED AND PURPOSE OF FORMAL HUMAN RESOURCE AUDIT

It is necessary to take a look at these and other questions. HR audit is highly useful for the purpose Does the organisation regularly forecast the supply of and demand for employees in various categories? Do job analyses exist for all positions in the organisation? Are all potential sources of recruitment identified and evaluated? Are measurable selection criteria developed and used while filling up jobs? Do effective training and development programmes exist? Is there a performance evaluation system that helps assess past and potential performance? Is the remuneration programme designed to motivate employees? Is the plant unionised? Does a grievance procedure exist? Does the organisation have high quality of work life? Does the HRM practice contribute to organisational effectiveness? Does the management underestimate the capacity of HRM to contribute to organizational effectiveness?

Objectives of the Human Resource Audit To review the performance of the Human Resource Department and its relative activities in order to assess the effectiveness on the implementation of the various policies to realize the Organizational goals. To identify the gaps, lapses, irregularities, short-comings, in the implementation of the Policies, procedures, practices, directives, of the Human Resource Department and to suggest remedial actions. To know the factors which are detrimental to the non-implementation or wrong implementation of the planned Programmes and activities.

 To suggest measures and corrective steps to rectify the mistakes, shortcomings if any, for future guidance, and advise for effective performance of the work of the Human Resource Department. To evaluate the Personnel staff and employees with reference to the Performance Appraisal Reports and suggest suitable recommendations for improving the efficiency of the employees. To evaluate the job chart of the Human Resource Managers, Executives, Administrative Officers, Executive Officers, Recruitment Officers, whether they have implemented the directives and guidelines for effective Management of the Human resources in their respective Departments. Benefits of HR Audit Identifies the contribution of HR department to the organization Improves the professional image of the HR department. Encourages greater responsibility and professionalism among member of the HR department. Clarifies the HR departments duties and responsibilities. Stimulates uniformity of HR policies and practices. Finds critical HR problems. Ensures timely compliance with legal requirements. Reduces human resource cost through more effective HR procedure. Creates increased acceptance of needed change in the HR department. Requires thorough review of HR departments information system.

The HR managers report contains all the information given to both operating mangers and staff specialists. In addition, the manager gets feedback about: 1. Attitudes of operating managers and employees about the departments benefits and services. 2. A review of the departments objectives and plans to achieve them. 3. HR problems and their implications. 4. Recommendations for needed changes and the priority for their implementation.

Approaches to Human Resources Audit

The following approaches are adopted for purpose of evaluation: Comparative approach In this, the auditors identify Competitor Company as the model. The results of their organization are compared with that Company/ industry. Outside authority approach In this, the auditors use standards set by an outside consultant as benchmark for comparison of own results. Statistical approach In this, Statistical measures are performance is developed considering the companys existing information. Compliance approach In this, auditors review past actions to calculate whether those activities comply with legal requirements and industry policies and procedures. Management by objectives (MBO) approach This approach creates specific goals, against which performance can be measured, to arrive at final decision about organizations actual performance with the set objectives.