|


  
`




  
O 
 | 

 People related strategies may be important to new

strategy (for example, a change in the way the
organization does business)
 In today¶s technologically complex business world,
analysis of existing human resources is important in
order to determine what options are available
 The network of people within an organization and
their relationships with people can be an important
part of strategy
|O  
  

 In some industries, people are the p
p 
factor in success
- advertising and creative development
- leisure and tourism
- management consulting
- hospitals and medical professions
 The adaptability of people to changing environments is
an important skill
 ³The ability to learn faster than your competitors may
be the only sustainable advantage´ ± Arie De Geus,
former head of planning at Royal Dutch Shell
0    


 ÿbtain some basic information on the people

and policies involved in the organization
 Explore in detail the role and contribution of
the human resources management function
in the development of strategy
0   

 People in the  Role and Contribution

ÿrganization of HR strategy
HR Audit: People in the ÿrganization
-Employee numbers and turnover

-ÿrganization structure
-Selection, training and development
-Structures for controlling the
-organization -Staffing levels

- se of special teams, e.g. for -Capital investment/employee

-Innovation
-Role of quality and personal service
-
evel of skills and capabilities -in delivering the products or services
-required -of the organization

-orale and rewards -Role of professional advice in

-delivering the product or service
-Employee and industrial
-relations
Role and Contribution of HR Strategy

-Relationship with strategy

-ey characteristics of HR strategy

-Consistency of strategy across different levels

-Responsiveness of HR strategy in leading change in the

organization

-Role of HR strategy in leading change in the organization

-onitoring and review of HR strategy

-Time horizon for operation of HR strategy

è|    
 The top management of the organization requires
the strategic advantage and the critical value
addition provided by people.
 The role of HRD is well carved out.

ine managers understand , accept , and
internalize their own role in development.
 A learning culture is created in the organization.
 Appropriate HRD systems are identified to suit
the needs, requirements and strategies of the
corporation and implemented well.
è|    

 The systems are periodically reviewed and
aligned and realigned with the business goals of
the organization.
 Support HR policies are formulated and
implemented.
 The HRD function is handled by competent
people
 The styles, beliefs and values of the top
management is aligned to promote a good
learning and competency building culture.
 HRD function and the implementation of HRD is
periodically reviewed and renewed .
 HRD audit is a comprehensive evaluation of
the current human resource development
strategies, structure , systems, styles and
skills in the context of the short and long term
business plans of a company. HRD audit
attempts to find out the future HRD needs of
the company after assessing the current HRD
activities and inputs available.
`    


 Provides information that is useful in deciding

how feasible a strategy is
 Identifies any human resource Π

(human resources necessary for a proposed
strategy minus the current state of human
resources)
 Allows the organization to ³benchmark´ their
performance against other organizations
(benchmark is a process of comparison)
Ô
 
  

  
       
          
  
  

   

 
     
 
 
  
    
   
 
  
   
 
      
   


   

     
     
    
     
  
 
      

        

 
     
 
       
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According to Dale Yoder,´ Personnel audit
refers to the examination and evaluation of
policies , procedures and practices to
determine the effectiveness of personnel
management´.
The essential features of HR Audit are:
1.The measurement and effectiveness HR
management¶s mission. Goals, strategies,
policies , programmes and activities
2.To determine the action plan for future in
response to the results from such
measurement.
|

  
A human resource audit evaluates the personnel
activities used in an organization. The audit may
include one division or entire company. It gives
feedback about :
1.The function of operating managers.

2.The human resource specialists.

3.How well managers are meeting their human

resource duties.
In short, the audit is an overall quality control check
on human resource activities in a division or
company and how those activities support the
organization¶s strategy
ÿ 
 |  
 To review every aspect of management of
HR to determine the effectiveness of each
programmes in an organization.
 To seek explanation and information in
respect of failure and success of HR
 To evaluate implementation of policies.
 To evaluate the performance of personnel
staff and employees.
 To seek priorities , values and goals of
management philosophy.
0
 



Proactive
Reactive
Informative
Developmental
´

 
An audit reminds member of HR department and others
its contribution, creating a more professional image of
the department among manager and specialist. The audit
helps clarify the department¶s role and leads to greater
uniformity, especially in the geographically scattered and
decentralized HR function of large organizations.
Perhaps most important, it finds problems and ensures
compliance with a variety of laws and strategic plans in
an organization.
 
   
  
   

          


´

  
c) Encourages greater responsibility and professionalism
among member of the HR department.
d) Clarifies the HR department¶s duties and
responsibilities.
e) Stimulates uniformity of HR policies and practices.
f) Finds critical HR problems.
g) Ensures timely compliance with legal requirements.
h) Reduces human resource cost through more effective
HR procedure.
i) Creates increased acceptance of needed change in the
HR department.
j) Requires thorough review of HR department¶s
information system.
´esides ensuring compliance, the audit can improve
the department¶s image and contribution to the
company. ÿperating managers may have more
respect for the department when an audit team seeks
their view. If the comments of manager are acted on,
the department will be seen as being more responsive
to their needs. And since it is service department,
these actions may improve its contribution to
organizational objectives.
 0 O
|

  
Audit of Corporate Strategy
Corporate Strategy concerns how the organization is going to gain
competitive advantage.

Audit of the Human Resource Function

Audit touches on Human Resource Information System, Staffing and
Development, and ÿrganization Control and Evaluation.

Audit of anagerial Compliance

Reviews how well managers comply with human resource policies and
procedures.

Audit of Employee Satisfaction

To learn how well employee needs are met.
     O 
 Human resource professionals do not set
corporate strategy, but they strongly determine its
success.
 ´y assessing the firm¶s internal strengths and
weaknesses and its external opportunities and
threats, senior management devises ways of
gaining an advantage, such as :
 stresses superior marketing channels,
 low-cost production, etc.
 nderstanding the strategy has strong
implications for human resource planning,
staffing, compensation, employee relations, and
other human resource activities
   |


! 
 
*
p

  p  
p
-
p

 
 Supply and demand
estimates; skill inventories; replacement charts
and summaries
-   

 p   Job standards, Job
descriptions, Job specifications
-  p
   p  Wage, salary, and
incentive levels; Fringe benefit package;
Employer-provided services
A   






  sources of recruits, availability of
recruits, employment applications
    selection ratios, selection
procedures, equal opportunity.
 0   p  orientation
program, training objectives and procedures,
learning rates
   p  internal placement,
career planning program, human resource
development efforts
X    
 


  p 

 standards and

measures of performance, performance appraisal
techniques, evaluation interview.

 r  p
 

egal
compliance, management rights, dispute
resolution problems.


p

   
 employee
communications, discipline procedures, change
and development procedures,
  " 
 

 Compliance with laws is especially
important. When safety, compensation, or
labor laws are violated, the government
holds the company responsible.
 If managers ignore policies or violate
employee relations laws, the audit should
uncover these errors so that corrective
action can be started.
  #
O 
 
 Employee satisfaction refers to an employee¶s
general attitude toward his or her job.
 When employee needs are unmet, turnover,
absenteeism, and union activity are more likely.
To learn how well employee needs are met, the
audit team gathers data from workers.
 The team collects information about wages,
benefits, supervisory practices, career planning
assistance, and other dimensions of job
  


In order to conduct HR audit, HR manager requires
considerable amount of data. To conduct meaningful HR
audit information on following human resource functions
is necessary:
1) Procurement Function
a) In inventory present and future needs for manpower
b) Reliable performance standard
c) Possible change affecting manpower
d)
ocation and matching of required and available skills
e) Valid measure for testing and selection
f) Cost of requirement and replacement
2) Ñevelopment Function
a) Valid measure of employee performance
b) Cost benefit calculation on training and development
c)
inkage between individual aspirations and
organizational needs.
d) Career and succession planning.
3) Compensation Function
a)
inkage between wages and productivity
b) Impact of money on work motivation of employee
c) Employee cost in term of turnover
d) Effect of inflation and technology on wages label and
productivity
e) Value of collective bargaining and fringe benefit
programmes to the organization.
Ú)  aintenance Function
a) Absenteeism, turnover, accidents, grievance
disciplines, man-days lost and other indicator of
organizational health
b) Environmental standards for physical and mental
health of the employees.
c) Causes and cost of employee separation
d) Incentives for voluntary separation, if necessary.
5) Integration Function
a) Communication and leadership climate in the
company
b) Adoption to environmental change
c) Causes of changes in productivity level
d) Impact of change in technology and market.
 `  



 
- nsure compliance

- Improve HR practices
-
rain your managers
- Prepare for potential government audit or litigation
- ain an understanding of department¶s environment
- ow a ³good fait effort´
- orrect errors
` 

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|   $  %
 

It can get the top management to think in terms of strategic and
long-term business plans.
Changes in the styles of the top management

Role clarity of HRD department and the role of the managers in

HRD
Improvements in HRD systems

Increased focus on human resources and human competencies

´etter recruitment policies and more professional staff

ore planning and more cost effective training.

Strengthening accountability through appraisal systems and other

mechanisms.
Streamlining of other management practices

TQ interventions

It can enhance RÿI of the HR function.

Ô
      
Ô
 
- Interviews

- servation
- uestionnaire
-econdary data analysis
- nd examination of documents and
communications.
ë 



with employees and managers
are one source of information about
human resource activity. Employees and
managers comments help the audit team
find that need improvement.
 Another useful source of information is the
exit interview. Exit interview are conducted
with departing employees to learn their
views of the organization.
%  

 Interviewing the various stakeholders can

give considerable data about the current
areas and directions for improvement. The
main advantage of the interview method is its
capacity to capture the primary concern of
the stakeholders.
 Interviews can be: (a) Individual (b) Group
%   %  
The auditors normally make it a point to
interview the top level management and senior
managers individually. Such individuals
interviews are a must for capturing their
thinking about the future plans and
opportunities available for the company. Also
by virtue of occupying strategic positions , the
top management has the required perspective
for a good HRD audit. Thus a good HRD audit
begins with individual interviews of the top
management.
%   %  
Individuals interviews are also essential when
sensitive information has to be obtained. Such
information pertains to working styles and
culture. nion leaders, departmental heads ,
some strategic clients and informal leaders are
all interviewed individually.
 è  %  
 Jormally in an audit of companies having
thousands of employees, it is not feasible to
meet everyone individually. Group interviews
are normally conducted for groups of four to
eight individuals. It is preferable to have
employees drawn from same or similar levels.
Some of the open-ended questions normally asked
for HRD audit in both individual and group
interviews areas follows:
 ` at do you see as t e future growt
opportunities and business directions of t e
company?
 ` at skills and competencies does t e
company ave w ic you are proud of?
` at skills and competencies do you need to
run your business, or to perform your role , more
effectively at present?
` at are t e strengt s of your HRÑ function?
` at are t e areas w ere your HRÑ function
can do better?
` at is good about your HRÑ subsystems ,
suc as performance appraisal , career planning
, job rotation, training, quality circles,etc?
` at is weak about t em? ` at can be
improved?
` at c anges do you suggest to strengt en
HRÑ in your company?
` at do you t ink are t e ways in w ic line
managers can perform more development roles?
=   
´ecause interviews are time-consuming,
costly, and often to only few people, many
human resource departments use
questionnaires. Through questionnaire
surveys, a more comprehensive picture of
employee treatment can be developed.
Questionnaire may also lead to more candid
answers than face-to-face interviews.
- employee attitude about supervisors
- Employee attitude about their jobs
- Perceived effectiveness of human resource
department
=   " 

 A comprehensive questionnaire is normally

administered to company executives. This
questionnaire has over 250 items and requires
90minutes to complete. The questionnaire can be
administered individually or in a group.
 These questionnaire attempt to assess various
dimensions of HRD including the competency base
of HRD staff, the styles of line managers, the
implementation of various HRD systems, etc.
ÿ  
ÿbservation is a way to look at the things as they
exists. It involves the use of various senses and
drawing meanings to the things we see or hear. There
are number of things that can be observed by an
evaluator. These may be classified under the following
categories:
Physical facilities and living conditions.
eetings, discussions, and other transactions.
Celebrations and other events related to
organizational life and culture.
Training and other HRD related facilities, including
the class-rooms, library, training centre etc.
Forms and formats, report, manuals etc.


 
 Annual Report.
 Appointment
etters
 Transfer letters
 Training Sponsorship, evaluation and follow up
formats
 Product information and company information
brochures
 Jews letters
 anuals (all types)
 Jotices on notice boards
 Posters, memos, announcements
 Appraisal forms, training nomination forms
 Claim forms, application forms for recruitment
 Joining formalities for new inductees
` 
 Do they promote a sense of belonging ?
 Do they communicate a sense of respect and dignity
for each individual?
 Are they professional or bureaucratic in terms of
language , tone and explanation?
 Are they clear or ambiguous?
 Do they indicate a lot of centralization or
decentralization and autonomy?
 Are they prepared with thought and care?
 Are they readable and communicative or
ambiguous?
 How are they organized and displayed?
 Are they informative or hiding details and prone to
rumours?
`
  

  

- ompliance wit employment law

- ompliance wit institution policies/procedures

-
raining opportunities
- Department environment
- Potential liailities
- ccuracy of records
-
anager¶s understanding of law/policies/procedures
´ 
  

  

*. Ñ
  

  

  

Internal vs. xternal

2.        
 
 


a. re tey ready to fix wat¶s roken, even if it costs ?
. Do tey agree wit te metodology?
c. Will tey allow access to all departments/information?
d. Will tey pulicly support te process?
´ 
  

 
 
X. Ñ  
 

a. Wo will e audited?
. Wat do you want to audit?
c. Wat audit tools will you use?
d. How will te process e rolled out?
e. How will results get reported?
f. Wo will get te results?
  !

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0

 




     



  

"


#
 $

´  
 G  
 

-o pantom participants -orrect use of exempts vs. non-

exempt status
-ompliant wit legal
provisions - mployees are correctly graded

-Paying correct rates -o descriptions are availale for all

position or grade categories
- imited access to systems/records
-ocial ecurity numers are secure
and only used wen necessary
% 


 

  0Ñ 
 

-orrect documentation of -Programs are readily
investigations availale to staff
-Warning/disciplinary letters -
racking attendance
-Policies and procedures are
readily availale to staff
-Required posters are visile to
staff
-ick and vacation tracking is
accurate
% 
   
 
  
 

- mployee files are kept in -taffing and selection paperwork
safe and secure area
- imited access to files - ffirmative ction forms

-ecessary paperwork is -Posting information

readily availale (jo
description, application,
emergency contact)
-ertain records are kept
separate from employee file
(references, medical records,
investigatory documents)
 0&   
 Identify who is responsible for each activity.
 Determine the objectives sought by each
activity.
 Review the policies and procedures used to
achieve these activities.
 Prepare a report commending proper
objectives, policies, and procedures.
 Develop an action plan to correct errors in
each activity.
 Follow up the action plan to see if it solved
the problems found through the audit.
 ! 

Evaluation by audit results is usually superficial because the
interpretation of such indicators is generally limited. High absence
rates, for example, may result from a variety of causes. Turnover
may be low because unemployment is high. The audit probe should
be much deeper ±apprising programmes, policies, philosophy and
theory. Policy on the depth of the audit must determine which of the
following level is desired.
a) Results including both accomplishment and problem regarded as
effect of current management.
b) Programmes including the detailed practices and procedure of
which they are composed.
c) Policies both explicit and implicit.
d) Philosophy of management, its priorities in value, goals and
objectives.
e) Theory or the assured relationship and plausible explanation they
clarify and relate philosophies, policies and continuing problems.
 0     
Findings of research are used to developed a
picture of the organization¶s resource activities.
For this information to be useful, it is compiled into
audit report.
The audit report is a comprehensive description of
human resource activities that includes both
commendations for effective practices and
recommendations for improving practices that are
less effective.
Audit report often contain several sections. ÿne
part is   , another is   
 
 
  
 , and the final
part is   
 
  

 
The audit report is a comprehensive
description of HR activities that includes
both recommendations for effective
practices and recommendations for
improving practices that are less effective.
A recognition of both good and bad
practices is more balanced and
encourages wider acceptance of the
report.
An audit report contains several sections.
The HR manager¶s report contains all the
information given to both operating
managers and staff specialists. In addition,
the manager gets feedback about:
a) Attitudes of operating managers and
employees about the department¶s benefits
and services.
b) A review of the departments¶ objectives
and plans to achieve them.
c) HR problems and their implications.
d) Recommendations for needed changes
and the priority for their implementation.
Audit report provides very useful information in the form
of summaries and valuation. The information thus
obtained can be utilized for making comparison of
policies, practice and programmes of other
organizations. This provides a chance for improvement
to the organization in future.
The audit report should include the following significant
aspects:
' Highlights of the contents
' ÿbjectives of audit
' Summary of the audit report for perusal of top
executives of the organization.
' Conclusions drawn
' Department wise evaluation
' Appendix. The voluminous data that cannot be
included in the body of report.
"ÿ  
Executive Summary
 Chapter 1 Introduction

 Chapter 2 Current Status of the HRD Function; Some

Facts
 Chapter 3 General ÿbservations

 Chapter Ú Career Systems

 Chapter5 Work Planning

 Chapter 6 Development System

 Chapter 7 Self -renewal System

 Chapter 8 HRD Culture

 Chapter 9 HRD Functions

 Tables and Appendices
   '% 
 
This section can contain the following components
briefly:
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!

In this chapter the status of the HRD functions should be
presented in the details. This chapter describe the
following:
ƒ Structure and staffing of the HRD functions

ƒHRD departments thrust areas and objectives.

ƒHighlights of the HRD systems and subsystems ± a

brief description of the existing systems in practice
(performance appraisal, potential appraisal, career
planning,mentoring etc) .
ƒStrengths and weaknesses of the HRD function.

ƒHRD needs : An overview- broad highlights of the areas

that need attention.
   *è ÿ  
This chapter should highlights the salient features of the
company that were observed by the auditors in relation to
its present competencies and future potential. It may be
used to introduce the importance of the three dimensions
of HRD : competence building , culture building and
commitment building.
´
       


(   
%  
  
   



)   
     
 
% 
    
*

 



%

 

  
   +  O

This chapter can describe the findings of the audit in relation to
manpower planning , recruitment , promotions, career planning
and development, and succession planning. The general
pattern to be followed in this chapter can include:
M 

M$  

+    

 

M 
+     
 


M,  

  +     

 

M%  

  +    

 

M
  +     

 

  ,` & 
The following subsections may be used for reporting.
In each of the subsections below strengths, followed
by the weaknesses and recommendations can be
highlighted in the bullet form.
Introduction- ( introduce the concept of work planning

´riefly followed by the component systems)

Contextual analysis

Role clarity

Performance appraisal system

  -
O

This chapter may be presented and organized

in the following manner:
Introduction and components

Induction training

Training and learning systems

Performance guidance and development

Workers development

ÿther mechanisms of development

  .O/ O

The strengths , weaknesses and
recommendations can be highlighted in each of
the following sections:
Introduction

Role Efficacy

ÿrganization development

Action ±oriented research

  0|  
Introduction
HRD Culture
Values
Quality ÿrientation
Rewards and recognition
Information
Communication
Empowerment through participation,
decentralization , shop-floor committees etc.
  1|! 
 
General observations
Industrial relations and HR

Personnel policies and HRD

HRD function ± Structure

HRD department- competencies

HRD strategies

HRD activities and priorities

0
  

   
 
 How line managers handle their duties
such as:
 Interviewing applicants
 Training employees
 Evaluating performance
 otivating workers
 Satisfying employee needs
 The report also identifies people problems.
Violations of policies and employee
relations law are highlighted
   |O
 
 The specialists who handle employment
training, compensation, and other activities also
need feedback. Such feedbacks are :
1. nqualified workers that need for training
2. Qualified workers that need for development
3. What others company are doing
Ú. Attitude operating managers toward personnel
policies
5. Workers pay dissatisfaction
  |"
 It is contains all the information given to both
operating managers and staff specialists. In
addition, HR angers gets feedback about :
 Attitude operating managers and employees
about services given by HRD
 A review of HRD plans
 Human resource problems and their implication
 Recommendations for needed changes and
priorities for their implementation


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