Human Resource Audits

Hasan Mustafa

Human Resource Audit?

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 organizations strategy
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Benefits of A Human Resource Audit

Identifies the contribution of the personnel departments to the organization Improves professional image of the personnel department Encourages greater responsibility and professionalism among members of the personnel department Clarifies the personnel departments duties and responsibilities Finds critical personnel problems
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The Scope of Human Resource Audits

Audit of Corporate Strategy Audit of the Human Resource Function Audit of Managerial Compliance Audit of Employee Satisfaction
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Corporate Strategy concerns how the organization is going to gain competitive advantage.

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

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

To learn how well employee needs are met.

Audit of Corporate Strategy

Human resource professionals do not set corporate strategy, but they strongly determine its success. By assessing the firms 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. Understanding the strategy has strong implications for human resource planning, staffing, compensation, employee relations, and other human resource activities
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Audit of the Human Resource Function

1. Human Resource Information System
- Human Resource Plans : Supply and demand estimates; skill inventories; replacement charts and summaries - Job Analysis Information : Job standards, Job descriptions, Job specifications - Compensation Management : Wage, salary, and incentive levels; Fringe benefit package; Employer-provided services
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2. Staffing and Development

Recruiting : sources of recruits, availability of recruits, employment applications Selection : selection ratios, selection procedures, equal opportunity. Training and development : orientation program, training objectives and procedures, learning rates Career development : internal placement, career planning program, human resource development efforts

3. Organization Control and Evaluation

Performance appraisals : standards and measures of performance, performance appraisal techniques, evaluation interview. Labor-Management Relations : Legal compliance, management rights, dispute resolution problems. Human Resource Controls : employee communications, discipline procedures, change and development procedures,
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Tasks of Auditors

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.
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Audit of Managerial Compliance

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.
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Audit of Employee Satisfaction

Employee satisfaction refers to an employees 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

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The audit report

Findings of research are used to developed a picture of the organizations 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. One part is for line managers, another is for manager of specific human resource function, and the final part is for the human resource manager.
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Report for line managers

How line managers handle their duties such as:

Interviewing applicants Training employees Evaluating performance Motivating workers Satisfying employee needs

The report also identifies people problems. Violations of policies and employee relations law are highlighted
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Report for the HR Specialist

1. 2. 3. 4. 5.

The specialists who handle employment training, compensation, and other activities also need feedback. Such feedbacks are : Unqualified workers that need for training Qualified workers that need for development What others company are doing Attitude operating managers toward personnel policies Workers pay dissatisfaction
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Report for HR Manager

It is contains all the information given to both operating managers and staff specialists. In addition, HR Mangers 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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