Internal Audit

Detailed Overview of HR Audit Process for a Business

Human Resource Department is the backbone of every organisation as it is tasked with managing one of the company’s most valuable assets, i.e., employees. Every business needs to have a proper HR Audit Process to keep a check on the HR policies and practices to avoid any legal and regulatory liability that can hinder the growth of the business. 

The article discusses a detailed overview of the HR Audit Process for the Business to help the organisation increase its efficiency and effectiveness of the organisation and achieve the organisational goal.   

What is HR Audit Process?

An HR Audit Process can be defined as a comprehensive assessment of the existing HR policies^[1] and practices of the organisation. The HR Audit process is conducted to determine the pitfalls in the functioning of the HR Department and to take adequate steps to overcome such pitfalls to enhance the effectiveness and efficiency of the business. 

What are the Objectives of HR Audit Process?

An HR Audit process has the following objectives – 

• Review the organisational system of the HR Department 
• Examination of the various procedures and policies implemented by the department 
• Analysis of the efficiency and effectiveness of the policies and procedures 
• Comparison of the Personnel system of the organisation with other organisations

What are the types of HR Audits?

There are different types of HR Audits, such as – 

• Compliance Audit 

A compliance audit is conducted to check if the HR practices and policies are in accordance with the prescribed rules and regulations of the organisation. The compliance audit helps to enhance the reliability and credibility of the business. 

• Best Practice Audit 

This audit is conducted by comparing the practices of the HR Department of the organisation in question with the best practices of other organisations to check if the organisation is adopting the best practices to carry out its operations. 

• Strategic Audit 

The main objective of conducting this type of audit is to evaluate the contribution of the HR policies towards achieving the organisational goal along with checking the improvement in the performance of the employees after providing better working conditions.

• Function Specific Audit 

This audit helps to check the accuracy of the functions performed by the HR Department. The functions involve recruitment, salary, training, and promotion, to name a few.

What are the Benefits of the HR Audit Process?

The HR Audit Process entails the following benefits-

• It helps to determine the contribution of the HR department towards the fulfilment of the organisational goals
•  Enables systematic assessment of the HR policies and practices 
• Helps to identify the gaps in the functioning of the HR Department 
• Enables compliance with the best practices   
• Provides a better performance appraisal system 
• Helps to reduce the HR costs 
• Portrays a professional image of the HR Department 
• Helps in smooth adoption of recent trends 

What are the steps involved in the HR Audit Process?

The HR Audit Process involves the following steps –

Determination of the Type of Audit 

The first step is to determine the type of HR audit that needs to be conducted by the organisation. The type of audit is selected based on the areas the organisation intends to assess, such as skills, strategies or the structure of the HR Department.

Formulation of a Plan for the Audit 

After determining the type of audit, the next step is to formulate a plan to conduct the HR Audit. The plan should include the areas that would be assessed and the strategy that would be followed along with the timeline for such assessment. 

Collection of Data 

After the formulation of the plan for the audit, the next step is to collect the data about the HR practices, policies or any other relevant information required to move forward with the HR Audit Process.

Comparison of the Data with the HR Benchmarks 

The next step is to compare the findings with the HR benchmark, which can be checked by analysing the HR policies and practices followed by the HR Departments of other organisations to identify the gaps within the organisation undergoing the HR Audit Process.

Preparation of Audit Report 

After comparing the data with the HR benchmarks, the next step is to prepare an audit report based on the findings drawn from the collected data. The report must mention the strength and weaknesses in the functioning of the organisation’s HR Department.

Creation of Action Plan 

It is important to create an action plan for implementing improvements for the gaps suggested in the audit report. The action plan should be made on a priority basis; otherwise, it shall defeat the purpose of the whole HR Audit Process.

Continuous Monitoring 

It is important for the organisation to continuously monitor the operations of the HR department to ensure compliance with the suggestions provided through the audit report and take immediate actions in case of any violations of the same. 

Conclusion 

It can be concluded that following the HR Audit Process is extremely important for the growth of the business. An organisation must hire a professional to conduct the HR Audit. Enterslice has a team of professionals to help in the HR Audit process. Reach out to the team to avail the services at the earliest.

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