Human Resource

The Value of HR Audit and why it is Important

Human Resource (HR) audit is essential to human resource management. In recent times, it has been popular among HR practitioners. It is used to review the effectiveness of human resource practices. It is a tool for evaluating the personnel activities of an organisation. Also, it gives feedback about HR functions not only to operating managers but also to the HR department about how well operating managers are meeting their HR duties.

In brief, an audit is an overall quality control to check on HR activities in a public organisation and evaluate how these activities support overall organisational strategy. It also helps to clarify organisational and management goals. Since the objectives are set to be achieved, the employee can ask about the addressed problems. It provides procedures for evaluating goals and objectives. An audit may result in efforts to restructure management practices and goals. It may affect the emergence of new policies and potential solutions. Moreover, it concerns whether a previously adopted policy alternative should be replaced with another or persisted with, given the imperatives of efficiency and economy.

Benefits

An  HR audit aims to achieve organisational goals and practices and improve personnel performance. Hence, it mentioned some benefits resulting from the audit

• In an organisation, identify and contribute to the improvement of the HR department.
• Improve the professional image of the HR department.
• Encouraged responsibilities and professionalism among members of the HR department
• Clarification of the HR department’s duties and responsibilities
• Stimulation of uniformity of HR policies^[1] and practices
• Solution of critical personnel problems
• Ensuring timely compliance with legal requirements
• Reduction of HR costs through more effective personnel procedures
• Creation of increased acceptance of the necessary changes in the HR department and;
• A thorough review of the department’s information system

Scope

The scope and subject areas of HR audit are vast. It represents a ‘whole man approach’ in that it assumes that the management of human resources involves much more than selecting, training and firing employees. The field of human resource audit includes:

• Recruitment and selection,
• Training and development,
• Promotion, transfer,    and   career development,
• Performance appraisal and job evaluation,
• Morale and discipline,
• Salary, rewards and benefits,
• Personnel   policies, procedures and programs,
• Employer-employee relations

The HR management audit allows rating the extent to which an organisation has basic HR activities and how well they are being performed. In deciding upon the rating, there is a need to consider how other managers and employees would rate the activities. The total scope provides a guide for actions that will improve HR activities in the organisation.

Value

1. Add Value
   HR audits can help to identify ways to escalate the return on investment (ROI), operational effectiveness, resource efficiency and contribution and identify reasons for low productivity.
   Additionally, understanding the information and communication systems helps organise a road map for creating a smooth and operative information system. It creates areas to save time and cost for an effective business.
2. Use Best Practice
   An audit compares the current standard of the HR department by using best practices and industry standards. The Company can improve employee handbooks, job descriptions, severance plans, promotion guidelines, and more. It helps to gain an advantage against other competitive organisations.
3. Review Current Compliance
   The HR Audit is essential for ensuring that the organisation complies with local, state, and federal laws, regulations, and procedures. Avoiding heavy fines, penalties, and lawsuits is one of the most critical sides of an audit.
4. Generate Confidence
   Ask questions about the HR policies or practices and regulations. The HR department must be well-informed and well-organized to meet potential challenges and opportunities. It provides the necessary information to create a more efficient and effective department.
5. Keep a record of Documentation
   An HR audit analyses human resource information about the employees and helps to organise to be more reliable and competent and protect records and necessary documents.
   An efficient electronic system makes it easily accessible to keep on record all the documents.
6. Help in the recruitment process
    The audits help to identify opportunities to improve the interviewing and onboarding process more efficiently. In a  competitive market, attracting and retaining top talent is a challenging task to do.
7. Increase Employee Retention
   Another benefit of an audit is identifying turnover trends, ultimately improving employee retention. Using a culture of professionalism, having clear promotion guidelines, and conducting employee surveys and face-to-face exit interviews, can reduce the turnover rate and incentivise employees to stay on board.
8. Improve Workplace Safety
   The audits identify trends and patterns in injuries and accidents, including time of day, departments, faulty equipment, understaffing, and more. By identifying the root causes of workplace accidents and injuries, you can work toward developing solutions to boost safety for everyone.

Importance

A Human Recourses audit is essential for any organisation. Some of its significant roles are as follows:

Promoting Critical Business Plans:

Every organisation follows specific strategic plans to achieve organisational objectives. The auditor’s responsibility is to convince management to disclose these plans to employees of the organisation so that they can participate comfortably in the Company’s decision-making process. The aim is for employees to contribute their point of view about these plans and involve themselves ultimately.

Role Clarity of HR Functions:

HR department employees must be very clear about their roles and responsibilities. According to the audit, they should clearly understand that their priority should be in the organisation’s interest. The role of the transparency function is to ensure they understand their role.

Improving Organizational Competency:

An HR audit helps in identifying the strength and weaknesses of the present administrative system. If there is any drawback in the system’s functioning, the audit tries to develop techniques by which productivity can be increased. These positive impacts are also visible in HRIS, working procedures, delegation, and clarifying roles and responsibilities.

 Analysis of HR Functions:

An HR audit plays a crucial role in analysing the functioning of the HR department. It helps to evaluate the employees’ performance and develop their leadership qualities. If necessary, the audit also helps to re-design the HR department’s development system.

Conclusion

The Human Resource Audit is an exhaustive method to review the current human resources policies, procedures, Documentation and system to identify the need for enhancement of management function and compliance with the rules, laws and regulations. It also ensures that the Human resource function is proactive in introducing technological advancement and innovative ideas for managing employees. The Audit’s objective is to identify and establish best practices that will give the organisation a considerable advantage in the competitive edge Industry.

Also Read: What exactly is an HR Audit