Internal Audit

Top Benefits of HR Audit for Companies

Benefits of HR Audit

Companies constantly try to keep up with the dynamic business environment by transforming the business model, re looking the customer services, and even re-branding the organisation. But they overlook the idea of HR Audit, which is extremely vital for maintaining internal organisational systems and addressing the diverse needs of the employees. The major reason for the same is the lack of awareness about the HR Audit concept and its benefits for businesses.

The article discusses the Benefits of HR Audit for Companies to help them in better management of their human resources.  

What is HR Audit?

HR Audit can be defined as a comprehensive assessment of the policies, procedures, operations and functions of the HR Department of a company.  

What are the Top Benefits of HR Audit for Companies?

The Benefits of HR Audit for Companies are enlisted below –

Value Addition

The HR audit can help the companies to identify the different ways of improving their Return on Investment[1], resource optimisation, operational effectiveness, administrative efficiency and contribution. It also discloses the reasons for low productivity, which enables the companies to devise a roadmap to deal with the issues and transform the organisation to enhance the growth of the business.

Acknowledge the Best Practices  

Another benefit of HR audit is that it enables them to compare the current status of their HR Department with the industry standards and the best practices. Such comparison of best practices and procedures helps companies to improve employee handbooks, severance plans, job descriptions, and promotion guidelines, among others.

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Review the Current Compliance

It is a well-known fact that compliance requirements regarding compensation, safety, working hours and other provisions of labour laws amendments from time to time and the lack of awareness in respect of the same lead to the imposition of hefty penalties on the companies. HR Audits play a vital role in ensuring that the company is complying with the prescribed local, federal and state laws and regulations and helping to avoid the penalties consequential to the same.

Assessment of the Contribution of the HR Department

One of the significant benefits of an HR Audit is it allows the companies to assess the contribution of the HR Department in the company to ascertain its effectiveness and efficiency in keeping a check on the functioning of this department.

Improvement of the Image of the HR Department

The HR Audit helps improve the HR Department’s image by showcasing its contribution towards the company and the efforts made by the department to ensure that the operations of the company are carried out smoothly.

Maintenance of Records and Documents

The HR Department faces a lot of challenges in maintaining the records and documents of the employees, and that’s when companies experience the benefits of HR Audit, as the HR Audit analyses the information of the human resource to ascertain the grey areas which require a more secure, reliable records and documents.

Formulation of Better HR Policies

Another benefit of HR Audit for Companies is the formulation of better HR Policies as the audit helps to identify employee requirements, recent payroll trends and the latest compliance requirements. This allows the HR department to formulate HR policies for the betterment of the employees and the company.

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Attract Qualified Personnel

The HR Audits help the companies identify the opportunities in the market, which facilitates them to mould the recruiting process accordingly, improve the interviewing process, hire well-qualified personnel for the company, and simplify the onboarding process.

Better Employee Retention

The Benefits of HR Audit for companies in respect of employee retention are experienced when such audit enables the identification of turnover trends which facilitates the improvement of the culture of professionalism, has clear promotion guidelines and conducts employee surveys and face-to-face exit interviews. This reduces the turnover rate and provides better incentives for employees to continue working in the company.

Improvement in Workplace Safety

HR audits allow the identification of the trends and patterns in where the injuries and accidents occur, which include the time of day, faulty equipment, departments, and understaffing, to name a few. Identifying the root causes of workplace accidents and injuries helps devise solutions to tackle the issues and boost the safety of the company’s employees.


HR Audit is the oldest yet the least leveraged tool utilised by companies. The audit is a more comprehensive mechanism, which can be broken down to cover more specific areas of concern for businesses that can be quite helpful for the companies. Therefore, companies must be aware of the benefits of HR Audit as it can immensely contribute to the growth of the company’s business.

Read our Article: Detailed Overview of HR Audit Process for a Business

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