Human Resources[HR] Audit: Meaning, Purpose & Challenges

Human Resources[HR] Audit: Meaning, Purpose & Challenges

In order to maximize the human resource capital of the company, an organization must conduct a regular Human Resources Audit (HR Audit).

An HR Audit is a comprehensive process that will be conducted to review the different HR policies, procedures and systems. The results of the human resources audit program can help the company in the following ways:

  • Identify which among the theories, methods, and operations needs to be improved
  • Provide suggestions for the identified concerns
  • Identify the organization’s best practices and maintain it
  • Assess whether the systems in place are still compliant with the rules and regulations of the state

Some of the sections that will be reviewed during the following include the following:

  • Hiring Process
  • Benefits and Compensation
  • Performance Evaluation Mechanism
  • Termination Process
  • Review of Different Admin Forms
  • Personnel File Review

Why should companies conduct an HR Audit?

An HR Audit must be taken seriously by organizations as this will be a big help in determining the effectivity of its human resource management. The company’s human resource capital is very vital as they are the lifeblood of the company.

If the HR processes are not evaluated from time to time, then the human resource department might not be able to foresee looming problems that can bring more significant damage to the organization.

Once these problems are identified, it will be easier to address them so as not to cause more significant damage.

Below are the different purposes of conducting an HR audit.

  1.    Effective management of human resource capital

Through the HR Audit, the organization will be able to check whether their human resource management system is indeed an efficient one. They will be able to check if there are enough people to serve the different functions needed by the organization. At the same time, they can also check whether some features are redundant.

  1.    Ensure different legal compliances

Laws change from time to time. There can be new laws or revised laws that need to be incorporated into the HR policies. Thus, the results of the audit can show whether the company is still compliant with state laws and regulations.

Once the auditors recommend some adjustments to your policies in compliance with the law, then your company can avoid penalties.

  1.    Improve confidence of management and human resource function

Knowing that the HR policies and systems in place are efficient, it can instil an increased sense of confidence for the management. The management will be at peace knowing that they have optimized one of their most important resource – their human resource capital.

  1.    Establishing guidelines for future audits

Auditing is a very complex and complicated process. Regular audits can help the organization by determining audit points. It will be easier to pick up where the auditors left of if audits are regularly conducted.

Issues and Challenges in HR Audit

However, the HR Audit process does not come without problems and challenges. A human resource audit is a painstaking process that would last for a period of time in order to ensure that everything that needs to be audited will be covered.

Outlined below are some of the issues and challenges in HR Audit:

  1.    Auditing Independence

Auditing independence is one of the significant issues in a human resource audit. The firm or the auditor/s that companies work with must have the independence to do their job. Companies must work with a reputable auditing firm to make sure that the outcome is genuinely reflective of what your organization need.

The audit result must have credibility. It must be a product of an independent and unbiased review. After all, even if some lapses will be seen, it will serve as an improvement point for the company.

Also, companies must not think that self-assessment and audit are the same. An audit must be done by a third-party organization.

  1.    The Scope and Audit Method

No two companies are the same. Therefore, different auditing methods would apply. These auditing methods must be tailored-fit based on the company’s organizational characteristics.

Also, both parties must agree with regards to the scope of the audit. For big corporations, it would really take time to conduct the audit so there must be a well-arranged schedule to avoid hampering the operations.

  1.    Auditor/s Capacity

The auditor/s that you will hire must be capable enough to do the auditing process. They must have enough expertise and experience to be able to impart significant recommendations based on the results.

A capable auditor can be of great help in pinpointing processes that can be improved. They can also provide valuable recommendations to address the identified problems.

As mentioned earlier, a human resources audit is a painstaking process. However, companies must see the significance of HR audit because ensuring efficient management of the organizations’ human resource capital is a significant factor in the success of the company.

 

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2 replies
  1. khan
    khan says:

    Thank you for your information. this is about human resources audit meaning purpose and challenges. I’m learning from you and payroll outsourcing management Services

    Reply

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