Monday, 25 November 2013 19:17

The Purpose and Scope Of An HR Audit

Written by  Administrator

A human resources audit is a tool that is used to collect and evaluate information about the state of an organization’s HR practices and policies to determine the overall effectiveness of people management practices in the organisation. The HR audit demonstrates to what extent the HR function contributes to the organisational effectiveness as a whole, as well as productivity and morale.  It also helps by providing feedback on the value of the contribution of the HR function to the organisation's strategic business objectives and in assessing the quality of HR practices. More importantly the audit can be used in setting guidelines for establishing HR performance standards and identifying areas for change and improvement.

Companies need to periodically audit their human resources practices to check if they are still adding value to the business. The audit can be performance related or a compliance one depending on your business requirements. A human resources audit can be an effective first step towards building better human resources practices for your organisation. A number of business organisations, large and small, will benefit immensely from a comprehensive audit of their human resources practices.

The audit helps to eliminate many simple but common errors that employers, especially new businesses, often make. It also serves to educate HR professionals on the latest trends and best practices used by their peers. The HR audit can give those responsible for employee relations some reassurance that legal risks have been managed and minimized, thus freeing them to focus on more creative aspects of their jobs that can add value to the employer's bottom line. There are also other benefits in undertaking an HR audit. Its results can be presented to investors for their review.

The final stage of the process is a comprehensive, personal presentation of the assessment showing the organization's posture relative to its overall HR management. Normally the objective is to provide senior management with a comprehensive and confidential assessment, along with associated recommendations for corrective action that can serve as a roadmap for immediate, as well as long-term, strategic human resources planning.

When carrying out the audit you need to know what to look at and what questions to ask. Then, you need substantive knowledge of the applicable labour legislation so that you can evaluate whether what you have found satisfies the laws that apply to your workplace. The audit should cover all areas of human resources practices in the organisation from recruitment, compensation, training, employee relations etc.

The areas that create the greatest risk are hiring, firing, remuneration, working conditions, employee handbooks, and unfair labour practices. In order to assess the degree of exposure that a company has, you must first be familiar with the legal requirements in each of these areas. For example, in Zimbabwe HR practitioners would want to know whether their HR practices are in compliance with the Labour Relations Act (LRA), Collective Bargaining Agreements (CBA) for your sector and other workplace related pieces of legislation. The Human Resources professional must also have at least a basic familiarity with the employer's obligations under those laws.

The next step in conducting an audit is to gather information on your operating environment and procedures. Typically, you will be guided in this process by a checklist. The checklist will ask you questions on your practices and policies in a number of areas. It might also ask for copies of your existing employment policies and forms, and your employee handbook. This part of the process may be tedious and time consuming, but it should not be difficult.

After you have provided the information requested in the checklist, it will be time to analyze your employment practices and policies to determine whether your company is in compliance with the best practice. At the same time, a good audit will provide guidance to help you avoid common mistakes that affect the smooth functioning of the organisation

The net result of your HR audit should be some sort of a list of action items that need attention. What you do next is key to whether the audit was done in good faith or not. It does not help to undertake the audit and end there. You need to devise an action plan to address the areas of concern.

Memory Nguwi is the Managing Consultant of Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. Phone 481946-48/481950/2900276/2900966 or cell number 077 2356 361 or email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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