2 HR Audit Agenda: Definition Of HR Audit HR Audit Significance Need Of HR AuditScope Of HR AuditUse Of HR AuditObjectives Of HR AudiBenefits Of HR AuditSpecial Areas of HR AuditThreats Of HRMFIVE Approaches to HR AudiPeriod of Audit, Audit Report
3 Definition:An HR audit is a process to review implementation of your institutions policies and procedures, ensure compliance with employment law, eliminate liabilities, implement best practices and educate your managers.(OR)HR Audit refers to Examination & Evaluation of Polices, Practices & Procedures to detect Effectiveness & Efficiency of HRM and Verify if Mission, Objectives, Polices, Procedures, Programs are chased and expected results achieved. HR Audit also suggest future improvements based on past activities measurement.
4 HR Audit Significance: Managements Feel, that Employee Participation in Activities is:Essential for Organization success.It Provides Required Feedback.Managing Rising Labor Costs.Increasing Opportunities for Competitive Advantage of HRM.HR Audit can avoid Government intervention6. HRP protect Employees interests
5 Need for HR Audit:Though, to audit HR- Policies & Practices no legal obligation exists, some Modern Organizations chase to:Increase size of Organization & Personnel Change Philosophy of Management towards HR Increase Strength & Influence of Unions
6 Programmes & Practices Planning - Forecasting Staffing & Development Scope of Audit:HR Audi has vide scope, involves much more than Management.Special areaPoliciesProgrammes & PracticesHR PhilosophysupervisionPersonnel ResultsScope of HR Auditleadership stylesResearch & InnovationdelegationPlanning - ForecastingMotivation & commitmentOrganizingSchedulingStaffing & Developmentnegotiation
7 Use Of HR Audit: Basic purpose of HR-Audit is to find: How various units are functioning?How they met policies & guidelines Pre-agreed upon?To assist Rest of Organization locating gaps between Objectives & Results.Formulate Plan for corrections
8 Objectives:1. Effectiveness: To review performance of Human resource Department and itsactivities to determine effectiveness.2.Implementation: To locate gaps, lapses, failings in applying Polices, Procedures, Practices & HR-directives. Also to see areas of wrong/ non- implementation that hindered the planned programs & activities.3.Rectification: To take corrective steps to rectify mistakes, shortcomings contesting effective work performance of HR Department.4.Evaluation: To evaluate HR Staff & employees.5. To evaluate the extent to which Line Managers Applied Policies Programmes &Directives initiated by Top Management & HR Department.6.Modify: To review HR System and Modify to meet challenges in comparison with other organizations.7.Questioning: To seek answers to ‘What, Why ‘When Happened while implementing Policies, Practices & Directives in managing HRs
10 Pitfalls of HR Audit: 1. Full audit may be time consuming 2. May not be as objective and impartial as desired3.Impact of certain actions may not be clear
11 Special Areas Of HR Audit: Audit of HR FunctionAudit of Managerial Compliance1.Employee Turnover2.AbsenteeismAudit of HR Climate3.Safety Records 4. Attitude SurveysAudit of Corporate StrategyAudit and Human Resource Research
12 Audit of HR Function:Involves all activities of HR Functions, From HRP to IRMajor Areas:Planning - Forecasting,Scheduling;Staffing & Development,Organizing;Motivation & commitment ;Administration ;Research & Innovation.
13 Auditor’s Role:For each activity in the HR Audit functions Auditors must:1 determine objective of activity.2 Identify who is responsible for its performance.3 Review the performance.4 Develop action plan to correct deviation, between Results & Goal.5 Follow up action plan. HR Evaluation must justify existence ofdepartment & its expenses. Department has no reason to function if fails tocontribute to Company’s bottom-line, Prune expenses to make department viable.
14 FIVE Approaches to HR Audit: Auditors may choose any of the five approaches for the purpose of Evaluation.Comparative Approach.Outside Authority Approach.Statistical Approach.Compliance Approach.MBO Approach
15 Comparative Approach – Auditors Identify another Company as a MODEL. Result of theirOrganization compared with those of Model Company.Outside Authority Approach –Often, Auditors use standard set by Outside Consultant asBENCHMARK for comparison of own Results.
16 Management By Objectives Approach – Compliance Approach –Auditors review Past Actions to determine if those activities comply with legalrequirements and Company Policies, & Procedures. A Final approach is forSpecialists & Operating Managers to set objectives in their areas of responsibility.Management By Objectives Approach –creates Specific Goals against which performance can be measured. Then theAudit Team Researches ACTUAL PEERFORMANCE and COMPARESWITH THE OBJECTIVES.
17 PERIOD OF AUDITNaturally any audit will be done annually. Though it is preferred to conduct Human Resource Audit annually, but it is advisable to conduct audit once in three years or five years, keeping in view the fact that the realization of the Organizational goals may not be identified within a year.Audit ReportThe Prog comes to end with preparation of Report. Report may be Clean or Qualified. It is Qualified if HR Performance contains Gaps for which remedies suggested. Report is Clean where Performance is fairly Satisfactory.