HR Audit – An Improvement tool

Audits, it really sounds scary and no jokes, it is a hectic process especially when we talk of financial audits. All financial aspects of the company are inspected, and a follow-up audit may also be undertaken after the year end in order to compare results

The goal of audits should be to protect the company, establish best practices and create an opportunity for improvement.

Unfortunately, many companies fail to audit another equally important area–human resource policies, practices, procedures and strategies. Companies often overlook these potential areas of exposure and do not consider the associated risks.

A human resources audit usually involves review of all HR policies, practices, and procedures, whether or not they are formal. It includes reviewing documents, interviewing human resources professionals from different areas of the organization, interviewing some managers at different levels of the organization, and possibly interviewing in-house employment counsel.

The audit can be performed in-house. But it is worth considering whether to use an outside consultant who has no personal stake in what is working and whether everything complies with the law. An outside employment attorney can conduct the audit. And, if set up properly, the audit can be subject to the attorney/client privilege so that its results will not be discoverable in a lawsuit. Or outside counsel can retain the consultant on the company’s behalf.

Either way, conducting an HR audit every two or three years can help a company:

  • Identify policies and procedures that need to be updated for changes in the law or compliance rules
  • Identify policies and procedures that are not followed and find out why
  • Find out about unwritten practices and whether there are any legal risks associated with those practices
  • Gauge whether procedures and practices are user friendly and what changes can be made to help assure broader compliance
  • Identify opportunities for new policies or procedures that will help minimize risk
  • Determine whether record-keeping practices are being followed
  • Identify where additional training or communication would be helpful for compliance

An effective HR audit will culminate in a well-organized report. The report includes not only the specific results of the audit, but also a list of recommended actions. And a truly effective list of recommendations is ranked by risk. That way, an organization can see at first glance where its largest or most expensive exposure is and can design reasonable response times to address the issues raised.

HR audits of the proper scope can be expensive. And it is important that business units are solicited for their support before embarking because when the audit is done, there may be changes that will directly impact the units. But most importantly, a company (through its executive management) should be committed to acting on the results of the audit, whether that means retaining outside counsel to perform a detailed legal review of policies, putting together project teams to create or update policies and procedures, designing training courses targeted to minimize risk, or writing a series of employee communications to address some of the issues discovered.

An HR audit can be as broad or narrow as the company wants. Perhaps in one year the audit is limited to written policies and procedures. Perhaps the next year an audit will look at the level of compliance with signed new-hire paperwork, contracts, and agreements. It doesn’t matter. Whether an audit is done piecemeal or all at once, the important thing is to have a process in place that ensures the time and money spent on creating elaborate HR programs does not go to waste because they are out-of-date, insufficient, or simply are not followed.

So, An HR audit can be a powerful lever of change in your department and organization.The degree of detail and definition of performance is within the control.

An Audit also moves HR professional into an active state of defining their direction, making sense of their choices and contributing to the business in a more definitive way.

  • S.B.Kumar

    wow! what an informative article this one is. thanks for submission.


    Great! Realy information is Excelent. HR Employes Will get more information on this.

  • Archna Khurana Sharma

    Thanks so much…really hope it is of help…

  • Ekta Jain

    very enlightening

  • Archna Khurana Sharma

    Thanks @c3bbeb143b22b4c8b819a31332eba586:disqus .hope it will be of help..

  • Cabliss

    this is a very interesting and useful article.