Human Resource Audits

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Human Resource Audits

• Hasan Mustafa

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Human Resource Audit?

• A human resource audit evaluates the personnel
  activities used in an organization. The audit may
  include one division or entire company. It gives
  feedback about
• The function of operating managers.
• The human resource specialists.
• How well managers are meeting their human
  resource duties.
• In short, the audit is an overall quality control
  check on human resource activities in a division
  or company and how those activities support the
  organizations strategy

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Benefits of A Human Resource Audit

• Identifies the contribution of the personnel
  departments to the organization
• Improves professional image of the personnel
  department
• Encourages greater responsibility and
  professionalism among members of the personnel
  department
• Clarifies the personnel departments duties and
  responsibilities
• Finds critical personnel problems

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The Scope of Human Resource Audits

• Audit of Corporate Strategy
• Corporate Strategy concerns how the organization
  is going to gain competitive
• advantage.
• Audit of the Human Resource Function
• Audit touches on Human Resource Information
  System, Staffing and Develop-
• ment, and Organization Control and Evaluation.
• Audit of Managerial Compliance
• Reviews how well managers comply with human
  resource policies and
• procedures.
• Audit of Employee Satisfaction
• To learn how well employee needs are met.

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Audit of Corporate Strategy

• Human resource professionals do not set corporate
  strategy, but they strongly determine its
  success.
• By assessing the firms internal strengths and
  weaknesses and its external opportunities and
  threats, senior management devises ways of
  gaining an advantage, such as
• stresses superior marketing channels,
• low-cost production, etc.
• Understanding the strategy has strong
  implications for human resource planning,
  staffing, compensation, employee relations, and
  other human resource activities

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Audit of the Human Resource Function

• 1. Human Resource Information System
• - Human Resource Plans Supply and demand
  estimates skill inventories replacement charts
  and summaries
• - Job Analysis Information Job standards, Job
  descriptions, Job specifications
• - Compensation Management Wage, salary, and
  incentive levels Fringe benefit package
  Employer-provided services

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2. Staffing and Development

• Recruiting sources of recruits, availability of
  recruits, employment applications
• Selection selection ratios, selection
  procedures, equal opportunity.
• Training and development orientation program,
  training objectives and procedures, learning
  rates
• Career development internal placement, career
  planning program, human resource development
  efforts

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3. Organization Control and Evaluation

• Performance appraisals standards and measures
  of performance, performance appraisal techniques,
  evaluation interview.
• Labor-Management Relations Legal compliance,
  management rights, dispute resolution problems.
• Human Resource Controls employee
  communications, discipline procedures, change and
  development procedures,

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Tasks of Auditors

• Identify who is responsible for each activity.
• Determine the objectives sought by each activity.
• Review the policies and procedures used to
  achieve these activities.
• Prepare a report commending proper objectives,
  policies, and procedures.
• Develop an action plan to correct errors in each
  activity.
• Follow up the action plan to see if it solved the
  problems found through the audit.

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Audit of Managerial Compliance

• Compliance with laws is especially important.
  When safety, compensation, or labor laws are
  violated, the government holds the company
  responsible.
• If managers ignore policies or violate employee
  relations laws, the audit should uncover these
  errors so that corrective action can be started.

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Audit of Employee Satisfaction

• Employee satisfaction refers to an employees
  general attitude toward his or her job.
• When employee needs are unmet, turnover,
  absenteeism, and union activity are more likely.
  To learn how well employee needs are met, the
  audit team gathers data from workers.
• The team collects information about wages,
  benefits, supervisory practices, career planning
  assistance, and other dimensions of job

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Research approaches to audits

• 1. Interviews with employees and managers are one
  source of information about human resource
  activity. Employees and managers comments help
  the audit team find that need improvement.
• Another useful source of information is the exit
  interview. Exit interview are conducted with
  departing employees to learn their views of the
  organization.

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2. Questionnaires/surveys

• Because interviews are time-consuming, costly,
  and often to only few people, many human resource
  departments use questionnaires. Through
  questionnaire surveys, a more comprehensive
  picture of employee treatment can be developed.
  Questionnaire may also lead to more candid
  answers than face-to-face interviews.
• employee attitude about supervisors
• Employee attitude about their jobs
• Perceived effectiveness of human resource
  department

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3. Historical analysis

• Not all the issues of interest to human
  resource audit are revealed through interviews or
  questionnaires. Sometimes insight can be obtained
  by an analysis of historical records, such as
• Safety and health records
• Grievances records
• Compensation studies
• Scrap rates
• Turnover and absenteeism records
• Selection records
• Affirmative action plan records
• Training program records

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4. External information

• Outside comparisons give the audit team a
  perspective against which their firms activities
  can be judged.
• Through Department of Labor, industry
  association, professional association numerous
  statistics and report are compiled.
• These organizations regularly publishes
  information about future employment
  opportunities, employee turnover rates, work
  force projection, area wage and salary survey,
  work force demography, accident rates, and other
  data that can serve as benchmark for comparing
  internal information.

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The audit report

• Findings of research are used to developed a
  picture of the organizations resource
  activities. For this information to be useful, it
  is compiled into audit report.
• The audit report is a comprehensive
  description of human resource activities that
  includes both commendations for effective
  practices and recommendations for improving
  practices that are less effective.
• Audit report often contain several sections.
  One part is for line managers, another is for
  manager of specific human resource function, and
  the final part is for the human resource
  manager.

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Report for line managers

• How line managers handle their duties such as
• Interviewing applicants
• Training employees
• Evaluating performance
• Motivating workers
• Satisfying employee needs
• The report also identifies people problems.
  Violations of policies and employee relations law
  are highlighted

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Report for the HR Specialist

• The specialists who handle employment training,
  compensation, and other activities also need
  feedback. Such feedbacks are
• Unqualified workers that need for training
• Qualified workers that need for development
• What others company are doing
• Attitude operating managers toward personnel
  policies
• Workers pay dissatisfaction

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Report for HR Manager

• It is contains all the information given to both
  operating managers and staff specialists. In
  addition, HR Mangers gets feedback about
• Attitude operating managers and employees about
  services given by HRD
• A review of HRD plans
• Human resource problems and their implication
• Recommendations for needed changes and priorities
  for their implementation