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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Master of Business Administration -Semester 3

MU0013:Legal aspects of business ASSIGNMENT-Set -1

Q.1 what are the main objectives of human resource planing

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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Answer

As the term audit has evolved, It is becoming increasingly specific, until the term functional audit has emerged. The objective of a functional audit is to diagnose, analyze, control, and advise within the boundaries of each functional area of the company. The HR audit is also a functional audit which emphasise on the well being of HR functions in the organisation. Thus, as a first approach, one could say that HR auditing consists of diagnosing, analyzing, evaluating, and assessing future lines of action within the framework of HRM. HR auditing is one of the basic tools for the management of a company. It not only attempts to control and quantifying of results, but also the adoption of a wider perspective that will aid in defining future lines of action in the HRM field. HR auditing must perform two basic functions [Cantera, 1995]. it must be a management information system whose feedback provides information about the situation in order to facilitate the development of managing processes or the development of HR. it must be a way of controlling and evaluating the policies that are being applied, as well as the established processes.

In the above sections, you have already realizedss that in order to secure the operative efficiency and user or client satisfaction, an appraisal of the results of the HR function is necessary. The results can be valued through their cost (a measurement internal to the function) [Walker, 1998]. This would lead the company to consider some basic points: There are adequate HR policies being developed in the organisation or not. There are the desired results being obtained from HR policies being followed. The extent to which HR policies add value to company

The main objective of this work is to offer a few guidelines for the appraisal of the HR function, which is in itself the basis for the auditing process. The purpose is to set conceptual limits for its content and to present the different approaches with which the HR audit can be presented.

Q.2 What are the trends in hr audit seen in Indian scenario? Answer:
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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

The goal of HR Audit is to assess the effectiveness of HR aspect in question or various HR aspects and verify whether they are properly co-ordinating with the goals of organization, diagnose any problem thereby and taking timely corrective actions. The other goals may be: 1. To examine and pinpoint strength and weaknesses related to HR areas and Skills and Competencies to enable an organization to achieve its long-term and short-term goals. 2. To increase the effectiveness of the design and implementation of human resource policies, planning and programs. 3. To help human resource planners develop and update employment and program plans

Q.3 Write a short note on employee orientation programme? Answer:


SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Telephonic Interview: Telephonic interviews give the company a chance to get a feel for your skill-set, interests, desired compensation etc., and see if there is a match between their needs and your strengths. If there is enough common ground, then the phone interviews are almost always followed-up by an in-person interview. Phone interviews are generally conducted in two steps. The first step is with a recruiter in Human Resources. The second step is a technical interview, usually with one of the people you would be working with.

Technical phone interviews are usually only conducted for people living outside the geographical region. This is done because the company wants to have some level of confidence in your technical abilities before they decided to spend the money to fly you in for an in-person interview. 1. Direct interview: It is brief but straightforward, face-to-face question-answer session between the interviewer and the interviewee. No in-depth analysis of the candidate ability skills is done. Characteristics or attitudes can be possible find out in such interviews. But if carefully planned, some of these limitations can be avoided. 2. Indirect interview: In this type of interview, no direct questions are asked to the candidate, he is encouraged to express his views about any topics. And how he rates the enterprise and the job applied for him. The interviewer in such cases will be a patient listener either disrupting the thoughts of the candidate. 3. Patterned interview: In this type of interview, a set of standard questions will be framed in advance. Ideal answer will also be framed before itself. Then the answers given by the candidate will be analyzed with the prepared pattern. 4. Stress interview: In this interview, the candidate is analyzed how he reacts to the situation under considerable stress and strain. The candidate should not get irritated or get angry; he should be cool and confident in his answers. 5. Board or Panel interview: In such an interview, there will be many interviewers each would be focusing on certain areas. The candidate is selected or rejected by the combined performance rating of the interviewer. 6. Group interview: In this type of interview, many candidates are interviewed at the same time. A situation will be given to them and all the candidates are asked to participate in the discussions.

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Q.4 explain the different types of competencies with examples? Ans:

Employee compensation system along with the benefits programs, are one of the most complex HR systems. A reward system should help support the organization's strategic mission, motivate employees, and reward performance. Compensation systems should be both externally competitive and internally equitable. Auditors may want to work with a compensation expert when reviewing this area. A
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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

review of the organization's salary administration process is also important to determine how employees are paid throughout their careers, including merit increases, variable performance pay, promotions, bonuses, stock options, and deferred compensation, to name a few. Base salary During the audit, auditors should ensure that: a compensation philosophy has been developed that defines how the organization wants to pay people with respect to its position in the labor market; there are current job descriptions for each position; an effective market analysis has been conducted; a salary structure has been developed to help manage pay, and an appropriate job evaluation system is being used to slot jobs into the salary structure. Sales incentives Sometimes past incentive programme may be a reason for disappointment to both you and your salespeople. At the time of HR audit, sales incentive programme should be crosschecked because a payment less than the worth may lead the sales team to under perform or fail as a result. Corporations use incentive programs to drive behavior and it is a well known fact that what gets rewarded gets done. To ensure that the incentive programme at your organisation work, you may use The 80-20 principle: Twenty percent of the salespeople make eighty percent of the sales and profits. Too often, sales incentives are geared to the entire sales force. This may seem to be a fair strategy, but a strategist should remember that these 20% people are already motivated. That means that the sales incentives should be good enough to 1. Keep these motivated sales personnel going and 2. Light a fire under the next twenty percent the next logical group The results have shown that this doubles the business in a more cost efficient manner. Keep it simple: Good salespeople look to simplicity to make things happen. Thus the organisation must keep the incentive program sweet, simple and attainable. There can be no ambiguity. Anything less will result in a lack of interest, as well as a waste of time and money that can sometimes spill over into other departments whose task it is to administer and account. Productivity incentives HR audit should employ meaningful methodologies of productivity measurement to evaluate and monitor the performance of a business operation. Productivity measurements

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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

must show a linkage with profitability and should clearly demonstrate how efficiently (or inefficiently) a company is using its resources to produce quality goods and services. Executive bonus programs In most of the companies, title and seniority mean more when it comes to bonus pay. By granting bonuses according to title and seniority, companies turn them into entitlements, not incentives. Due to this, executives, who do the field work and put in more labour do not get that much of the bonus. HR auditor should ensure that the organization links incentives to performance as the only fair and rationale way to reward employees. Bonus plans by design, should be geared to reward employees for short-term performance. Team based incentives Since in most of the big organisations, a project is assigned to a whole team together and the performance on the project depends on the collective performance of the team, the HR auditor should check if the due reward is being paid to the collective performance of the employees. There are primarily two ways to offer team based incentives, viz. 1. Team based 2. Gain sharing Exempt and non-exempt status determination This concept is more prominent in USA where the HR auditor should analyse if the finance department has correctly determined whether a salaried associate should be exempt or nonexempt? Exempt status is regulated by the Fair Labor Standards Act (FLSA). When determining exemptions, employers must first consider the way in which the employee is paid (hourly vs. salaried), then they must review the duties and responsibilities of the job. Although, there are a number of unique position that provide for exempt status. Overtime computation According to the labour laws in India, when a worker works in an employment for more than nine hours on any day or for more than forty-eight hours in any week, he shall, in respect of such overtime work, be entitled to wages at double the ordinary rates of wages.

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Q.5 what are the reson for implementing the human resource scorecard? Ans:

Good starting point of audit process is to take some time and reflect on HR functions which need to be audited. Simply listing them is a good first step. For achieving organizational goals, it is very important to carry out various HR functions smoothly. In this step of audit process, we define the various functions which need to be audited.s In this step consider your areas of responsibility and traditional HR practices covered by the functions, you need to audit. In starting out, it is better to make more general statements and improve from year to year in those areas that you choose to raise the level of performance. For example as an audit manager, you may decide to audit any of following:
SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

All human resource functions. Any specific function like recruitment process of your company. Any part of the specific function you have selected for audit like generating applicant pool function of recruitment process,

The main purpose is to study and analyze each one of the specific areas of HRM. The analysis should focus on the planned measures, the method of implementation, and the results obtained. In order to carry this out, the areas that need to be audited must be identified. A list of the indicators corresponding to the different areas of the HR function could contain some of the following: Description of the staff of the company The complete staff can be described by: hierarchic levels years of service qualification sex nationality the number of permanent and temporary employees, interns and physically or mentally challenged employees indexes of personnel rotation and absenteeism

Job analysis The various indicators of Job analysis are as follows: The number of described posts Occupants per post Degree to which the job description cards have been updated The degree of detail in the job description cards The methods used to analyze and describe the jobs.

HR planning HR planning, as you have studied in unit 7, is an important area of preplanning includes the methods employed to plan personnel needs, the measures adopted to cover future personnel needs, and the temporary planning horizon. Recruiting and personnel selection Main indicators of this are as follows: the number of days required to a vacant post the number of applications received by work place categories the average amount of days between the reception of the application

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

the average cost of recruitment cost of selection per job post the degree to which internal and external sources of recruitment are used the average number of candidates that do not pass the selective tests the study of the reliability and validity of the selection tests

Training and development The training indicators are as follows: the procedures followed frequency to which personnel training needs are analyzed the criteria followed in the training programs the evaluation criteria of the efficiency of the training programs the percentage of the HR budget dedicated to training the average number of hours of training per employee The percentage of employees that participate in training programmes by work place categories.

Development of professional careers These indicators focus on the vacancies covered internally. These indicators include: the percentage of people promoted per number of employees; the percentage of vacancies covered internally and externally and the average time per employee it takes to receive a promotion.

Q.6 elaborate on the need for human resource audit? Answer:

During an HR audit, due attention must be paid to find out if the competencies model has been adequately designed and developed or not. There are three ways in which competencies models may be developed: 1. Behavioral Indicators: Behavioral indicators describe the behaviors, thought patterns, abilities and traits that contribute to superior performance. 2. Evaluative Competency Levels: Exceptional competencies of high performers are set as standards for evaluating competency levels of employees.

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

3. Competencies Describing Job Requirements: This approach is useful for organizations having multiple competency models. Competencies required in a particular job are described. Job specific competency models help in structuring focused appraisal and compensation decisions. To identify role-specific competencies required industry specific, functional and behavioral competencies, which need to be developed for enhanced performance. The approach for developing a competency framework for a particular role is as proposed below: Understand strategic business context of the organizations in term of its structure and environmental variables. Detail role description for positions. Defining and scaling (relative importance and mastery level) of specific behaviors for each identified competency as a measure of performance. Develop competency framework taking into consideration the core values and the culture of the organizations in addition to specific functional and level requirements. This should gel with the vision and mission of the company. Validate the competency framework through a workshop, which should include functional experts and top management personnel in order to define critical and desirable competencies. And also to substantiate the extent to which the competencies differentiate between high and average performers by validating the content and criteria. The auditor should establish the link between people and roles through effective measuring tools that evaluate the performance of the person in the role. On-the-job performance of the individual is evaluated on the basis of a performance management system. The assessment centre is a powerful tool in the hands of the management for selection and development. As a selection tool it can be used for management promotions, fast tracks schemes, high potential list and change of functional role. As a development tool, it is helpful in succession planning, identifying training needs and career development. Designing and conducting a potential assessment centre should follow basic principles in term of accuracy, fairness, reliability, legality, efficiency, multiple assessors, multiple tests and optimal stress to increase performance. It would involve two types of exercises, i.e., group exercises and individual exercises. Group Exercises For potential assessment, the following group exercises are conducted: Assigned Role Exercises: Used to assess negotiating skills, decision making skills, and risk taking skills;

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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Unassigned Role Exercises: Used to assess ability to handle uncertainty, change orientation, ethical behavior and global orientation; and Team Exercises: Used to assess ability to work in a team and solve problems efficiently.

Individual Exercises For potential assessment, the following individual exercises are conducted: In-Basket Exercises: Used to assess ability to plan, organize, decide, manage and delegate; Learning skill Inventory/Psychometric Inventories: Used to assess ability to learn, leverage knowledge and indicate behavioral patterns; and Interpersonal Effectiveness Module: Used to assess interpersonal effectiveness, excommunication skills, patience and interpersonal skills.

Assignment Set- 2
Q.1 Explain staffing in detail.

Staffing is the process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organization's effectiveness. Figure will help you to understand the staffing process.

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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Staffing Process Now study the various steps in the staffing process which are explained below: 1. Planning work force requirements is the first step in staffing process which involves forecasting and determining the future manpower needs of the organization and thus planning about the number of employees required in any organization. 2. In recruitment organizations invites and solicits applications made to the desirable candidates. 3. In selection, screening of applications is done and suitable candidates are appointed as per the requirements. 4. Orientation and Placement: Orientation involves induction of employees so that they come to know the working culture of the organization. 5. Training and Development: Employees recruited may have many skills but which is required out of them in the concerned organization is important. 6. Remuneration: It is a kind of compensation provided monetarily to the employees for the job they performed. This is given according to the nature of job-skilled or unskilled, physical or mental, etc. Remuneration forms an important monetary incentive for the employees. 7. Performance Evaluation: In this expected results are compared with actual results 8. Promotion and Transfer: Based on the previous step, the decision of promotion and evaluation of the employee is taken up.
Q.2 Discuss approaches to HR Audit. Ans: HR auditing in recent years is not only considered mere instrument of control an but

also has become a necessary decision making tool in personnel related matters according to the global objectives of the company. As a result, all of the functions and competencies of HR auditing are being progressively expanded. 1 Approaches to Human Resource Audit by Walker Walker [1998] differentiates between two approaches relative to HR auditing i.e. those centered in the functions internal aspect, and those centered on the external aspect. Internal perspective: From an internal perspective, as in any staff function, there is a trend of valuing its actions as a result of the activities undertaken and its costs. The way of judging departments capability would be on its ability to supply certain services to the
SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

organization at the lowest possible cost. According to this approach, the operational measurements traditionally used are those which refer to quantity, quality and reliability, or cost and speed, therefore placing the focus on activities, costs, or productivity ratios. External perspective: From an external perspective, if it is understood that the ultimate appraisal of the effectiveness of HR is based on their impact on the companys results, then the measurements. Should include results obtained outside the function. 2 Common approaches to Human Resource Audits There are five common approaches for the purpose of evaluation of HR in any organization: Comparative approach: In this approach, another division or company that has better practices or results is chosen as the model. The audit team audits and compares the audited firms results with the best practices of the model organization. This approach is commonly used to compare the results of specific activities or programs. The approach is often used with turnover, absence, salary data and staffing levels. It helps detect areas where improvement is needed. It also makes sense to compare where a procedure is being used for the first time. Outside authority: In this approach, standards set by a consultant or taken from published research findings serve as the benchmark for the audit team. The consultant or research findings may help diagnose the cause of problems. Statistical: This approach relies on performance measures drawn from the companys existing information system. From existing records, the audit team generates statistical standards against which activities and programs are evaluated. With the mathematical standards as a base, the team may uncover errors while they are still minor. Often this approach is supplemented with comparative data from external sources such as other firms, or industry association surveys. The information is usually expressed in ratios or formulas that are easy to compute and use. Compliance approach: This approach reviews past practices, to determine if actions taken followed legal requirements and company policies and procedures. The audit team here often examines a sample of employment, compensation, discipline and employee appraisal forms. The purpose of the review is to ensure that the field offices and the operating managers have complied with internal rules and legal regulations, such as minimum wages and equal employment opportunity laws. By sampling elements of the human resources information system, the audit team looks for deviations from laws and company policies and procedures. The team can then determine the degree of compliance achieved.

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Management by Objectives (MBO): In this management by objectives approach, managers and specialists set objectives in their area of responsibility. Then they create specific goals against which this performance can be measured. The audit team researches actual performance and compares it with the previously set objectives. They can then evaluate the trends in this area.
Q.3 Describe How to approach a HR Scorecard. Ans: This mode of scorecard is based on the assumption that competent and committed

employees are needed to provide quality products and services at competitive rates emphasizing on the ways to enhance customer satisfaction. The Seven Steps in the HR Scorecard approach to formulating HR policies activities and strategies are as follows: The first step is to formulate business strategies i.e. define the business strategy of the organization so as to be very clear about the way to exploit the human resource towards the achievement of the organizational goal. The next step is to outline the companys value chain activities and identify the strategically required organizational outcomes. Now after the outcomes have been decided clearly, identify the workforce requirements and behaviors expected so as to achieve the desired outcomes. The next step is to formulate HR policies and practices which are strategically relevant such as new training and grievance systems. After ensuring that all above steps are correctly conducted then develop detailed scorecard. Then design the HR Scorecard measurement system. In order to ensure the productivity, periodically re-evaluate the measurement system.

Q.4 Explain A the process of workplace behaviors that support legal compliance. Ans: safe, dignified, and respectful work environment is not only mandated by the law, but

also increases motivation and productivity of the employees. An example of review of business practices used to deal with allegations of harassment safe working environments should be considered especially for the females in the offices so as to make them feel confident and concentrate on work is shown as under: Tailored Reviews can be added to the General Audit

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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

By Joan Curtice: Read the following example at the end to observe how in practical world organisations pursue safe working environment for their employees. 1. Ethical trading initiative: promoting conflict resolution in union negotiations Cambodia (Source: http://www.ethicaltrade.org) In November 2005 the Ethical Trading Initiative (ETI) was alerted to allegations of serious interference in union rights in a Cambodian factory. In response, the organisation brought member companies sourcing from the Fortune Garments factory to meet with workers, intermediary suppliers, factory management and International Textile, Garment and Leather Workers Federation (ITGLWF) representatives, in order to seek a solution to the conflict. After negotiations, in May 2006 an agreement was reached by all parties resulting in: payment of compensation to unfairly dismissed workers; entry of the Coalition of Cambodian Democratic Apparel Workers Union into the factory; and acceptance of trade union demands over pay and conditions. 2. Nike, Adidas, Umbro and more: working group with trade unions to promote trade unionism Global (Source: http://www.ituc-csi.org)

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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

The International Trade Union Confederation reported in the lead up to the 2008 Beijing Olympics that sporting apparel companies including Nike, Adidas, New Balance, Umbro and Speedo had formed a joint working group with trade unions and NGOs to explore, amongst other issues, how to promote trade unionism and collective bargaining across the sector. 3. Agreement with UNI property services to ensure rights of workers Global (Source: http://www.g4s.com/) In 2008, G4S, one of the worlds largest international security firms, signed a global agreement with UNI Property Services, a global union, to ensure that all of G4Ss 570,000 employees (spread across more than 110 countries) have the right to organise in a free and fair atmosphere. This is in addition to complying with international standards and national law in its relations with workers. 4. Training internal monitors on freedom of association Global (Source: http://www.gapinc.com) In 2006 Gap Inc. partnered with the International Textile, Garment and Leather Workers Federation (ITGLWF), the global union federation for the apparel and textiles sector, to train its internal monitoring team on freedom of association and collective bargaining issues. In the same year, the ITGLWF provided Gap Inc. with a detailed briefing. Gap Inc. supplemented this training by holding workshops on the Indian subcontinent and in south east Asia with the ITGLWF and local trade union representatives. These workshops aimed to strengthen engagement between Gap Inc.s Vendor Compliance Officers (responsible for inspecting factories and documenting violations) and key worker rights representatives at regional and local levels. 5. General Electric: expanding supplier due diligence to include freedom of association Global (Source: http://www.ge.com) In 2008, General Electric (GE) expanded its supplier due diligence programme to cover freedom of association, discrimination and harassment/retaliation. To do this it engaged in benchmarking activities with other companies to determine how they monitored and audited their suppliers in relation to the ILO principles. In addition, it reviewed its on-site assessment tools and guidance materials and developed new training materials. As a result, over 150 suppliers were asked to change their policies with respect to freedom of association. In addition, around 400 suppliers were asked to adopt an employee dispute resolution process. 6. Mod-Style: offering worker empowerment and training to suppliers China (Source: http://www.bsl.org.au) Mod-Style, a business sourcing optical frames from Asia, has the majority of its factories in China, where the only government-affiliated All-China Federation of Trade Unions is
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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

recognised and trade union rights are severely restricted. In 2000, Mod-Style joined with the Brotherhood of St. Laurence (BSL), an Australian based charity, to implement business standards based on the conventions of the ILO and the OECD Guidelines for Multinational Enterprises. In the absence of independent trade unions, BSL and Mod-Style have offered worker empowerment training and capacity building in supplier factories to ensure that workers rights can still be adequately voiced and heard. Nonetheless, to date no factories have agreed to this training, with BSL and Mod-Style instead focusing on developing longterm, direct and stable relationships with factory owners and managers.
Q.5 What are the issues in Human Capital Measurement and reporting .Explain Ans: The human capital can be defined as "the knowledge that individuals acquire during

their life and use to produce goods services or ideas in market or non-market circumstances." Organisations know that that measurement is a prerequisite for good management. As the popular saying goes, what gets measured gets managed. But in most of the organisations today, the most basic source of wealth creation human capital is not managed properly. This is primarily because most organizations systems of measurement, shaped in part by accounting and reporting requirements, are still overly influenced by measurement concepts that date back to the industrial era when physical capital was the primary source of wealth creation. Expenditures incurred on the development of the employees education and training being perhaps the most prominent are treated as costs although, these expenditures possess the traits of an investment (expenditure at one point in time that is made with the intention of generating an increase in capacity at some future point in time). But this outright focus on costs and cost cutting is not baseless. Often the known costs associated with people and their development, because measurement and accounting practices associated with human capital are remains of the industrial era, the measured costs are only a portion of the total costs. Moreover, because benefits are both uncertain and unknown, a conservative strategy has its merits. And finally, because human capital cannot be owned, spending on the development of people does not meet the traditional accounting concept of an investment, since employers cannot control the asset, i.e., the people in whom an investment is being made. There are genuine arguments in favor of the status quo with regard to measurement, accounting and reporting of human capital development and management. There are, however, also powerful arguments to be made that change is necessary. Human capital represents a huge operating cost that must be managed efficiently because of its absolute scale. At the same time because human capital is also the only asset that cannot be owned it must be managed wisely, but also with humanity. As a result, a strategy that focuses exclusively on efficiency and cost containment can, at best, only be successful in the short-run. This creates a fundamental paradox. Exceptional management in the knowledge era is defined by the ability to resolve this paradox through a both/and, rather than an either/or strategy. The both/and strategy
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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

requires a relentless focus on finding ways to cut costs and improve productivity, while simultaneously evoking the passion, creativity, loyalty and best efforts of the people on whom an organization relies.
Q.6 Discuss the auditing for HR professionals. Ans: Competence for HR function is demonstrated by an extensive audit of all its aspects.

An audit of HR professionals is essentially an assessment of the extent to which the professionals demonstrate competence for HR function. Such an assessment requires a 360 degree feedback, and, according to Ulrich, usually employs the following five steps: 1. Developing a model of competencies: Before embarking on an assessment of competence, it is necessary to first determine what are the competencies that make a successful HR professional. These competencies usually stem from knowledge of business, knowledge of HR, knowledge of change and finally personal credibility. In addition to determining the competencies that account for a successful HR professional, it is also important to determine the behavioral attributes that reflect these competencies. A model that reflects both these aspects may be said to be a comprehensive model for auditing of HR professionals. 2. Collect data using the model: Several techniques may be employed to collect data about the extent to which an HR professional exhibits the modeled competencies. These include interviews, questionnaires and focused groups. 3. Summarized data and give feedback to the HR professionals: The quantitative and qualitative data collected in the above mentioned ways, need to be synthesised and codified so that specific themes emerge. These themes are then used as aids to help the HR professionals identify his/her strengths and weaknesses. One of the key activities of an HR audit is to give feedback. This needs to be done in a way that protects the confidentiality of the participants. The manner of the feedback should take into account the sensitivities of the receiver. The tenor of the feedback should neither be accusatory nor defensive. In addition, the individual data that is collected may be integrated into an audit for the overall HR function. 4. Create action plans: The HR audit goes beyond defining the competencies and inadequacies of the HR function. It also identifies the measures to develop the competencies at both, the individual and the departmental level. At the institutional level, this may involve doing an HR for HR. At the individual level, the action plan will concentrate on developing a tailored set of trainings, readings, assignments and training opportunities. 5. Continuous improvement: Auditing of HR professionals is not a one time activity but an ongoing continuous process through which HR professionals are able to constantly build on their HR competencies and strengthen the HR functions in the organisation.
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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Master of Business Administration -Semester 3

MU0013:Legal aspects of business ASSIGNMENT-Set -2


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Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Q.1 explain the linkages between hr audit and business functions?


Answer
Staffing is a term that refers to the management of employee schedules. It can be described as the process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organization's effectiveness. The ideal staffing level for an organization depends on the amount of work to be done and the skills required for doing it. If the number and quality of staff employed are greater than necessary for the workload, an organization may be deemed to be overstaffed or if the number of staff is insufficient for the workload, an organization is deemed to be understaffed. Effective human resource planning will determine the appropriate staffing level for an organization at any given point in time. Staffing includes various aspects to ensure the best practices in an organization SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT . Workforce planning: Workforce planning is one of the most important activities in a business. It starts with analysis of the strategic position of the business. The results of this analysis then feed into a forecast of the required demand for labor by the business and how this is likely to be supplied. The final stage involves the creation and implementation of a human resources plan which aims to deliver the right number of the right people for the business. Specifying Jobs and Roles: Clearly defining employee roles in your company is vital to work efficiency. When employees understand what their role is in your company they will be more productive. Employees should also know what is expected of them and the work they produce. Employees that do not know what is expected of them or their role in your company can lead to unnecessary conflict and misunderstandings. Here are some tips to help you to clearly define employee roles: Clearly tell people what is expected of them. Balance the work load. Update your employee's progress continuously. Weekly progress reports should be implemented. Encourage employees to openly communicate with you and other employees. Share information about the company with your employees. Along with knowing what an employee's role is in the company, they should also be trained and educated for this role. If your company continues to grow and develop you may realize that there is a need for a new job role. When employees continue to report being short-handed and mention that some tasks are not being done this could mean it is time to plan a new job role. Management should draft a job description which states the general responsibilities of the position, along with some specific job duties to be conducted by the role. Get feedback from other managers and supervisors about the new job role, the job description and the responsibilities that the new employee will have. Make changes if necessary to maintain a balanced work load. Finalize the job description. It is important the job description is accurate because it is what you have based the new employee's salary, required training and skills on. Remember to help your company grow and advance it is vital that all employees know what their roles are in your company. Recruiting: It involves the process of identifying and hiring best-qualified candidate (from within or outside of an organization) for a job vacancy, in a most timely and cost effective manner. Outsourcing: Employee Outsourcing can be a cost effective alternative to the expense and administrative burden of a traditional employer-employee relationship. Outsourcing your human resource functions allows you to focus on business development and provides administrative relief from many employment responsibilities such as payroll preparation, income tax reporting, employee benefits and workers compensation. SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT Outsourcing is accomplished by transferring many of your employer responsibilities to a Professional Employment Organization (PEO). A PEO is not simply a temp firm, staffing agency, payroll service or placement agency. The PEO acts as your off-site human resource department. Your company enters into an agreement with the PEO to establish a three-way relationship between you, your employees and the PEO. You and the PEO become co-employers instead of the traditional employment relationship. The other staffing processes involve Screening Applicants Selecting (Hiring) New Employees Succession Planning Job and Task Analysis Job Description Specifying Competencies New Employee Orientation Training and Development Retaining Employees Out placing and Downsizing (laying off employees) Exit Interviews HRD audit and staffing HR auditors review the process of staffing and policies pertaining to staffing. It includes reviewing the recruitment process, the interview process, the employee orientation process, the job analysis and job description, promotion and growth opportunities.

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Q.2 write a short note on focus groups. Answer


The following are the approaches to Human Resources Audit, which are adopted for purpose of evaluation: Comparative approach Outside authority approach Statistical approach Compliance approach Management by objectives (MBO) approach

Comparative approach In this, the auditors identify Competitor Company as the model. The results of their organization are compared with that of the Model Company/ industry. Outside authority approach In this, the auditors use standards set by an outside consultant as benchmark for comparison of own results. Statistical approach SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT In this, Statistical measures are performance is developed considering the companys existing information. Compliance approach In this, auditors review past actions to calculate whether those activities comply with legal requirements and industry policies and procedures. Management by objectives (MBO) approach This approach creates specific goals, against which performance can be measured, to arrive at final decision about industrys actual performance with the set objectives. The Legal Approach in HR Auditing This first concept of HR auditing is based on a legal outlook. According to Antona [1993, p. 2], the audit of performance or conformity consists of "making an inventory of the social situation of the company, considering the labor law norms and regularly verifying the company's compliance with the applicable regulations." Thus, this concept is centered on the verification that the current labor laws are being fulfilled. The audit should verify if the firm's policies, practices, and documents regarding employee hiring, retention, discipline, termination, and post-employment are both fair and legal [Higgins, 1997]. These practices and policies must: prohibit discrimination by offering equal employment opportunities; protect the employment seeker from being discriminated against on the basis of age; carry out minimum wages; and contain provisions regarding mental disabilities and reasonable accommodations for disabled workers. According to Nevado [1998, p. 49], the basic functions of the audit of conformity or of performance as an element of HR auditing are threefold. The first function is examining to see if the firm is fulfilling all its administrative social obligations, as well as those relative to the collective rights of its personnel. The second is to study the relationship between the employees and the firm based on the legal statutes. The final function is verifying if the firm fulfills its financial obligations (for example, social security payments), as well as its informative ones. Concern about labor risks has created a function within HRM with the purpose of altering working conditions by identifying the risks that could stem from them and implementing necessary preventive measures. Such preventive activity could fit perfectly into the legal approach of HR, although the effort that the company can make in this sense can go beyond the application of the existing risk prevention laws. The requirement for labor security and hygiene is a part of the search for quality of life in the workplace, which is becoming increasingly demanded from companies.

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Q.3 explain the audit of human resorce function? Answer:


This mode of scorecard is based on the assumption that competent and committed employees are needed to provide quality products and services at competitive rates emphasizing on the ways to enhance customer satisfaction. Look at Figure 9.1 for understanding the steps in HR Scorecard approach. The Seven Steps in the HR Scorecard approach to formulating HR policies activities and strategies are as follows: The first step is to formulate business strategies i.e. define the business strategy of the organization so as to be very clear about the way to exploit the human resource towards the achievement of the organizational goal. The next step is to outline the companys value chain activities and identify the strategically required organizational outcomes. Now after the outcomes have been decided clearly, identify the workforce requirements and behaviors expected so as to achieve the desired outcomes. The next step is to formulate HR policies and practices which are strategically relevant such as new training and grievance systems. After ensuring that all above steps are correctly conducted then develop detailed scorecard. Then design the HR Scorecard measurement system. In order to ensure the productivity, periodically re-evaluate the measurement system.

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

Q.4 what are the components of human resorce development audit? answer
A safe, dignified, and respectful work environment is not only mandated by the law, but also increases motivation and productivity of the employees. An example of review of business practices used to deal with allegations of harassment safe working environments should be considered especially for the females in the offices so as to make them feel confident and concentrate on work. Many smaller companies do not like writing certain aspects of ways of conducting business. For such companies, it is mere formality and they do not appreciate people-oriented culture. Though it should be avoided because it is patently illegal because laws require that companies should mention very clearly the policies about guaranteeing specific protections to employees Safeguarding employee information Employees personal information should be safeguarded. Separate files should be maintained for personal information as contrasted with employment related information. Main objective behind it to ensure that while deciding the employees career with the company his personal information should not be considered. For example while deciding whether to promote employee or not, instead of his personal information like his religion, his work experience and capabilities should be considered. The employment decision needs to be made on work/performance-related information, not the personal information. Relevant materials in the work file include information on the employees education, related work experience, and performance evaluations in other positions within the company. An audit can clarify what information must be segregated and the laws that govern employees access to and copying of their files. Other employee information that must be safeguarded includes any materials that contain medical information. Employee performance management An audit can review companys job descriptions for compliance (i.e., to determine whether the descriptions list the essential functions of the job). Various legal issues SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT can arise due to performance related problems of employees. Audit will help in following improvements and reviews: A 90-day written standard performance evaluation form, An annual written standard performance evaluation form, A performance management/performance improvement plan, A description of the companys policy for both voluntary resignation and company-initiated termination, Wage and salary administration program,

Bonus/stock option criteria. Safe work environment Audit practices may also help the companies to know about factors that contribute to a safe work environment. A company may choose to develop an audit sheet tailored to a particular issue, such as the companys zero-tolerance policy for harassment. For example, a company may wish to review and evaluate its practices of dealing with inappropriate harassing behavior in its workplace.

Q.5 explain how audit of training is conducted? Answer:

The human capital can be defined as "the knowledge that individuals acquire during their life and use to produce goods services or ideas in market or non-market circumstances." Organizations know that that measurement is a prerequisite for good management. As the popular saying goes, What gets measured gets managed. But in most of the organizations today, the most basic source of wealth creation human capital is not managed properly. This is primarily because most organizations systems of measurement, shaped in part by accounting and reporting requirements, are still overly influenced by measurement concepts that date back to the industrial era when physical capital was the primary source of wealth creation. Expenditures incurred on the development of the employees education and training being perhaps the most prominent are treated as costs although, these expenditures possess the traits of an investment (expenditure at one point in time that is made with the intention of generating an increase in capacity at some future point in time). But this outright focus on costs and cost cutting is not baseless. Often the known costs associated with people and their development, because measurement and accounting practices associated with human capital are remains of the industrial era, the measured costs are only a portion of the total costs. Moreover, because benefits are both uncertain and unknown, a conservative strategy has its merits. And finally, because human capital cannot be owned, spending on the development of people does not meet the traditional accounting concept of an investment, since employers cannot control the asset, i.e., the people in whom an investment is being made. There are genuine arguments in favor of the status quo with regard to measurement, accounting and reporting of human capital development and management. There are, however, also powerful arguments to be made that change is necessary. Human capital represents a huge operating cost that must be managed efficiently because of its absolute scale. At the same time because human capital is also the only asset that cannot be owned it must be managed wisely, but also with SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT humanity. As a result, a strategy that focuses exclusively on efficiency and cost containment can, at best, only be successful in the short-run. This creates a fundamental paradox. Exceptional management in the knowledge era is defined by the ability to resolve this paradox through a both/and, rather than an either/or strategy. The both/and strategy requires a relentless focus on finding ways to cut costs and improve productivity, while simultaneously evoking the passion, creativity, loyalty and best efforts of the people on whom an organization relies.

Q.6 elaborate on the different aspects work place policies and practice to be considered by the employers? answer
ScopeHuman resource audits involve a companys strategic actions to take an intensely objective look at its HR policies, procedures and practices. This type of comprehensive review of the companys current state can help to identify whether specific practice areas or processes are adequate, legal and/or effective. The results obtained from this review can help to identify gaps in HR practices, and these gaps can then be prioritized for attention in an effort to minimize lawsuits and/or regulatory violations, as well as to achieve and maintain world-class competitiveness in key HR practice areas. Overview Human resource audits are a vital means of avoiding legal and/or regulatory liability that may arise from a companys HR policies and practices. In addition to identifying areas of legal risk, audits often are designed to provide a company with information about the competitiveness of its HR strategies by looking at the best practices of other companies in its industry. In essence, an HR audit involves identifying issues SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT and finding solutions to problems before they become unmanageable. It is an opportunity to assess what an organization is doing right, as well as how things might be done differently, more efficiently or at a reduced cost. In todays competitive climate, companies operate within the confines of a heavilyregulated employee environment. This includes dealing with myriad complex laws and regulations. The scope of the HR function includes establishing and administering a host of policies and practicesmany of which involve compliance implicationsthat significantly influence the productivity and profitability of the enterprise. Just a handful of these are: Benefit administration issues Disciplinary matters Employee development Employees eligibility to work Interim/contingent staffing Interviewing and hiring Job descriptions Organizational development Payroll management Performance management Problem or conflict resolution Stress management Substance abuse Team building Termination Workplace violence

Given that many HR departments are both understaffed and overworked, only in retrospect do many companies become aware of the monetary costs of ignoring HRrelated legal hot buttons. Noncompliance with applicable laws and regulations involves significant financial risk. To minimize the risk, many organizations purchase employment practices liability insurance. While this is a sound strategy, companies can take other proactive measures. Chief among these is a voluntary HR compliance audit. Types of Audits An HR audit can be structured to be either comprehensive or specifically focused, within the constraints of time, budgets and staff. There are several types of audits, and each is designed to accomplish different objectives. Some of the more common types are: Compliance: Focuses on how well the company is complying with current federal, state and local laws and regulations. Best Practices: Helps the organization maintain or improve a competitive advantage by comparing its practices with those of companies identified as having exceptional HR practices.

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT Strategic: Focuses on strengths and weaknesses of systems and processes to determine whether they align with the HR departments and/or the companys strategic plan. Function-Specific: Focuses on a specific area in the HR function (e.g., payroll, performance management, records retention, etc.). What to Audit Deciding what to audit will depend largely on the perceived weaknesses in the companys HR environment, the type of audit decided on and the available resources. Keeping a log of issues that have arisen but are not covered in the companys procedures or policies will help identify areas of potential exposure that can be addressed during the annual review process (if they do not need to be addressed immediately.) There are, however, certain areas in which companies are particularly vulnerable. Most lawsuits can be traced to issues related to hiring, performance management, discipline or termination. Some additional risk areas that should be carefully reviewed include: Misclassification of exempt and nonexempt jobs. Almost every company has job positions that have been misclassified as exempt from overtime eligibility. The complexity of wage and hour laws and regulations makes it easy to err in classifying a job as exempt, thereby exposing the company to liability for past overtime. Inadequate personnel files. A review of sample personnel files often reveals inadequate documentation of performancefor example, informal, vague and/or inconsistent disciplinary warnings. Performance evaluations may be ambiguous, inaccurate or outdated. Personal health information is often found in personnel files, despite medical privacy laws requiring such data to be kept separate. Accurate and detailed records are essential for employers to defend any type of employee claim, particularly unemployment compensation or wrongful termination claims. Prohibited attendance policies. Controlling excessive absenteeism is a big concern for most employers. However, the complexity of family and medical leave laws, with sometimes conflicting state and federal protections, has made many formerly acceptable absence control policies unacceptable. Absences affect workers compensation, family and medical leave, disability accommodations and pregnancy laws. Companies often have attendance policies that either do not comply with relevant laws and regulations or grant employees more protections than required. Inaccurate time records. Employers typically require nonexempt employees to punch a time clock or to fill out time sheets reflecting their time worked each week. The records generated by these systems typically are the employers primary means of defense against wage and hour claims, so it is essential that timekeeping policies and practices be clearly communicated and consistently administered. Insufficient documentation. Reviews of employer hiring practices often uncover inadequate documentation, such as missing or incomplete I-9 Forms. Employers can be fined between $100 and $1,000 for each failure to accurately complete an I-9 Form. Fines for these violations can easily add up, with reported cases of repayment totaling over $100,000

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT

Neelam Aswal MBA-SEM-3 HR HUMAN RESOURCE AUDIT

SIKKIM MANIPAL UNIVERSITY HUMAN RESOURCE AUDIT