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1) Human resources process

HRP is done by the HRD manager. He is supported by the HRD department. He takes following Steps in the process of Human Resource Planning HRP. 1. Review of Organisation's Objectives The HRD Manager first studies the objectives of the organisation. Then he prepares a list of all the activities (jobs) that are required to achieve the objectives. He also does Job's analysis. 2. Estimation of Manpower Requirements The HRD manager then estimates the manpower requirement of the organisation. That is, he finds out how many people (manager and employers) will be required to do all the jobs in the organisation. Estimation of manpower requirements must be made in terms of quantity and quality. 3. Estimation of Manpower Supply The HRD manager then estimates the manpower supply. That is, he finds out how many managers, and employers are available in the organisation. 4. Comparison of Manpower The HRD manager then compares the manpower requirements and manpower supply. 5. In case of no difference If there is no difference between the manpower requirements and the manpower supply, then the HRD manager does not take any action. This is because manpower requirements are equal to the manpower supply. 6. In case of difference If there is a difference between the manpower requirements and the manpower supply the HRD manager takes the following actions. 1. Manpower Surplus If the manpower requirements are less then the manpower supply then there is a surplus. During manpower surplus, the HRD manager takes the following actions :1. Termination i.e removal of staff. 2. Lay-off. 3. Voluntary retirement. 2. Manpower Shortage If the manpower requirements are greater than the manpower supply then there is manpower shortage. During manpower shortage, the HRD manager takes the following actions :1. Promotions 2. Overtime 3. Training to improve quality. 4. Hire staff from outside, etc. 5. 7. Motivation of Manpower HRP also motivates the employers and managers by providing, financial and non-financial incentives. 8. Monitoring Manpower Requirements The HRD manager must continuously monitor the manpower requirements. This is because many employees and managers leave the organisation by resignation, retirement, etc. and new work force must take their place fill the manpower gap. This helps in uninterruptible functioning of the organisation.

2) Discuss the HR/Manpower/Workforce demand forecasting techniques in detail.


Forecasting human resource demand is the process of estimating the future human resource requirement of right quality and right number. As discussed earlier, potential human resource requirement is to be estimated keeping in view the organisation's plans over a given period of time. Analysis of employment trends; replacement needs of employees due to death, resignations, retirement termination; productivity of employees; growth and expansion of organisation; absenteeism and labour turnover are the relevant factors for human resourced forecasting. Demand forecasting is affected by a number of external and internal factors. Job analysis and forecasting about the quality of potential human resource facilitates demand forecasting. So, existing job design must be thoroughly evaluated taking into consideration the future capabilities of the present employees. FACTORS AFFECTING HR DEMAND FORECASTING Human Resource Demand Forecasting depends on several factors, some of which are given below.

Employment trends; Replacement needs; Productivity; Absenteeism; and Expansion and growth.

There are number of techniques of estimating/forecasting human resources demand: (a) Managerial Judgement (b) Work Study Technique (c) Ratio-trend Analysis (d) Econometric Models (e) Delphi Model (f) Other Techniques (a) Managerial Judgement: Managerial judgement technique is very common technique of demand forecasting. This approach is applied by small as well as large scale organisations. This technique involves two types of approaches i.e. 'bottom-up approach' and 'top-down approach'. Under the 'bottom-up approach', line mangers send their departmental requirement of human resources to top management. Top management ultimately forecasts the human resource requirement for the overall organisation on the basis of proposals of departmental heads. Under the Top-down approach', top management forecasts the human resource requirement for the entire organisation and various departments. This information is supplied to various departmental heads for their review and approval. However, a combination of both the approaches i.e. 'Participative Approach' should be applied for demand forecasting. Under this approach, top management and departmental heads meet and decide about the

future human resource requirement. So, demand of human resources can be forecasted with unanimity under this approach. (b) Work-Study Technique: This technique is also known as 'work-load analysis'. This technique is suitable where the estimated work-load is easily measureable. Under this method, estimated total production and activities for a specific future period are predicted. This information is translated into number of man-hours required to produce per units taking into consideration the capability of the workforce. Past-experience of the management can help in translating the work-loads into number of man-hours required. Thus, demand of human resources is forecasted on the basis of estimated total production and contribution of each employee in producing each unit items. The following example gives clear idea about this technique. Let us assume that the estimated production of an organisation is 3.00.000 units. The standard man-hours required to produce each unit are 2 hours. The past experiences show that the work ability of each employee in man-hours is 1500 hours per annum. The work-load and demand of human resources can be calculated as under:

Estimated total annual production = 300000 units Standard man-hours needed to produce each unit = 2 hrs Estimated man-hours needed to meet estimated annual production (i x ii) = 600000 hrs Work ability/contribution per employee in terms of man-hour = 1500 units Estimated no. of workers needed (iii / iv) = 600000/1500 = 400 units

The above example clearly shows that 400 workers are needed for the year. Further, absenteeism rate, rate of labour turnover, resignations, deaths, machine break-down, strikes, power-failure etc. should also be taken into consideration while estimating future demand of human resources/ manpower. (c) Ratio-Trend Analysis: Demand for manpower/human resources is also estimated on the basis of ratio of production level and number of workers available. This ratio will be used to estimate demand of human resources. The following example will help in clearly understanding this technique. Estimated production for next year = 1,40,000 units Estimated no. of workers needed (on the basis of ratio-trend of 1: 200) will be = 700 (d) Econometrics Models: These models are based on mathematical and statistical techniques for estimating future demand. Under these models relationship is established between the dependent variable to be predicted (e.g. manpower/human resources) and the independent variables (e.g., sales, total production, work-load, etc.). Using these models, estimated demand of human resources can be predicted. (e) Delphi Technique: Delphi technique is also very important technique used for estimating demand of human resources. This technique takes into consideration human resources requirements given by a group of experts i.e. mangers. The human resource experts collect the manpower needs, summarises

the various responses and prepare a report. This process is continued until all experts agree on estimated human resources requirement. (f) Other Techniques: The other techniques of Human Resources demand forecasting are specified as under: (a) Following the techniques of demand forecasting of human resources used by other similar organisations (b) Organisation-cum-succession-charts (c) Estimation based on techniques of production (d) Estimates based on historical records (e) Statistical techniques e.g. co-relation and regression analysis.

Manpower demand forecasting The development of strategies to match the supply of workers to the availability of jobs at organizational, regional, or national level. Manpower planning involves reviewing current manpower resources, forecasting future requirements and availability, and taking steps to ensure that the supply of people and skills meets demand. A more current term for manpower planning at organizational level is human resource planning. Demand Forecasting: It is the process of estimating the requirement of different kinds of personnel in future The basis of manpower forecasts should be the annual budget and long term corporate plan translated into activity levels for each function an department Techniques of Demand Forecasting Managerial Judgment Work Study Technique Statistical Techniques Delphi Technique Computer Analysis

Managerial Judgment: The most typical method for smaller company In this method the managers simply sit down, think about their future work load and how many people they need It adopt both the bottom-up' and top-down approach. Work Study Technique:-

It is technique can be used when it is possible to apply work measurement to know how long operations should take and the amount of labour required. It calculated in two type Work-load Analysis:- In work load analysis the manpower expert need to find out sales forecasts, work schedules and thus determine the manpower required per unit of product. Work-force Analysis: - In work load analysis the manpower expert need to find out sales forecasts, work schedules and thus determine the manpower required per unit of product.

Statistical Techniques: It is the technique of using high speed computers and new mathematical techniques The main statistical tools are Ratios and Trend analysis:- Ratios, which are calculated for the basis of past data relating to number of employees The data are collected in different levels Future manpower requirement is calculated on the basis of established ratios The value depend upon accurate records and realistic estimate of future activity levels and the effect of improved performance Regression analysis:- The technique is used to estimate the manpower requirement of an organization's at a future point of time It used when dependent and independent variables are functionally related to each other Delphi Technique: The objective of the Delphi technique is to predict future situations by integrating the independent opinions of experts A major goal of the Delphi technique is to avoid direct confrontation of experts, since some individuals may be unduly influenced by others because of status differences, resulting in compromise of good ideas Computer Analysis: MANPLAN was developed by General Electric" to overcome human resource modeling problems (such as the overwhelming mathematical complexity that can be brought into such planning efforts). One final merit of MANPLAN is that running the computer model is relatively inexpensive.

This computer program needs for its forecast, asking such questions as: 1. How many different product lines do you manufacture? 2. How many months does your forecast cover? Once these questions are answered and fed into the computer, the computer can produce a forecast estimating average human resource levels required to meet product demand. MANPLAN also provides for ranges of possible human resource needs for any period

3)Discuss the HR supply forecasting techniques in detail.


Human Resource supply forecasting is the process of estimating availability of human resource followed after demand for testing of human resource. For forecasting supply of human resource we need to consider internal and external supply. Internal supply of human resource available by way of transfers, promotions, retired employees & recall of laid-off employees, etc. Source of external supply of human resource is availability of labour force in the market and new recruitment. External supply of human resource depends on some factors mentioned below.

Supply and demand of jobs. Literacy rate of nation. rate of population industry and expected growth rate and levels Technological development. Compensation system based on education, experience, skill and age.

The most important techniques for forecasting of human resource supply are Succession analysis and Markov analysis.

6) Define/Describe HR audit. Is an HR scorecard an outcome or input for the HR audit process? Justify your answer
Definition: HR Audit means the systematic verification of job analysis and design, recruitment and selection, orientation and placement, training and development, performance appraisal and job evaluation, employee and executive remuneration, motivation and morale, participative management, communication, welfare and social security, safety and health, industrial relations, trade unionism, and disputes and their resolution. HR audit is very much useful to achieve the organizational goal and also is a vital tool which helps to assess the effectiveness of HR functions of an organization. Scope of Audit: Generally, no one can measure the attitude of human being and also their problems are not confined to the HR department alone. So it is very much broad in nature. It covers the following HR areas: Audit of all the HR function. Audit of managerial compliance of personnel policies, procedures and legal provisions. Audit of corporate strategy regarding HR planning, staffing, IRs, remuneration and other HR activities. Audit of the HR climate on employee motivation, morale and job satisfaction.

Balanced Scorecard Basics


The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950s and the work of French process engineers (who created the Tableau de Bord literally, a "dashboard" of performance measures) in the early part of the 20th century. The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The new balanced scorecard transforms an organizations strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies. This new approach to strategic management was first detailed in a series of articles and books by Drs. Kaplan and Norton. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results.

When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

Adapted from Robert S. Kaplan and David P. Norton, Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review (January-February 1996): 76.

Perspectives
The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: The Learning & Growth Perspective This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization. Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems." The Business Process Perspective This perspective refers to internal business processes. Metrics based on this perspective

allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants. The Customer Perspective Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups. The Financial Perspective Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category.

Strategy Mapping
Strategy maps are communication tools used to tell a story of how value is created for the organization. They show a logical, step-by-step connection between strategic objectives (shown as ovals on the map) in the form of a cause-and-effect chain. Generally speaking, improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up), which in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows).

Balanced Scorecard Software


The balanced scorecard is not a piece of software. Unfortunately, many people believe that implementing software amounts to implementing a balanced scorecard. Once a scorecard has been developed and implemented, however, performance management software can be used to get the right performance information to the right people at the right time. Automation adds structure and discipline to implementing the Balanced Scorecard system, helps transform disparate corporate data into information and knowledge, and helps communicate performance information. The Balanced Scorecard Institute formally recommends the QuickScore Performance Information System developed by Spider Strategies and co-marketed by the Institute.

10) The scope of hr audit


Every time the scope is to be decided. The scope of human resource audit is very wide. It represents the encompassing approach. It assumes that the management of human resources involves much more than the practice of recruiting, hiring, retaining and firing employees. In other words, human resource audit is interested in all the prograrnmes relating to employees regardless of where they originate. In this way, the areas personnel audit includes are recruitment, selection, job analysis, training, management development, promotions and transfers, labour relations, morale development, employee benefits, wage and salary administration, collective bargaining, industrial relations and communication. Further, the areas like leadership, grievances, and performance appraisal and employee mobility are also included within the scope of human resource audit. For integration of personnel management with HRD functions, HRD audit now encompasses all the areas like review and integration of corporate mission, goals, policies and objectives, manpower planning, career planning and development, and transfer policies, performance appraisal systems, training and development functions, recruitment and selection, etc

11) Step of hr audit


The HR audit process is conducted in different phases. Each phase is designed to build upon the preceding phase so that the organization will have a very strong overview of the health of the HR function, at the conclusion of the audit. These phases include:

1. Pre-Audit Information: This phase involves the acquiring and review of relevant HR manuals, 2.
handbooks, forms, reports and other information. A pre-audit information request is forwarded to the client who compiles the necessary information for review by auditors. Pre-Audit Self-Assessment: In order to maximize the time spent during subsequent portions of the audit, a pre-audit self-assessment form, if sent to the client can be of use. The selfadministered yes/no questionnaire asks a number of questions about current HR policies and practices. The completion of this self-administered questionnaire allows auditors to identify key areas for focus during the HR audit. On-site Review: This phase involves an on-site visit at the clients facility interviewing staff regarding HR policies and practices. A very in-depth HR audit checklist is completed. Records Review: During the on-site visit, a separate review is conducted of HR records and postings. Employee personnel files are randomly examined as well as compensation, employee claims, disciplinary actions, grievances and other relevant HR related information are checked. Audit Report: The information gathered is used to develop an HR audit report. The audit report categorizes action needs into three separate areas. The areas that are urgent and important (UI), not urgent needs but important (NUI), not urgent but not important needs (NNI)), and important opportunities needs (IO). As a result of this scheme of classification, managements can prioritize their steps. The critical areas: The comprehensive HR audit covers all areas of HR management like recruitment practices, training and development, compensation and benefits, employee and union relations, health, safety and security, miscellaneous HR policies and practices-welfare, strategic HR issues, manpower planning/budgeting. Besides classifying needs in each of the above areas, the HR audit also cites relevant laws, cases and research to support the recommendations. Preparation for an audit

3. 4. 5.

6.

7.

Auditor engagement: If external firm carrying out the audit, it is preferable to set terms in writing defining and agreeing on scope .If using internal resource it is better to appoint them formally with clarity on scope and select persons who are non political or those who are not high on hierarchy. Also, if internal persons are auditing there must be training in auditing. Documents, manuals, handbooks, forms and reports auditor must have access to relevant information contained in employee files and other confidential documents of the organization. Auditors must be given unrestricted access to records, once they sign agreement for confidentiality.

8. Data gathering: Completion of a self-assessment questionnaire significantly expedites the audit


process and allows for better audit planning.

9. On-site access: The on-site portion of the audit is the most critical.

10.Using audit findings: How does an organization use HR audit results? Since the HR audit
results are classified, an important aspect is already taken care of. Critical needs should be the first ones to be addressed. Organizations generally have three options for dealing with audit results.

a. Use the HR audit as a blueprint or action plan for addressing HR needs. b. Address as many needs as possible using the organizations internal expertise and resources. c. Contract out those need areas where internal expertise and resources are not available or do not fit in the core competencies of the organization. An HR audit is much like an annual health check. It can perform the same function for the organization. An audit is a means by which an organization can measure where it currently stands and determine what it has to accomplish to improve its HR functions. It involves systematically reviewing all aspects of human resources, usually in a checklist fashion, ensuring that the government regulations and company policies are being adhered to. The key to an audit is to remember that it is a tool to discover and not to test. There will always be room for improvement in every organization.

12) METHODS OF HR AUDIT

There are four methods of conducting HR audit. For HR audit, either combination of methods or all the methods are used. 1. 2. 3. 4. Individual interview method Group interview method Workshop method Questionnaire method

I.

Individual interview method: Top level management and senior managers are interviewed, individually. It helps in following: a. Knowing their thinking about future plans and opportunities available for the company. b. Knowing about their expectations from the HR Audit. c. Getting sensitive information pertaining to working styles and culture. d. Union leaders, departmental heads, some strategic clients and informal leaders are also interviewed, individually. e. In case of small companies, manned by professionals, interviews can be extended with selected employees from different levels and functions.

The individual interview is conducted with: 1. CEO 2. HRD Chief 3. Line Managers 4. Workers and Their Representatives

II.

Group Interview Method: Group interviews and discussions with the employees and/or executives of large companies for HR Audit facilitate collection of information about effectiveness of existing systems.

The Advantages of this method are: Wider coverage of issues Larger involvement of employees Verification of data and significant points Assessment of impact of feelings related to any issue and problem. Guidelines for selecting samples for group interviews: Middle level managers: Minimum 10% and Maximum 100% group-wise or department-wise. In any audit, 100 Managers individually or in groups should be interviewed. Supervisors and Staff: 10% or 5-6 groups from different functions and workplaces may be selected for audit. Workmen: To be interviewed in large groups. 5-10 groups are advisable. Guidelines for interviews in groups: Auditors to be introduced to the group by a representative from HR Department.

Auditors to brief about the HRD Audit and its purpose and usefulness to the company. Thereafter, questions relating to various systems can be either asked questions or given a questionnaire to answer in about 30 Minutes and after collecting the feedbacks, discussion for another about 30 minutes can be held to know the intensity of the feelings. In either case, notes should be taken. Auditors to consolidate the feedbacks.

III.

Workshop method: In some cases of HR Audit, instead of Individual and Group Interviews, Workshop Methods i.e. Large Scale Interactive Process (LSIP) is conducted, as under:

a. b. c. d. e. f.

30 to 300 participants can be asked to gather in a room. They are divided in small groups. They are asked to work either around Systems, Subsystems or around different dimensions of HRD and do SWOT Analysis. All the groups thereafter give presentations. The HR Auditor compiles the views of all groups, makes own observation, conclusions and prepares a report. The HR Auditor announces the audit Results before submitting the report to

IV.

Questionnaire Method: Feedback about various dimensions of HRD, including the competency base of HRD staff, the styles of line managers, the implementation of various HRD systems, etc are obtained through a detailed questionnaire from individuals or groups for HR Audit. This method helps in benchmarking. The process is as follows: a. Detailed questionnaire is prepared by HR Auditor. b. Individuals or groups are asked to assemble in a room or hall are explained the objective and process of HR Audit. They are then given questionnaires. c. They submit the questionnaire, duly filled in, to the HR Auditor. d. The HR Auditor compiles the feedbacks, makes observations, conclusions and recommendations. e. Audit Results are informed to the Participants before the report is submitted.

HR AUDIT QUESTIONNAIRE With human resources audit becoming a mandatory annual undertaking in most organizations, there is no denying the vital role that the HR audit questionnaire plays. The HR audit is conducted for purposes of gauging the overall well-being of the human resource (workforce) in an organization. Through data compiled from such audits, the HR department is then able to figure any lapses or gaps that may exist in the workforce. The audit is also vital in comparing set systems, policies and targets with implementation. In addition, the HR department is able to determine if the organization is sufficiently staffed, whether the HR resources are maximally utilized and whether the workforce complies with set industry laws.

13)Limitations of HRD Audit:


Top mgmt can influence HR audit. Failure of implementation of corrective action based on the feedback. Victimize the HR deptt and remove some HR staff, due to negative audit feedback.
The audit works best when the focus is on analyzing and improving the HR function in the organization - IF NOT IT IS A TOOTHLESS DOCUMENT. The audit itself is a diagnostic tool, not a prescriptive instrument. It will help you identify what you are missing or need to improve, but it cant tell you what you need to do to address these issues. It is most useful when an organization is ready to act on the findings, and to evolve its HR function to a level where its full potential to support the organizations mission and objectives can be realized.

17) Why human resource audit undertaken


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 organization 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.

18) Discuss the HR audit introduction & initiation process.


Human Resources Audit A Human Resources Audit is a comprehensive method (or means) to review current human resources policies, procedures, documentation and systems to identify needs for improvement and enhancement of the HR function as well as to ensure compliance with ever-changing rules and regulations. An Audit involves systematically reviewing all aspects of human resources, usually in a checklist fashion. Sections of review include: 1. 2. 3. 4. 5. 6. 7. 8. Hiring and Orientation Benefits Compensation Performance evaluation process Termination process and exit interviews Job descriptions Form review Personnel file review

A periodic HR audit can qualify its effectiveness within an organization. HR audits may accomplish a variety of objectives, such as ensuring legal compliance; helping maintain or improve a competitive advantage; establishing efficient documentation and technology practices; and identifying strengths and weaknesses in training, communications and other employment practices. Objectives of the Human Resource Audit To review the performance of the Human Resource Department and its relative activities in order to assess the effectiveness on the implementation of the various policies to realize the Organizational goals. To identify the gaps, lapses, irregularities, short-comings, in the implementation of the Policies, procedures, practices, directives, of the Human Resource Department and to suggest remedial actions. To know the factors which are detrimental to the non-implementation or wrong implementation of the planned Programmes and activities. To suggest measures and corrective steps to rectify the mistakes, shortcomings if any, for future guidance, and advise for effective performance of the work of the Human Resource Department. To evaluate the job chart of the Human Resource Managers, Executives, Administrative Officers, Executive Officers, Recruitment Officers, whether they have implemented the directives and guidelines for effective Management of the Human resources in their respective Departments.

The Basic Steps In An HR Audit The general process of conducting an audit includes seven key steps, each of which is discussed in greater detail below:

Step 1 Step 2 Step 3 Step 4 Step5 Step 6 Step 7

Determine the scope and type of audit.


Develop the audit questionnaire. Collect the data. Benchmark the findings. Provide feedback about the results. Create action plans. Foster a climate of continuous improvement.

Step 1: Determine the scope and type of the audit

To uncover the needed information, it is important to determine exactly what areas should be targeted for review. If the organization has never audited its HR function, or if there have been recent significant organizational or legal changes, the audit team may want to conduct a comprehensive review of all HR practice areas. On the other hand, if concerns are limited to the adequacy of a specific process or policy, the audit focus should be limited to a review of that particular area.

Step 2: Develop the audit questionnaire

An audit usually is conducted by using a questionnaire that asks for the evaluation of specific practice areas. This document helps guide the audit team in scrutinizing all critical areas of a companys HR practices. The audit also may include interviewing selected HR employees and other department managers to learn whether certain policies and procedures are understood, practiced and accepted. Whether conducting a comprehensive audit or an audit of a specific practice, it is important to invest sufficient time in developing a comprehensive document that elicits information on all the subjects of the inquiry. A list of specific questions must be developed to ensure that the questionnaire is complete.

Step 3: Collect the data

The next phase includes the actual process of reviewing specific areas to collect the data about the company and its HR practices. Audit team members will use the audit questionnaire as a roadmap to review the specific areas identified within the scope of the audit.

Step 4: Benchmark the findings

To fully assess the audit findings, they must be compared with HR benchmarks. This comparison will offer insight into how the audit results compare against other similarly sized firms, national standards and/or internal company data. Typical information that might be internally benchmarked includes the companys ratio of total employees to HR professionals, ratio of dollars spent on HR function relative to total sales, general and administrative costs, cost per new employee hired, etc. National standard benchmarking might include the number of days to fill a position, average cost of annual employee benefits, absenteeism rates, etc. For additional information about benchmarking

Step 5: Provide feedback about the results

At the conclusion of the audit process, the audit team must summarize the data and provide feedback to the companys HR professionals and senior management team in the form of findings and recommendations. Findings typically are reduced to a written report with recommendations prioritized based on the risk level assigned to each item (e.g., high, medium and low). From this final analysis, a roadmap for action can be developed that will help determine the order in which to address the issues raised. In addition to a formal report, it is critically important to discuss the results of the audit with employees in the HR department, as well as the senior management team, so everyone is aware of necessary changes and approvals can be obtained quickly.

Step 6: Create action plans

It is critical actually to do something with the information identified as a result of an audit. The company must create action plans for implementing the changes suggested by the audit, with the findings separated by order of importance: high, medium and low. It actually increases legal risk to conduct an audit and then fail to act on the results.

Step 7: Foster a climate of continuous improvement At the conclusion of the audit, it is important to engage in constant observation and continuous improvement of the companys policies, procedures and practices so that the organization never ceases to keep improving. This will ensure that the company achieves and retains its competitive advantage. One way to do this is to continuously monitor HR systems to ensure that they are up-to-date and to have follow-up mechanisms built into every one of them. One approach is to designate someone on staff (or an outside consultant) to monitor legal developments to ensure that HR policies and practices are kept current. Likewise, it is important to keep track of the audit findings/changes made, turnover, complaints filed, hotline issues, employee survey results, etc. to identify trends in the companys employmentrelated issues. Identifying problematic issues, growth areas or declining problem spots can help in the decision of where to allocate time, money and preventive training resources in the future.

Benefits of Human Resource Audit Several benefits associated with Human Resource audit are listed below. An audit reminds member of HR department and others its contribution, creating a more professional image of the department among manager and specialist. The audit helps clarify the departments role and leads to greater uniformity, especially in the geographically scattered and decentralized HR function of large organizations. Perhaps most important, it finds problems and ensures compliance with a variety of laws and strategic plans in an organization. Identifies the contribution of Human Resource department to the organization Improves the professional image of the Human Resource department. Encourages greater responsibility and professionalism among member of the Human Resource department. Clarifies the HR departments duties and responsibilities. Stimulates uniformity of HR policies and practices. Finds critical HR problems. Ensures timely compliance with legal requirements. Reduces human resource cost through more effective Human Resource procedure. Creates increased acceptance of needed change in the Human Resource department. Requires thorough review of Human Resource departments information system.

Besides ensuring compliance, the audit can improve the departments image and contribution to the company. Operating managers may have more respect for the department when an audit team seeks their view. If the comments of manager are acted on, the department will be seen as being more responsive to their needs. And since it is service department, these actions may improve its contribution to organizational objectives. Limitations of HRD Audit: Top management can influence HR audit. Failure of implementation of corrective action based on the feedback. Victimize the HR department and remove some HR staff, due to negative audit feedback.