PROGRAM – Master of Business Administration

SEMESTER – Semester 3

SUBJECT CODE & NAME – HRM304 – HR Audit

BK ID – B1735

SET I

Ans 1:- Five Common approaches to HR Audit

The following approaches are adopted for purpose of evaluation:

1. Comparative approach
2. Outside authority approach
3. Statistical approach
4. Compliance approach
5. Management by objectives (MBO) approach

1) Comparative approach
In this, the auditors identify Competitor Company as the model. The results of their organization
are compared with that Company/ industry. In this approach, a benchmarking strategy is used.
Auditors identify a competitor organization which is used as a model in comparison. The audit
reports are compared analytically to find areas to make corrections.
The benchmarking process is quite tedious as it involves;
 Forming a team to take care of the process.
 Identifying the most suitable organization to partner for the benchmarking.
 Collection of data from both organization/companies.
 Proper analyzing and interpretation of the data.
 Creating an action plan and working on loopholes identified.

2) Outside authority approach

In this, the auditors use standards set by an outside consultant as benchmark for comparison of
own results. Standards set by outside consultants are used by the audit team to benchmark for
comparison with their own results. Data from published research finding and research films/
documentaries are also a source for benchmarking, to explore for causes of the problem.

3) Statistical approach
In this, Statistical measures are performance is developed considering the company’s existing
information. Statistical Approach is also known as a quantitative and qualitative approach. This
method uses statistical tools and information recorded in the organization’s system. The recorded
information may include employee turnover and absenteeism. The checking and auditing of
employees involve complex mathematical formulas which form a standard on which all activities
and programs are examined.
With the mathematical data as a base, mistakes can be discovered and corrected from an early
point. Other times statistical approach is supplemented with records from different sources such
as films and surveys.

4) Compliance approach
In this, auditors review past actions to calculate whether those activities comply with legal
requirements and industry policies and procedures. It is an approach based on legal and
organization’s policies. Auditors take a thorough look at past actions to examine whether the
organization’s activities are in line with legal requirements together with the set standards,
policies and procedures. Although many don’t view it as an efficient approach because it uses
past information which may be biased due to various reasons.

5) Management by objectives (MBO) approach

This approach creates specific goals, against which performance can be measured, to arrive at
final decision about organization’s actual performance with the set objectives. This is a goal and
objective-based approach. Specific targets are laid down against which the organization’s
performance is measured so as to arrive at a final decision. The Audit team conducts a survey of
the actual performance then compares that performance with the desired objectives of the
organization.
It is noted that irrespective of the approach, it can be grouped as a comprehensive plan or special
focused plan, with staff, time and costs as factors.

Ans 2:- Definition of Audit of HR Planning:-

Human resource planning is the continuous process of systematic planning to achieve optimum
use of an organization's most valuable asset — its human resources. The objective of HRP is to
ensure the best fit between employees and jobs while avoiding manpower shortages or surpluses.
The four key steps of the HRP process are analyzing present labor supply, forecasting labor
demand, balancing projected labor demand with supply and supporting organizational goals.

Like any audit, the Human Resource Audit is also a systematic formal process, which is designed
to examine the strategies, policies, procedures, documentation, structure, systems and practices
with respect to the organization’s human resource management. It systematically and
scientifically assesses the strengths, limitations, and developmental needs of the existing human
resources from the larger point of view of enhancing organizational performance.

Human Resource 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.

An HR audit also goes beyond looking at the hiring process into areas like employee retention,
budgeting, training, employee compensation, management/employee relations and virtually any
process or practice within the company that affects its people.

A periodic Human Resource audit can qualify its effectiveness within an organization. Human
Resource 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.

Human Resource auditing is something that many companies do annually, just as they audit their
financial information. This gives them an accounting of their workforce and the efficiency with
which the organization as an entity deals with its people, from recruiting to firing. Human
Resource auditing can be likened to a person going to the doctor for a general check-up to stay
well. The process allows a company to get a general idea of where it stands so it can better
correct any potential problems and plan for the future.

Ans 3:- Definition of Balanced Scorecard:-

The balanced scorecard (BSC) is a strategic planning and management system that organizations
use to:
 Communicate what they are trying to accomplish
 Align the day-to-day work that everyone is doing with strategy
 Prioritize projects, products, and services
 Measure and monitor progress towards strategic targets

The system connects the dots between big picture strategy elements such as mission (our
purpose), vision (what we aspire for), core values (what we believe in), strategic focus areas
(themes, results and/or goals) and the more operational elements such as objectives (continuous
improvement activities), measures (or key performance indicators, or KPIs, which track strategic
performance), targets (our desired level of performance), and initiatives.

The BSC framework is based on the balance between leading and lagging indicators, which can
respectively be thought of as the drivers and outcomes of your company goals. When used in the
Balance Scorecard framework, these key indicators tell you whether or not you’re accomplishing
your goals and whether you’re on the right track to accomplish future goals. The balanced
scorecard is a management system aimed at translating an organization's strategic goals into a set
of performance objectives that, in turn, are measured, monitored and changed if necessary to
ensure that the organization's strategic goals are met.

Definition of Competency Mapping:-

Competency Mapping is a process of identifying key competencies for an organization and/or a
job and incorporating those competencies throughout the various processes (i.e. job evaluation,
training, recruitment) of the organization. A competency is defined as a behavior (i.e.
communication, leadership) rather than a skill or ability.

Competency mapping identifies an individual's strengths and weaknesses. The aim is to enable
the person to better understand himself or herself and to point out where career development
efforts need to be directed. Competency approach to job depends on competency mapping.

Competency mapping is the process of identifying the specific skills, knowledge, abilities, and
behaviours required to operate effectively in a specific trade, profession, or job
position. Competency maps are often referred to as competency profiles or skills profiles.

We develop competency maps according to the client’s needs. That means we can develop a
completely customized competency map, or we can build upon an organization’s existing
competency maps or occupational information. All of our competency maps are all-
encompassing, including professional, personal, and technical competencies.

The Competency Group is flexible in our competency map development process. Our many
years of competency experience — including an extensive history working with the Canadian
pioneers of the DACUM process — have allowed us to develop the most efficient way to build
competency maps with current job practitioners. Since then, our team has worked with subject
matter experts from all industries and sectors to define the competencies of many occupations.

SET II
Ans 1:- Explanation of FlanhoItz Model:-

In the Flamoltzs recent model, he visualized the movement of individuals trough different roles

or positions in the organization as a stochastic process depending on prior roles or services states
held by the individual in the system.

Here, a person’s expected realizable value is to be calculated systematically by following

the steps mentioned hereunder:

(a) Define the mutually exclusive set of ‘states’ an individual may occupy in the system
(organization);
(b) Determine the value of each state to the organization;

(c) Estimate a person’s expected tenure in an organization; and

(d) Find the probability that a person will occupy each possible state at specified future times.

The Rewards evaluation model was suggested by FlanhoItz. It identifies the major variables that

determine an Individual’s value to an organization, or in other words, his expected reliable value.

Rewards evaluation model is certainly an improvement over the model suggested by Lev and

Schwarts. But when examined on operational capacity, this model falls short of a practical value

in as much as those probabilities will have to be determined for each individual occupying

various service states, and these probabilities will have to be determined for all employees for
different periods on an individual basis.

Ans 2:- Definition of Staffing:-

Staffing is a managerial function which involves obtaining, utilizing and retaining, qualified and

competent personnel to fill all positions of an organization, from top to operative echelon. In

finer terms, staffing is placing the right person at the right job. The selection and training of
individuals for specific job functions, and charging them with the associated responsibilities.

Various steps involved in Staffing process:-

Staffing is one of the most important managerial function which helps in obtaining and fulfilling
various positions in the organization with most suitable and capable persons.

In this process the following steps are involved.

1. Estimating Manpower Requirements:

Before starting the work, the manpower requirement of the organization is assessed. Here, two
aspects need to be taken into account while determing the requirement of manpower i.e. Type of
Employees & Number of Employees. Also the job requirement, desired qualification,
relationship between different jobs etc. is clearly drawn out.

Manpower planning involves two techniques in estimation viz. (a) Workload analysis and (b)
Workforce analysis.

(a) Workload analysis would enable an assessment of the number of an types of human resources
necessary for the performance of various jobs and accomplishment of organizational objectives.
Workload analysis ensures that there is no burden and wastage of resources and work is
completed on time.

(b) Workforce analysis would reveal the number and type available to fact such an exercise
would reveal whether organization is understaffed, overstaffed or optimally staffed. Workforce
analysis is for the existing employees. It sees manpower employed and number of manpower to
be employed.

2. Recruitment:
Recruitment is the process of searching and motivating a large number of prospective employees
for a particular job in an organization.

It includes the following activities:

(i) Determining the various sources of supply.

(ii) Evaluation of the validity of these sources.

(iii) Selecting the most suitable source or sources.

(iv) Inviting applications from the candidates for the vacancies.

3. Selection:
Under the process of selection, better applicants are selected out of a large number of them. It
must be kept in mind that the ability of the applicant & the nature of work must match. It means
that right man should be selected for the right job. This will lead to better performance on all
fronts i.e. quality, quantity, time, cost etc.

It includes the following steps:

1. Preliminary Screening
2. Selection Test

3. Employment interview

4. Reference & Background checks

5. Selection Decision

6. Medical Examination

7. Job Offer

8. Contract of Employment

4. Placement and orientation:

Placement involves putting the selected man at the right place considering his aptitude and
ability. It is the actual posting of an employee to a particular job for which he/she has been
chosen.

Orientation is also known as induction. It means introducing the newly selected employee i.e. to
various facets of the company his job, other jobs, nature of products, policies, rules and existing
employees etc. It aims at inducting new employees into the organization smoothly

5. Training and Development:

The term training implies a systematic procedure of imparting knowledge and skills for a specific
job. It benefits both the enterprise & the employee. Training increases the skills and abilities of
employees to perform specific jobs.

Training can be given for improving the current job or to prepare the employees for some
intended jobs. The enterprise also gets the advantage of training in the form of reduction in the
production cost, best usage of tools & machine and improvement in the quality etc.

6. Performance Appraisal:
At this step, the capability of the employee is judged and for that, his actual work performance is
compared with the work assigned to him. If the results are unfavorable, he is again given training
and after that also if results are again unfavorable, the employee is put on some other work.

7. Promotion:
It is a process through which employees get better salary, status, position, more responsibility
etc. In this step, employees earn their promotion to higher posts on the basis of their
performance.

8. Compensation:
The organization should have fair salary or wage structure and should give incentives to those
who deserve it. This means that jobs must be evaluated and ranked in a manner that contributes
to that contribution.

9. Separation:
It is the last step in the process of staffing. It means separating the employees from their job. This
take place in four ways i.e. through retirement, termination, retrenchment or death.

Ans 3:- Major HR Development Strategies:-

1. Safe, Healthy And Happy Workplace

Creating a safe, healthy and happy workplace ensures that employees feel at home and stay with
the organization for a very long time. Capture their thoughts through frequent surveys.

2. Open Book Management Style

Sharing information about contracts, sales, new clients, management objectives, company
policies, employee personal data, etc. ensures that the workforce is as enthusiastic about the
business as the management. It helps in making people interested in your strategic decisions, thus
aligning them to your business objectives. Be as open as you can. Employee self-service portal,
manager on-line etc. are some tools available today to practice this style.

3. Performance Linked Bonuses

Awarding bonuses or including a variable component in compensation can be both an incentive
and a disillusionment based on how it is administered and communicated. Bonuses must be
designed in such a way that employees understand that there is no payout unless the company
hits a certain level of profitability. Additional criteria could be the team’s success and the
individuals’ performance. It is good for employee retention also.

4. 360 Degree Performance Management Feedback System

This system, which solicits feedback from seniors (including the boss), peers, and subordinates,
has been increasingly embraced as the best available method for collecting performance
feedback. Every person in the team is responsible for giving relevant, positive and constructive
feedback.
5. Fair Evaluation System
Develop an evaluation system that clearly links individual performance to corporate business
goals and priorities. Each employee should have well-defined reporting relationships. Self-rating
should be a part of the evaluation process as it empowers employees. Evaluation becomes fairer
if it is based on achievements of the employee, tracked over the year. For higher objectivity,
besides the immediate boss, each employee should be evaluated by the next higher level (often
called a reviewer). Cross-functional feedback, if obtained by the immediate boss from another
manager (for whom this employee’s work is also important), will add to the fairness of the
system.
6. Knowledge Sharing
Adopt a systematic approach to ensure that knowledge management supports strategy. Store
knowledge in databases to provide greater access to information posted either by the company or
the employees on the knowledge portals of the company. When an employee returns after
attending any competencies or skills development program, sharing essential knowledge with
others could be made mandatory. Innovative ideas (implemented at the work place) should also
be posted on these knowledge sharing platforms. However, what to store and how to maintain a
knowledge base requires further and detailed plans.

7. Highlight Performers
Create profiles of top performers and make these visible though company intranet, display
boards, etc. It will encourage others to put in their best, thereby creating a competitive
environment within the company.
8. Open House Discussions And Feedback Mechanism
Ideas rule the world. Great organizations recognize, nurture and execute great ideas. Employees
are the biggest source of ideas. The only thing that can stop great ideas being implemented in
your organization is the lack of an appropriate mechanism to capture ideas. Open house
discussions, employee-management meets, suggestion boxes and tools such as Critical Incidents
Diaries can help identify and develop talent.
9. Rewards
Merely recognizing talent may not work, you need to couple it with public appreciation. Getting
a cash bonus is often less significant than listening to the thunderous applause by colleagues in a
public forum.

10. Delight Employees With The Unexpected

Last but not least, occasionally, delight your employees with unexpected things in the form of a
reward, a gift or a certificate. Reward not only the top performers but also a few others who need
to be motivated to exhibit their potential.