Professional Documents
Culture Documents
Human resources controls are controls that focus on employee behavior, employee performance and
developing and upholding policies and procedures. ... There are several human resources controls used in
human resources management to meet organizational goals: Performance appraisals.
functions. It represents the memory of organisation. The records provide information about the organisation
which is maintained in tangible form i.e. written, pictorial, charts etc.
They are therefore tangible evidence of the activities of the organisation. Personnel records provide informa-
tion about the position of HR in the organisation e.g. – records relating to training, performance,
absenteeism, wages and salary, labour turnover, productivity, morale surveys, job satisfaction, social
security, employee welfare etc. Conventionally records are stored in the form of papers, cards, files, charts,
blue prints etc. But in modern times records are stored in C.Ds, video films, audio cassettes etc.
Types of Information:
The records are prepared from reports, minutes of meetings, orders etc. They contain information about
employees, trade unions, employer, government, job description, job analysis, recruitment, selection,
promotion, transfer, termination, redeployment, training and development, lay off, strikes, PF contributions,
employee benefits, wage and salary, grievances disputes etc.
The main objective of record in not storing but to have information for making analysis of various problems.
Effectively stored records enable better analysis of the problems.
(2) Facilitates in decision making in respect of transfer, promotion, demotion, redeployment etc.
(4) Enables to provide information relating accidents, absenteeism, labour turnover, wages and salaries to
governmental agencies.
(5) Facilitates human resource audit.
(8) Maintain data in respect of leaves, training, promotion, transfer, layoffs, dismissals, expenses incurred on
employee benefits etc.
To achieve the above objectives a good record must include the following features:
(1) It should be objective. It should be maintained to fulfill the stated objectives.
(6) In maintaining the records principle of economy should be followed. Maintenance of records should not
be expensive.
(7) It should be useful for better management of business. Needless papers should not be kept in records.
(8) There should be easy access to required information, hence should be maintained accordingly.
The records serve many purposes. The records of personnel’s are to be maintained from the date of their
induction till the time of their retirement or leaving the organisation. According to Jucius Michael certain
precautions are essential in maintaining the personnel records.
They are:
(1) All hiring information for every employee may be kept in a folder. The other information concerning the
employee such as performance evaluation, educational qualifications, training, disciplinary actions, if any,
against the personnel etc. are placed in the folder.
(2) Besides folder a card containing important information may be filed in the folder enabling the easy
availability of the employee record at any point of time.
(3) In some cases, where the number of employees is very large, data processing equipment may be used for
maintaining records.
section, date of appointment, date of superannuation, wage, increment, promotion received, transfer etc. of
employee.
Performance Record:
Ratings given to each employee on the basis annual performance appraisal is included in this record.
Leave Records:
It includes the different types of leaves taken by the employees and the leaves balance.
Training Record:
This includes the training programmes attended by the employees with date and time periods.
Article Shared By
ADVERTISEMENTS:
Human resource management audit is the systematic examination and evaluation of policies, procedures,
data for determining the accuracy and reliability of accounting statements and reports. From accounting,
this concept has been used in management audit and social audit.
Learn about:-
ADVERTISEMENTS:
1. Introduction to Human Resource Audit 2. Definition of Human Resource Audit 3. Scopes 4. Objectives 5.
Human resource management (HRM) has experienced a strong evolution. In order to provide useful
information to managers, it is necessary to evaluate the results generated by the design and implementation
of personnel policies.
The goal of the Human resource audit that includes two different analyses and valuations- the Human
Resource policies and the level of their matching with the strategy of the company, and the characteristics of
human capital. Several criteria have been used to assess different Human Resource policies. Nevertheless,
the measurement of the value that human capital brings to the company is a very complex. Consequently,
different models are being presented that aim to properly solve this challenge.
Human resource audit is a powerful tool which helps an organization evaluates the effectiveness of its
Human Resource management practices. Human resource performance is one of the most difficult aspects of
organizational performance to measure. One valuable tool which helps to assess the effectiveness of human
resource functions within an organization is Human Resource audit.
ADVERTISEMENTS:
Human resource audit provides for the systematic verification of an organization’s recruitment and selection
practices, job design and-analysis, training and development, orientation and placement, performance
assessment and job evaluation, employee and executive compensation, employee motivation and morale,
participative management, inter-department communication, safety and health, welfare and social security,
industrial relations, trade unionism, as well as disputes and their resolution.
Human resource audit covers a broad range of organizational functions, such as – policy and regulation
compliance; corporate strategies in relation to human resource planning, staffing, and compensation;
“Human Resource Climate” on employee morale, motivation, and job satisfaction; etc.
Human resource audit provides key information on the actual contribution of the human resource department
towards the organization. It helps improve human resource personnel motivation and reduce total human
resource costs, as well as provides timely legal requirement. Another benefit of a systematic human resource
Human resource evaluation activities may differ depending on the purpose of human resource audit. Various
approaches to human resource audit includes: comparative and statistical approach, regulatory and policy
compliance, and management by objectives (MBO). Human resource audit represents the gaps in
performance and helps create various remedial measures. It helps an organization to face the challenges and
In general the functions, responsibilities and activities are related to HR department. In addition to this,
management philosophy and other systems and procedures are required to achieve the objectives of the
organisation covered under HR audit plan. Basically HR department is the core center for HR audit.
The term ‘audit’ has been derived from Latin word ‘auditus’, meaning a hearing. Thus, audit is a hearing of
review resulting in a systematic evaluation. The meaning of audit in accounting term is well known where it
is defined as the verification of accounting data for determining the accuracy and reliability of accounting
statements and reports. From accounting, this concept has been used in management audit and social audit.
In management audit, it is divided in two parts- (a) one is the management function audit covering planning,
organizing, staffing, directing, and controlling; (b) the other is a management decision audit dealing with the
quality of decisions in the areas of long-range and company-wide planning covering various functions —
As per view of Seybold, HR audit refers to, an examinations and evaluation of policies, practices, and
procedures to determine the effectiveness and efficiency of human resource management and to verify
whether the mission, objectives and programmes have been followed and expected results achieved. It also
Thus, HRM audit is concerned with the evaluation of effectiveness of various HRM activities with the view
to identify what should be (or should not be) done in future in the light of such an evaluation.
The importance of audit in accounting is so important that it has been made mandatory for certain types of
organizations (company form of organizations), and the audit is conducted by outsider, independent
qualified person. Besides the external audit, companies undertake auditing on their own.
ADVERTISEMENTS:
In the case of management audit including HRM audit, there is no such compulsion but various companies
undertake such an audit on their own because it provides various information which is quite useful in
developing better systems for managing human resources.
iv. Verification of all HR related transactions in conformity with HR policies and procedures.
2. HR Planning:
i. Period of HR plan.
ii. Linkage between HR plan and business plan.
4. Training:
i. Examining the adequacy of in-service training of employees.
ii. Probing the modalities of ascertaining training needs.
6. Performance Management:
i. Examining the methods of merit rating.
7. Compensation Administration:
i. Verifying any irregularity in pay fixation.
iii. Violation, if any, in legal provisions in the matter of pay fixation and salary disbursement.
8. Communication System:
i. Measuring the knowledge of the employees with regard to organizational policies, procedure, vision,
mission, goals, etc.
12. Attrition:
i. Measuring the level of attrition.
(c) Staffing
(e) Controlling.
In planning manpower requirements, audit can be made by the effectiveness of past forecasting and
scheduling to ascertain how the needs were identified in time. If forecasting was not accurate, ways should
Job description usually needs a revision in the light of changed conditions. New sources of recruitment have
to be found, hi finding and training manpower, the HR department may gauge its performance. Need may be
felt to make the personnel department itself more aware of the requirements of line departments.
Psychological tests may be evaluated from time-to-time to check their usefulness.
Staffing is one area where the working of HR department is given the responsibility of selection; much
depends on its expertise which can make the selection. Motivation is the most important aspect of
management. HR department will have to test moral on all counts that go into high motivation, compare
them with previous records and records in the industry. Facilities such as – lighting, ventilation, sanitation,
2. To analyse the factors involved in HRD and develop a statement of findings with recommendations for
correcting deviations, if any, on the following issues –
3. To seek explanations and information and answers to all such questions as – What happened? Why did it
happen?
5. To evaluate the extent of implementation of policies by line managers and the operational problems faced
by them in implementing HRD policies.
6. Evaluating the personnel staff and employees. Knowing how the various units are functioning and how
they have been able to meet the policies and guidelines, which were agreed upon.
7. To study the current manpower inventory and identify shortfall or excess, if any.
8. To modify the existing human resource practices to meet the challenges of personnel/human resource
management.
9. To assist the rest of the organization by identifying the gap between objectives and results.
10. To formulate plans for correcting deviations if any.
ii. To review the efficiency of HR subsystem in attracting, maintaining, developing and motivating the
required HR;
iii. To analyse the functioning of the HR subsystem in assisting in the achievement of the organisational
objectives, and knowing how various functioning units are implementing various personnel/HR policies;
iv. To provide information on deviations from plans for the continuity or modification of the plans.
When the organisation has specific goals, norms or basis for comparison with other firm, it can use goal
Compliance audit can also be used to know how and to what extent the organisation is complying with the
legal requirements, union agreements and with policies, principles, etc.
The proponents of HRA have suggested several methods of valuation for human resources.
1. Cost-Based Approaches:
i. Historical Cost
3. Non-Monetary Value-Based:
i. The Likert Model
over the years to reflect the value of the individuals and the organisation. It is based on the Historic cost
approach. This may not truly represent the HR value of an organisation. Capitalisation of cost contrary to its
expense nature in traditional accounting practices may not be acceptable. Accumulated cost of HR
acquisition and development may not reflect their value. Cost amortization inappropriate due to performance
rating of individuals.
However, this cannot fulfil the requirement of developing a system of HRA based on systematic valuation of
internal as well as external human resources, which may improve the quality and utility of accounting
The replacement cost may be relevant only for key individuals. Human resource is not traded in the market;
hence replacement cost may not exist. Replacement alternatives may be many and assessment of correct
It is difficult to find identical replacement of the existing human resources in actual practice due to the
absence of arriving at proper replacement cost of an employer, this model is not useful.
It is based on competitive bidding amongst the investment centre managers to win the individual employees
for use based on the highest bid price to be included as value of human asset along with investment in
physical assets while assessing the return on investment by individual investment centres. More and more
individuals may be out of the bidding process and may have no value in the organisation. It requires
assessing the likely contribution from each individual for future assignments.
It is more subjective and may not be uniform across the company. The assessment may be based on the
perception of the individuals involved in the bidding. It is more subjective and hence cannot be used
effectively.
Method # 2. Monetary Value-Based Approaches or Economic Models:
i. Hermanson Model:
a. Goodwill Method:
Extra profits earned by organisation as compared to industry average rate, i.e., HR value = Goodwill,
Investment in HR/Total investments. The rate of earnings may be influenced by other external factors also
and cannot be purely linked to HR. Goodwill may be attributable to investment in suppliers, the customers,
This model cannot be implemented if the rate of earnings of the company is less than the industry average.
This model is more subjective and unless relationship of various factors to the company’s goodwill is
value. The adjusted rate of return refers to average rate of return on owned assets of all firms in the economy
multiplied by the efficiency ratio in the organisation during the last five years on a weighted average basis.
Rate of return of a specific organisation may not be comparable with other firms in the economy. The model
is subjective with respect to Pv being restricted for five years, efficiency ratio calculated for past five years,
and assignment of weightless for past rate of return, it is too subjective, and hence cannot be used.
alone. Possibility of employee leaving the organisation is not considered. It has to be seen with the Pv of
This is easy to implement and use. Also it is the most widely used model as it can be easily adopted.
sometimes in addition to, historical cost. The model involves measurement of a cost to replace a firm’s
existing human resources, i.e. costs to the firm to recruit, hire, train and develop replacements to the level of
proficiency and familiarity with the organisation and its operations currently experienced with existing
employees.
Flamholtz, who used this model, has referred to two different concepts of replacement cost, viz., “individual
replacement cost” and “positional replacement cost’. The model is considered to be useful in different
phases of the Manpower Planning and Control Process as measures of the cost of people per se. It may also
be potentially useful in developing valid and reliable surrogate measures of the value of people to formal
organisations.
The applicability of the replacement cost concept in the valuation of physical assets has been questioned on
the ground that changes in technology may not permit replacing one asset with an identical one. This
problem becomes more serious in the variation of human resources because individuals, especially higher
level managers of an organisation, are unique in their talents and capabilities. Even otherwise, the
multiplied by the wages payable could reflect the likely benefits to the organisation and hence the HR asset.
Individual’s attitude matters more than the group’s attitude. High ratings based on job grade level and tenure
Attitude is not the only parameter to influence employee behaviour. It is difficult to assess the attitudes of
on retirement, death and service movements need to be arrived at. The Pv of likely services from employees
Past trend is not an indication for the future. The model does not recommend any method to evaluate the
extent of services that may be available from the employees. It is based on the past trend. In a technology
intensive industry like software, past trends may not be representative of the future.
Method # 3. Non-Monetary Value-Based Methods – Behavioural Models:
management systems adopted by an organisation determine the depreciating or appreciating of human asset.
Establishing valid relationships between organisational health and performance is difficult. In the absence of
valid relationships, the condition of HR may not be a true reflector of the HR Performance. Hence, it is mere
difficult to implement and is more subjective.
information essential for management to perform the functions of acquiring, developing, allocating,
conserving, utility, evaluating and rewarding human resources. The first step in human resource acquisition
is to forecast manpower requirements; the management then must translate the manpower forecast into a
manpower acquisition budget, which is essentially a process of cost estimation.
HRA can provide measurements of the standard cost of recruiting, selecting and hiring people, for estimates
of amounts to be incorporated in the manpower acquisition budget. Again, in selection decisions, managers
need measurements of the value of the candidates for particular jobs, so that the person selected is one who
possesses the greatest future value to the organisation. Instead of using non-monetary measures of potential
abilities derived through qualitative tests, the potential economic value of candidates may be a better
In the absence of arriving at proper replacement cost of an employee, this model is not useful.
for each employee in an organisation, which consists of two elements – (a) his-or her net benefits and total
cross; and (b) a certainty factor which is comprised of the employee’s probability of continued employment
The model presented by Pekin organ is certainly an improvement over other models. It also makes use of the
‘certainty factor’ designed to measure the probability of continued employment and probability of survival.
Limitations/Deficiencies:
A major shortcoming of this model is that it can be applied only in these organisations where costs and
The audit of the human resource function is determined with the following components:
The Human Resource Information System requires the following information from the organization:
(a) Human Resource Plans – Supply and demand estimates; skill inventories; replacement charts and
summaries
(b) Job Analysis Information – Job standards, Job descriptions, Job specifications
(c) Compensation Management – Wage, salary, and incentive levels; Fringe benefit package; Employer-
provided services
The staffing and development is basically depends upon the following parameters:
(a) Recruiting – Sources of recruits, availability of recruits, employment applications
(d) Career development- Internal placement, career planning program, human resource development efforts
evaluation interview.
(b) Labour-Management Relations – Legal compliance, management rights, dispute resolution problems.
(c) Human Resource Controls – employee communications, discipline procedures, change and development
procedures.
Audit of Managerial Compliance – Reviews how well managers comply with human resource policies and
Procedures. Compliance with laws is especially important. When safety, compensation, or labour laws are
violated, the government holds the company responsible. If managers ignore policies or violate employee
relation’s laws, the audit should uncover these errors so that corrective action can be started.
Tasks of Auditors:
(a) Identify who is responsible for each activity.
(c) Review the policies and procedures used to achieve these activities.
(f) Follow up the action plan to see if it solved the problems found through the audit.
Audit of Employee Satisfaction – To learn how well employee needs are met. Employee satisfaction refers
to an employee’s general attitude toward his or her job. When employee needs are unmet, turnover,
absenteeism, and union activity are more likely. To learn how well employee needs are met, the audit team
gathers data from workers. The team collects information about wages, benefits, supervisory practices,
Audit of Corporate Strategy – Human resource professionals does not set corporate strategy, but they
strongly determine its success. By assessing the firm’s internal strengths and weaknesses and its external
opportunities and threats, senior management devises ways of gaining an advantage, such as –
(c) Understanding the strategy has strong implications for human resource planning, staffing, compensation,
HR Audit is based on a deeper study and analysis of HR policies, programmes, philosophies and practices
and comparing them with the standards and the HR records and reports. This process includes both factual
(ii) Examining variations during the period by comparing the progress of the previous corresponding period;
(iii) Comparing variations and determining reasons for such variations; and
(iv) Preparing the final report and submitting the same to the top management for necessary action.
This audit can be done by any internal or external agency. HR audit is a cumbersome process, as there is no
fixed rule on how it is to be done. Therefore, most of the time, it is only a fault-finding process instead of
fact-finding one.
1. Survey Feedback:
Survey feedback is a part of HR research. It is the investigation and analysis of any aspect of HR
(iii) To suggest ways for improving the effectiveness of current policies and programmes
The method is based on an opinion survey of employees, where they are given the opportunity to voice their
opinions about a specific HR function, i.e., effective HRD climate, employee empowerment, performance
appraisal, working environment, etc.
resource;
ii. Managers believing that the development of competency of the employees is their responsibility;
iii. Faith in employees that they can improve their abilities at any stage;
iv. Open communication;
v. Encouraging risk-taking;
vi. Helping employees to know their strengths and weaknesses;
x. Development oriented appraisals, training, rewards, job rotations and career planning programmes.
Studying information collected from employees through structured questionnaire is the HRD climate survey.
3. Administration of Survey:
A questionnaire, prepared on a 5 point scale, bearing different items broadly on the points, is administered
among employees. Let us say that if 20 questions are there, the score will range from 0 to 80. T.V. Rao, the
father of HRD movement in India, proposed a 38 item questionnaire. He said that companies getting scores
closer to or above 150 have excellent HRD climate, those getting scores above 114 have good climate and
Please give your assessment on the HRD climate in your organisation by rating your organisation in
(i) The top management comes up with policies and programmes to make employees enjoy their work.
(ii) The top management believes that employees are an important resource to the organisation.
(iv) Managers take active interest in subordinates, helping them learn their jobs.
(xii) Employees are afraid of expressing their feelings with the superiors.
(xiii) Future plans of the organisation are made known to the employees.
the HRD climate of an organisation. Similar survey feedbacks also help the organisation to know about the
iii. To instil a sense of confidence in the HRD so that it is well managed and prepared to meet potential
An audit examines the important aspects of the organization and its management, and is a means of
identifying strengths, weaknesses, and areas where rectification may be warranted. An audit is done on a
sampling basis. And in a sampling, not every instance or situation can be examined.
How an audit is conducted is very often determined by its intended use. For instance, the type of audit used
to ascertain HR practices may be significantly different from the type of audit used to support an initial
public offering. Although the areas examined may be similar, the process used and the depth of inquiry will
The rationale of human resource valuation for manpower management essentially arises from the fact that
the collectivity of people happens to be the key to organisational efficiency and effectiveness. At the
national level, the quality of people determines the state of the national economy as much as the social and
political ethos. Similarly, in an individual firm it is the organised group of human beings that determines the
quality of day-to-day performance as well as the growth and prosperity of the firm.
One can speak of human capital being a necessary and vital component of the organisation just as human
capital or manpower happens to be the major component of any economic system. The success of an
Hence, the objectives of an organisation should, therefore, be to acquire their services, to develop their skill,
to motivate the people to enhance their level of performance and ultimately to ensure that they continue to
maintain their commitment to the organisation. These operations are performed by all the organisations,
whether they are profit seeking or non-profit seeking to achieve their desired objectives.
Growth in size and complexity of organisations are inseparable features of modern society, so are
complexities of management. Managing people has become increasingly more complex in today’s
organisations. The trend towards organisational proliferation for economic advancement has led to the
pursuit of goals, which require increasing size and complexity to be accepted for the sake of efficiency. New
type of organisations have come into existence over the years with technological advances and increasing
In the context of all these changes, the role of people in the organisations has come to be recognised as of
vital significance. Along with the concern for the management of the manpower is achieving corporate
objectives, attention has also been drawn in recent, years to the necessity of measuring the value of human
resources and changes thereof. The assumption underlying the valuation of accounting for human resources
is that information relating to the value of human resources is an important ingredient of managerial
decision-making.
Over and above, the usefulness of human resource value for internal management, the relevant data are also
expected to be useful to investors, creditors, financiers as well as government agencies. The impact of
human resource data on managerial decisions and its usefulness to external uses of corporate reports has
been the subject of inquiry in a number of research studies. Approaches to the methods of measuring the
value of human resources have been developed by a number of researchers keeping in view the nature of use
of such data.
Resulting in the conventional balance sheets failing to represent the value of HRs and hence these financial
reports are unable to reflect the true value of the organisational and the rate of return on actual investments.
The rate of investment shows a brighter image than what is the actual position. This is why the information
2. Effective Control:
The data retrieved from sources can be used as a tool by the management for effective control of the
functioning. The basic purpose of HRA is to provide information pivotal for management to perform the
functions of acquiring, developing, allocating, conserving, utilising, evaluating and compensating HRs. The
result so derived through using HRA for reporting may also be of crucial significance in the management
control system.
the bankers giving loans, agencies making investments are interested in the profit and success of the
organisation at par the Board of Directors and Chief Executives in having these periodic measurements of
the casual and intervening variables. Where the causal variables denote the strategy, skill and policies of
leadership, the intervening variables denote the strategy, skill and policies of leadership, the intervening
variables reflect the internal health, state and performance capabilities of the organisations.
HRs of the organisation are able to achieve the organisational goals, for they feel that an entity with skilled,
efficient and wise HRs are more desirable for investment, as they may get higher rate of capital gains from
their securities and expects greater service potentials than from those with efficient working force. Moreover
important indicator of future profit performance to the investors and other interested parties.
secured because the measurement of services and reporting of such non-monetary report will make the
information system more logical and authentic.
HRA would first identify the variables which determine a person’s value to an organisation that would
suggest in developing monetary measures for human value, and by identifying the variables; it would
the management in developing employee’s behaviour and skill, monitoring their efficiency of performance,
reducing employee turnover, absenteeism and improving human relations. The HRs, once treated in the
Balance Sheet as assets of the organisation, may achieve some psychological impetus, which ultimately
received information, which will be of great help to management for effective control. For this comparison,
a few financial ratios may be suggested such as – (a) Ratio of human to non-human; (b) Rates of the value of
scientific staff to the total value of human capital. These ratios will help determine the value of HRs in
time to time to the interested particles, which helps them in taking appropriate decisions and choosing the
alternatives. The resource providers may decide on their intended investments on the basis of the rate of
profit, and HRs is the prime mover for achieving maximum productivity. Hence, HRs should be shown as
assets in the financial statement to give a meaningful and comparable measure of productivity. The
profitability on the other hand, presents the performance and creditworthiness of an entity and such
information can only be portrayed by incorporating the value of both human and non-human assets in the
financial statements.
efficient manner by a pre-decided policy for acquisition, development, allocation, conservation, designed to
iii. Helps in identifying the blind spots of HR programmes and removing them to improve the image of HR
department;
iv. Helps in encouraging members of the HR Department to accept more responsibility with better
professionalism;
vi. Ensures timely compliance (of what?) with legal requirements and other contractual provisions.
HR audit should focus on the study and analysis of each functional area of the HR department. This includes
areas like planning, staffing, training and development, motivation, performance management, etc.
Human resource audit has evolved over time and expanded as it is not only used in decision making, but also
as an instrument of control in personnel-related matters. Several approaches have been brought forward to
evaluate the effectiveness of the hr function. Previous scholars had their own perspective of human
resources audit. Their argument was hr audit has an internal an external background.
From the internal aspect, departments are evaluated from their capability to offer services to the organization
at an optimized cost. According to this traditional approach, quality quantity and reliability are used to
examine the efficiency of the audit.
On the other hand, the external approach focuses on the impact of the organization’s results, thus the
auditors consider data obtained from outside as important in solving the errors encountered.
Apart from traditional approaches there exist the modern/ common approaches. The modern approaches for
HR Audit are;
Statistical approach.
Compliance approach.
Comparative approach.
Outside authority approach.
Management by objectives (MBO) approach.
1. Statistical approach
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.
2. Compliance approach
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.
3. Comparative approach
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.
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.
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.
What is an HRIS?
HRIS stands for Human Resources Information System. The HRIS is a system that is used to collect and
In most cases, an HRIS encompasses the basic functionalities needed for end-to-end Human Resources
Management (HRM). It is a system for recruitment, performance management, learning & development, and
more.
An HRIS is also known as HRIS software. This is a bit confusing as it implies that different systems can
have different software running on them. However, this is not the case. The HRIS is, in essence, an HR
software package.
The HRIS can either run on the company’s own technical infrastructure, or, more common nowadays, be
cloud-based. This means that the HR software is running outside of the company’s premises, making it
Benefits of an HRIS
Using an HRIS has a number of clear benefits. That’s why companies of all sizes implement this tool to
support their people operations. Centrally, the HRIS holds employee information. A wide range of employee
Record-keeping. An HRIS is a record-keeping system that keeps track of changes to anything related to
employees. The HRIS can be seen as the single source of truth when it comes to personnel data.
Compliance. Some data is collected and stored for compliance reasons. This includes material for the
identification of employees in case of theft, fraud, or other misbehaviors, first contact information in case
of accidents, citizens identification information for the tax office, and expiration dates for mandatory
certification. All this information can be stored in the HRIS. It is essential that data is stored safely and
Some companies still keep a lot of data about employees as physical paperwork. Finding the right folder,
and locating the right sheet, can take up a lot of staff time.
HR strategy. The HRIS permits the tracking of data required to advance the HR and business strategy.
Depending on the priorities of the organization, different data will be essential to track. This is where the
HRIS shines.
Self-Service HR. A final benefit is the ability to offer self-service HR to employees and managers. This
enables employees to manage their own affairs. When done right, the HRIS can offer a good employee
experience. Keep in mind that not all HRIS systems offer this in a user-friendly manner!
Working with an HRIS has multiple benefits for the organization, HR, and the employee. Using an HRIS
At this time, managing this basic information in Excel becomes cumbersome and simple procedures like
Using an HRIS is especially beneficial for large organizations which typically use more advanced HRIS
systems to support different HR functions. Small businesses would suit a more basic HRIS.
HRIS functions
There are different kinds of HRIS systems and software. Because an HRIS encompasses all the
functionalities for HR, all separate functionalities are part of the system. These functionalities include:
Applicant Tracking System (ATS). This software handles all the company’s recruiting needs. It tracks
candidate information and resumes, enables recruiters to match job openings to suitable candidates from
the company’s application pool, and helps in guiding the hiring process.
Payroll. Payroll automates the pay process of employees. Contractual data and information on new hires
is often entered into this system – sometimes combined with time & attendance data – and at the end of
benefits are an important aspect of compensation and are also managed in this system. More advanced
systems offer an employee self-service model for employee benefits. In this case, employees can select
the benefits they are looking for themselves. One may want more paternity leave, the other one a more
expensive company car. This self-service approach to benefits is also called a cafeteria model.
Time & Attendance. This module gathers time and attendance data from employees. These are
especially relevant for shift workers where employees clock in and out. Back in the day, employees often
wrote down their working hours on a piece of paper. Then, the manager would manually enter the data
into a time tracking system. Based on this data, payment orders were generated and paid to all
employees. Nowadays, workers often check into work by fingerprint or a card that is synced with an
HRIS. This gives an exact time for arrival and departure. Any issues with lateness are easily detected.
Training. Learning and development is a key element when it comes to employee management. This
module allows HR to track qualification, certification, and skills of the employees, as well as an outline
of available courses for company employees. This module is often referred to as an LMS, or Learning
Management System, when it’s a stand-alone. An LMS usually includes available e-learning and other
ratings are generated once or multiple times a year by the direct manager or peers of the employee.
Succession planning. Creating a talent pipeline and having replacements available for key roles in the
Employee self-service. Employee self-service has already been mentioned. Organizations are focusing
increasingly on having employees and their direct supervisors manage their own data. Requests like
holidays can be asked for by the employee him/herself. After approval, these are then immediately saved
into the system (and registered to track for payroll and benefits purposes).
Reporting & Analytics. A much rarer module in HRIS systems is reporting and analytics. Modern
systems enable the creation of automated HR reports on various topics like employee turnover, absence,
performance, and more. Analytics involves the analysis of these insights for better-informed decision
ADVERTISEMENTS:
The four steps involved in designing of HRIS are as follows: 1. Determination of Information Needs 2.
Designing the System 3. Implementation 4. Monitoring and Evaluation.
Data and information are basic inputs for decision making activity. Managers at different levels may need
different types of information. Hence, identification of information needed by the managers becomes the
first step in designing HRIS. This involves a perspicacious study of the activities carried out in the
organisation.
Work patterns, their relationship and constraints affecting the HRIS also need to be analysed. Yes, these
factors may differ from organisation to organisation and from industry to industry and even from time to
time in case of the same organisation and industry.
the information needs of managers. It is important to mention that HRIS as a sub-system of Management
Information System (MIS) does not require a separate design. However, designing HRIS may require
developing preferred processing techniques for desired data set by managers at different levels.
3. Implementation:
This is the stage when the HRIS is actually set up. In order to handle the system effectively, employees are
imparted the necessary skill through orientation and training programmes. Besides, facilities are increased
and upgraded, procedures are properly streamlined with an objective to integrate the HRIS with various
organisational components in existence at the
It involves measuring the performance, or say, contribution of the system to the overall human resource
management of the organisation. By doing so, gaps are identified and corrective steps are taken to ensure its
smooth operation. The system is evaluated on a regular basis so that it is evaluated in the light of changes
taking place from time to time within and outside the organisation.