Spirit Of HR

It's all about Human Resource Management

HR Audit, Records, Research, HRIS

HR Audit, Records, Research, Human Resource Information System

Human Resources Audit: It is a systematic formal process to review or examine the current human resources policies, procedures, documentation and
systems to identify needs for improvement and enhancement of the HR function as well as to assess compliance with ever-changing rules and regulations.

The American Accounting Association’s Committee on Human Resource Accounting (1973) has defined Human Resource Accounting as “the process of
identifying and measuring data about human resources and communicating this information to interested parties”.

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

It involves a systematic analysis and evaluation of the efficiency and effectiveness of the HRM function and its contribution to the achievement of the
organisations strategic business objectives.

It is an activity used to evaluate HR practices and performance. It investigates about HR functions.

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 and establish
the best practices. An Audit involves systematically reviewing all aspects of human resources, usually in a checklist fashion.

The purpose of an HR Audit is to recognize strengths and identify any needs for improvement in the human resources function. A properly executed audit
will reveal problem areas and provide recommendations and suggestions for the remedy of these problems. Some of the reasons to conduct such a review
include:

Ensuring the effective utilization of the organization’s human resources

Reviewing compliance concerns with a myriad of administrative regulations
Instilling a sense of confidence in management and the human resources function
Maintaining or enhancing the organization’s and the department’s reputation in the community
Performing “due diligence” review for shareholders or potential investors/owners
Establishing a baseline for future improvement for the function

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Other purposes of a HR audit

To examine and pinpoint strength and weaknesses related to H.R. areas and Skills and Competencies to enable an organization to achieve its long-term
and short-term goals.
To increase the effectiveness of the design and implementation of human resource policies, planning and programs. To help human resource planners
develop and update employment and program plans.
To insure the effective utilization of an organizations human resources.
To review compliance with a myriad of administrative regulations.
To instill a sense of confidence in management and the human resources function that it is well managed and prepared to meet potential challenges.
To maintain or enhance the organizations and the departments reputation in the community.
To perform a “due diligence” review for shareholders or potential investors/owners.

Steps in HR Auditing Process

 Step 1: Briefing and orientation: Key staff members meet:

To discuss particular issues considered being important

To chart out audit procedures
To develop plans and program of audit
Step 2: Scanning Material Information:

Scrutiny of all available information pertaining to personnel, personnel handbooks and manuals, guides, appraisal forms, computer capabilities and any
other related information.

Step 3: Surveying Employees:

Interview with the key managers, functional executives, top functionaries in the organisation and the employees’ representatives if necessary.

The purpose is to pinpoint issues of concern, present strengths, anticipated needs and managerial views on human resources.

Step 4: Conducting Interviews:

What questions to be asked are developed during scanning of information?

It is better for H.R. Audit if clarity about the key factors of H.R.M. selected for audit and the related questions that need to be examined.

Step 5: Synthesizing:

The data gathered is synthesized to show the current situation, priorities, staff pattern and issues Identified.

Step 6: Reporting:

The results of the audit are discussed with the managers and staff specialists in several rounds. Important issues are identified for inclusion in the formal
report.

Audit of Human Resource Function

Areas/ Topics for covered for HR Audit in each HR function

Information :Coverage, source, adequacy and gaps

Forecasting: Methodology, reliability, testability, budgeting, time orientation, technology perspective

Training and development: Need assessment, selection criteria, levels covered and frequency, internal vs external training, quality consciousness, changing
needs and climate for self-development

Performance Appraisal  : Validity of appraisal process, benefits and/or draw backs/problems, know-how of appraising, uniformity in process, underlying
benchmarks, consistency in ratings, linkages with pay, feedback to employees

Succession Planning:Policy formulation, identifying key positions, availability of successors, matching future needs, responsibility for grooming and
developing and handling non/poor performers

Compensation: Appropriateness of policies, company philosophy, adequacy of rewards, nature of job descriptions, flexibility in job evaluation systems,
control over costs, rationale of reward system and opportunities for improvement

Methods of HR Audit

Individual interview method:

Top level management and senior managers are interviewed, individually. Union leaders, departmental heads, some strategic clients and informal leaders
are also interviewed, individually.

It helps in following:

1. knowing their thinking about future plans and opportunities available for the company.
2. knowing about their expectations from the HR audit.
3. getting sensitive information pertaining to working styles and culture.

Group interview method

Group interviews and discussions with the employees and/or executives of the company. It facilitates collection of information about effectiveness of existing
systems. Ideally group of 4 to 8 employees should consist of same or similar hierarchy from cross functional areas.

Workshop method

30 to 300 participants can be asked to gather in a room and 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 top management.

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.

 Audit of Employee Satisfaction

An Audit of Employee Satisfaction can be done by employee opinion survey which can provide valuable insights to strengthen the organization in the areas
where employees feel there are opportunities to improve.

The various areas which are audited for employee satisfaction are as follows:

Overall Job Satisfaction

Satisfaction with the Work
Pay & Benefits Satisfaction
Promotions/Career Advancement
Supervisory Consideration
Internal Communication
Personnel Policies
Concern for Employees
Physical Working Conditions
Job Stress

Ethical Issues in HRM

Hiring without any discrimination: Selection on any employee should not be based on any one single competency, gender, religion, caste.
Appraisal without any biases: Role of HR should never be compromised over the line manager’s decision on appraising any employees.
Equal remuneration between genders: Compensation and benefits rendered to employees should be based on a criteria which is applicable to all
Managing disciplinary issues: The HR should lay down his/her independent decision rationally before finalizing any disciplinary proceedings.
Solving industrial disputes: The HR should never come under any pressure from the union or the management in terms of solving any industrial
disputes.
Justified suspensions and terminations: Integrity should be placed above any other justifications in case of employee separations.
Fair promotions and transfer: : Critical decision making regarding internal mobility should be based on core facts and justified rational
Maintaining data privacy of employees: Data integrity is in the hands of HR since they have an access to most confidential data regarding all employees
of an organisation

 HR RECORDS

Records refer to the informational documents utilized by an organisation to carry out its functions. There can be conventional record systems through file
system or can be modern record management system through soft wares

Importance of record management:

To supply information required by the management

To identify training needs
To use them for succession planning
To know validity of employment tests and interviews
To take personnel decisions like transfer, promotions etc.
To maintain up to date data about everything in the organisation.

Essentials of good record:

Objectives for maintenance should be clearly and adequately stated

Consistent with requirement
Easily available and accessible
Economical and safe
Periodical revised and updated
Easily identified and differentiated
Avoid duplication of entries
A person entrusted with responsibility to maintain
A procedure manual

Principles of Record Keeping:

The purpose for which the record is kept must be justifiable

Records must be classified
Records must be precise
Records must be produces and maintained at reasonable cost
Records must be capable of verification

Essential points to achieve the record maintenance objective:

Simplicity
Accuracy
Economy
Usefulness

HR record refers to all data relating to employees working in an organisation

Purpose of Personnel/ Employee Records:

Stores all relevant employee data

Provide an evidence of events
Useful for taking important decisions
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Helps to know everything about the employee at one glance
Facilitate evaluation of performance
As provisions under industrial and labour laws

Examples of HR Record:

Employee turnover record

Personnel inventories
Accident record
Grievance record
Absenteeism record
Cost of training record
Payroll record
Health record
Suggestions record
Employee use of services records such as gym, canteen

REPORT:  A report is an account or statement describing in detail an event, a happening or evaluating an enterprise or product etc.

Essentials of a good report:

Should deal with a specific objective

Should dwell on the issues referred
Data collected should be interpreted easily
Should make specific recommendations
Should be timely
Should be clearly worded
Should be reader oriented

HR Report: It is a document stating a particular fact with regards to any human resource function.

Some of the examples of HR report are:

Manpower Availability report

Daily Sales VS. Employee Cost Report
Attrition Analysis Report
Recruitment Analysis report
Uniform Stock Report
Monthly Performance report
Employee Grievance report
Statutory Deadline Report
Talent Transformation Report
Payroll Input report

HR RESEARCH:  

It is a systematic and scientific process of collecting information, analyzing the information and drawing conclusions for better decision-making in HR
function.

Various HR Research’s that can be conducted in an organisation are:

Effectiveness of recruitment and selection process.

Wage and salary administration research or compensation bench marking research
Impact of Employee Benefits on the productivity of employees
Employee Engagement survey
Employees perception on the performance management practice of the organisation
Research on attrition cause analysis
Training effectiveness survey
Employee Satisfaction survey

Ways to conduct HR Research:

Most research is conducted by using one or more of the following methods.

1. a) Interviews: Interview though time consuming provide very valuable information. It refers to a face-to-face discussion with managers and other
employees to get information on a particular issue. Interview has several advantages.

It provides an opportunity to verify information

Information relating to motivation and commitment can best be sought by interview.
It provides an opportunity to explain.
It is a two-way interaction and hence provides one opportunity to get in-depth information.

Interviews of employees and managers offer research teams a powerful tool for collecting information about HR activities and identifying areas that need
improvement. Criticisms and comments from interviews can help pinpoint perceptions and causes that can form the basis for departmental action. Likewise,
suggestions by managers may reveal ways to provide better service.
One useful variation of interview is Exit Interview. Such interviews are conducted when the employees has decided to leave the organizations. At this time
the employees can very openly discuss problems issues and concerns because now he /she is not afraid of reprimanded by the authorities. Some extremely
useful information can be gathered through exit interviews, which can be very handy in reviewing HR policies, identifying training needs and examine
behavioral problems that are not easily identifiable.

1. b) Questionnaires: Since interviews are time –consuming and costly and often are limited to only a few people, many HR departments use questionnaires
to broaden the scope of their research. Also, questionnaires may lead to more candid answers than do face-to-face interviews. Besides being less costly
questionnaires provide an opportunity to collect large amount of date in short period of time as they could be administered to a group. Questionnaires
generally consist of a list of statement / items to which respondent responds by either saying yes or no or showing varying degrees of
agreement/disagreement. However one major disadvantage of questionnaire is that it assumes that respondents can read and write in language used in
the questionnaire. Hence they can be given to only literate people.
2. c) Secondary Source of Data: Both interviews and questionnaires require human beings to provide information. If the focus of research is to collect
historical data perhaps the best source could be what is called as secondary source. Where data is available in published documents, government reports,
journals and magazines, house magazines, minutes of the meetings and achieves etc. Such data can be extremely useful to examine trends in terms of
growth or otherwise. Needless to say secondary source of data can be very handy method to collect specific information.

HRIS: Human Resources Management System (HRMS) or Human Resources Information System (HRIS)

INTEGRATION between human resource management (HRM) function and information technology

Software or online solution for the data entry, data tracking, and data information needs of the Human Resources, payroll, management, and accounting
functions within a business.

Enterprise resource planning (ERP) software ( SAP HR & PEOPLE SOFT)

Payroll Software

Currently human resource management systems encompass:

1. Payroll (http://en.wikipedia.org/wiki/Payroll)
2. Time and attendance (http://en.wikipedia.org/wiki/Time_and_attendance)
3. Performance appraisal (http://en.wikipedia.org/wiki/Performance_appraisal)
4. Benefits administration
5. HR management information system
6. Recruiting/Learning management (http://en.wikipedia.org/wiki/Learning_management_system)
7. Performance record
8. Employee self-service (http://en.wikipedia.org/wiki/Employee_self-service_(web-based_application))
9. Scheduling
10. Absence management
11. Analytics

The payroll module automates the pay process by gathering data on employee time and attendance, calculating various deductions and taxes, and
generating periodic pay cheques and employee tax reports. Data is generally fed from the human resources and time keeping modules to calculate automatic
deposit and manual cheque writing capabilities. This module can encompass all employee-related transactions as well as integrate with existing financial
management systems.

The time and attendance module gathers standardized time and work related efforts. The most advanced modules provide broad flexibility in data
collection methods, labor distribution capabilities and data analysis features. Cost analysis and efficiency metrics are the primary functions.

The benefits administration module provides a system for organizations to administer and track employee participation in benefits programs. These
typically encompass insurance, compensation, profit sharing and retirement.

The HR management module is a component covering many other HR aspects from application to retirement. The system records basic demographic and
address data, selection, training and development, capabilities and skills management, compensation planning records and other related activities. Leading
edge systems provide the ability to “read” applications and enter relevant data to applicable database fields, notify employers and provide position
management and position control. Human resource management function involves the recruitment, placement, evaluation, compensation and development
of the employees of an organization. Initially, businesses used computer based information systems to:

produce pay checks and payroll reports;

maintain personnel records;
pursue talent management (http://en.wikipedia.org/wiki/Talent_management).

Online recruiting has become one of the primary methods employed by HR departments to garner potential candidates for available positions within an
organization. Talent management systems typically encompass:

analyzing personnel usage within an organization;

identifying potential applicants;
recruiting through company-facing listings;
recruiting through online recruiting sites or publications that market to both recruiters and applicants.

The significant cost incurred in maintaining an organized recruitment effort, cross-posting within and across general or industry-specific job boards and
maintaining a competitive exposure of availabilities has given rise to the development of a dedicated applicant tracking system
(http://en.wikipedia.org/wiki/Applicant_tracking_system), or ‘ATS’, module.
The training module provides a system for organizations to administer and track employee training and development efforts. The system, normally called a
“learning management system” (LMS) if a stand alone product, allows HR to track education, qualifications and skills of the employees, as well as outlining
what training courses, books, CDs, web based learning or materials are available to develop which skills. Courses can then be offered in date specific
sessions, with delegates and training resources being mapped and managed within the same system. Sophisticated LMS allow managers to approve training,
budgets and calendars alongside performance management and appraisal metrics.

The employee self-service module allows employees to query HR related data and perform some HR transactions over the system. Employees may query
their attendance record from the system without asking the information from HR personnel. The module also lets supervisors approve O.T. requests from
their subordinates through the system without overloading the task on HR department.

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