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ueflnlLlon

P8 AudlL means Lhe sysLemaLlc verlflcaLlon of [ob analysls and deslgn recrulLmenL and selecLlon
orlenLaLlon and placemenL Lralnlng and developmenL performance appralsal and [ob evaluaLlon
employee and execuLlve remuneraLlon moLlvaLlon and morale parLlclpaLlve managemenL
communlcaLlon welfare and soclal securlLy safeLy and healLh lndusLrlal relaLlons Lrade unlonlsm
and dlspuLes and Lhelr resoluLlon P8 audlL ls very much useful Lo achleve Lhe organlzaLlonal goal
and also ls a vlLal Lool whlch helps Lo assess Lhe effecLlveness of P8 funcLlons of an organlzaLlon
O cope of AudlL
Cenerally no one can measure Lhe aLLlLude of human belng and also Lhelr problems are noL
conflned Lo Lhe P8 deparLmenL alone o lL ls very much broad ln naLure lL covers Lhe followlng P8
areas
O AudlL of all Lhe P8 funcLlon
O AudlL of managerlal compllance of personnel pollcles procedures and legal provlslons AudlL
of corporaLe sLraLegy regardlng P8 plannlng sLafflng l8s remuneraLlon and oLher P8
acLlvlLles AudlL of Lhe P8 cllmaLe on employee moLlvaLlon morale and [ob saLlsfacLlon


8eneflLs of P8 AudlL

O lL provldes Lhe varlous beneflLs Lo Lhe organlzaLlon 1hese are
O lL helps Lo flnd ouL Lhe proper conLrlbuLlon of Lhe P8 deparLmenL Lowards Lhe organlzaLlon
O uevelopmenL of Lhe professlonal lmage of Lhe P8 deparLmenL of Lhe organlzaLlon
O 8educe Lhe P8 cosL
O ,oLlvaLlon of Lhe P8 personnel
O lnd ouL Lhe problems and solve Lhem smooLhly
O 9rovldes Llmely legal requlremenL
O ound 9erformance Appralsal ysLems
O ysLemaLlc [ob analysls
O mooLh adopLlon of Lhe changlng mlndseL

Approaches Lo P8 AudlL
1here are flve approaches for Lhe purpose of evaluaLlon of P8 ln any organlzaLlon
O omparaLlve approach
O uLslde auLhorlLy
O LaLlsLlcal
O ompllance approach and
O ,anagemenL 8y b[ecLlves(,8%

oncluslon
1he audlLors always prepare and submlL an audlL reporL Lo auLhorlLy of Lhe organlzaLlon whlch may
be clean or quallfled 1he clean reporL lndlcaLes Lhe appreclaLlve of Lhe deparLmenLs funcLlon buL
Lhe laLLer one represenLs Lhe gaps ln performance and Lherefore conLalns remarks and remedlal
measures P8 AudlL ls very much helpful Lo face Lhe challenges and Lo lncrease Lhe poLenLlallLy of
Lhe P8 personnel ln Lhe organlzaLlon
O 8eferences
Wllllam8WerLher and kelLh uavls Puman 8esource ,anagemenL and 9ersonnel ,anagemenL
3
Lh
edlLlon ,cCrawhlll 1996
k AswaLhappa Puman 8esource ,anagemenL and 9ersonnel ,anagemenL 4
Lh
edlLlon ,cCraw
hlll 2006







ub[ecL 1he audlL process
1he P8 audlL process ls conducLed ln dlfferenL phases Lach phase ls deslgned Lo bulld upon Lhe
precedlng phase so LhaL Lhe organlsaLlon wlll have a very sLrong overvlew of Lhe healLh of Lhe P8
funcLlon aL Lhe concluslon of Lhe audlL
1hese phases lnclude

9reAudlL lnformaLlon 1hls phase lnvolves Lhe acqulrlng and revlew of relevanL P8 manuals
handbooks forms reporLs and oLher lnformaLlon A preaudlL lnformaLlon requesL ls forwarded Lo
Lhe cllenL who complles Lhe necessary lnformaLlon for revlew by audlLors

9reAudlL elfAssessmenL ln order Lo maxlmlse Lhe Llme spenL durlng subsequenL porLlons of Lhe
audlL a preaudlL selfassessmenL form lf senL Lo Lhe cllenL can be of use 1he selfadmlnlsLered
yes/no quesLlonnalre asks a number of quesLlons abouL currenL P8 pollcles and pracLlces

1he compleLlon of Lhls selfadmlnlsLered quesLlonnalre allows audlLors Lo ldenLlfy key areas for focus
durlng Lhe P8 audlL

nslLe 8evlew1hls phase lnvolves an onslLe vlslL aL Lhe cllenLs faclllLy lnLervlewlng sLaff regardlng
P8 pollcles and pracLlces A very lndepLh P8 audlL checkllsL ls compleLed

8ecords 8evlew urlng Lhe onslLe vlslL a separaLe revlew ls conducLed of P8 records and posLlngs
Lmployee personnel flles are randomly examlned as well as compensaLlon employee clalms
dlsclpllnary acLlons grlevances and oLher relevanL P8 relaLed lnformaLlon are checked

AudlL 8eporL1he lnformaLlon gaLhered ls used Lo develop an P8 audlL reporL 1he audlL reporL
caLegorlses acLlon needs lnLo Lhree separaLe areas 1he areas LhaL are urgenL and lmporLanL (ul% noL
urgenL needs buL lmporLanL (nul% noL urgenL buL noL lmporLanL needs (nnl%% and lmporLanL
opporLunlLles needs (l% As a resulL of Lhls scheme of classlflcaLlon managemenLs can prlorlLlse
Lhelr sLeps

1he crlLlcal areas

1he comprehenslve P8 audlL covers all areas of P8 managemenL llke recrulLmenL pracLlces Lralnlng
and developmenL compensaLlon and beneflLs employee and unlon relaLlons healLh safeLy and
securlLy mlscellaneous P8 pollcles and pracLlceswelfare sLraLeglc P8 lssues manpower
plannlng/budgeLlng

8esldes classlfylng needs ln each of Lhe above areas Lhe P8 audlL also clLes relevanL laws cases and
research Lo supporL Lhe recommendaLlons

9reparaLlon for an audlL

AudlLor engagemenL lf exLernal flrm carrylng ouL Lhe audlL lL ls preferable Lo seL Lerms ln wrlLlng
deflnlng and agreelng on scope lf uslng lnLernal resource lL ls beLLer Lo appolnL Lhem formally wlLh
clarlLy on scope and selecL persons who are non pollLlcal or Lhose who are noL hlgh on hlerarchy
Also lf lnLernal persons are audlLlng Lhere musL be Lralnlng ln audlLlng

uocumenLs manuals handbooks forms and reporLs audlLor musL have access Lo relevanL
lnformaLlon conLalned ln employee flles and oLher confldenLlal documenLs of Lhe organlsaLlon
AudlLors musL be glven unresLrlcLed access Lo records once Lhey slgn agreemenL for confldenLlallLy

uaLa gaLherlngompleLlon of a selfassessmenL quesLlonnalre slgnlflcanLly expedlLes Lhe audlL
process and allows for beLLer audlL plannlng

nslLe access1he onslLe porLlon of Lhe audlL ls Lhe mosL crlLlcal

uslng audlL flndlngs

Pow does an organlsaLlon use P8 audlL resulLs? lnce Lhe P8 audlL resulLs are classlfled an
lmporLanL aspecL ls already Laken care of rlLlcal needs should be Lhe flrsL ones Lo be addressed
rganlsaLlons generally have Lhree opLlons for deallng wlLh audlL resulLs

* use Lhe P8 audlL as a blueprlnL or acLlon plan for addresslng P8 needs

* Address as many needs as posslble uslng Lhe organlsaLlons lnLernal experLlse and resources

* onLracL ouL Lhose need areas where lnLernal experLlse and resources are noL avallable or do noL
flL ln Lhe core compeLencles of Lhe organlsaLlon

An P8 audlL ls much llke an annual healLh check lL can perform Lhe same funcLlon for Lhe
organlsaLlon An audlL ls a means by whlch an organlsaLlon can measure where lL currenLly sLands
and deLermlne whaL lL has Lo accompllsh Lo lmprove lLs P8 funcLlons lL lnvolves sysLemaLlcally
revlewlng all aspecLs of human resources usually ln a checkllsL fashlon ensurlng LhaL Lhe
governmenL regulaLlons and company pollcles are belng adhered Lo 1he key Lo an audlL ls Lo
remember LhaL lL ls a Lool Lo dlscover and noL Lo LesL 1here wlll always be room for lmprovemenL ln
every organlsaLlon

where a human resouce assoclaLe comes and makes sure LhaL your emplyee flles are up Lo daLe







Answer
A healLhy P8 funcLlon ln an organlzaLlon ls as lmporLanL as Lhe physlcal and menLal well belng of a
human body 1yplcally Lhe baslc reason why organlzaLlons prefer Lo conducL an P8 audlL ls Lo geL a
clear [udgmenL abouL Lhe overall sLaLus of Lhe organlzaLlon and also Lo flnd ouL wheLher cerLaln
sysLems puL ln place are yleldlng any resulLs P8 audlL also helps companles Lo flgure ouL any gaps or
lapses and Lhe reason for Lhe same lnce every company plans cerLaln sysLems and LargeLs an P8
audlL compares Lhe plans Lo acLual lmplemenLaLlon
1he concepL of P8 audlL has emerged from Lhe pracLlce of yearly flnance and accounLlng audlL
whlch ls mandaLory for every company Lo be done by exLernal sLaLuLory audlLors
1hls audlL serves as an examlnaLlon on a sample basls of pracLlces and sysLems for ldenLlfylng
problems and ensurlng LhaL sound accounLlng prlnclples are followed lmllarly an P8 audlL serves
as a means Lhrough whlch an organlzaLlon can measure Lhe healLh of lLs human resource funcLlon
rganlzaLlons underLake P8 audlLs for many reasons
1 1o ensure effecLlve uLlllzaLlon of human resources
2 1o revlew compllance wlLh Lons of laws and regulaLlons
3 1o lnsLlll a sense of confldence ln Lhe human resource deparLmenL LhaL lL ls wellmanaged and
prepared Lo meeL poLenLlal challenges and opporLunlLles
4 1o malnLaln or enhance Lhe organlzaLlons repuLaLlon ln a communlLy
An audlL ls a sysLemaLlc process whlch examlnes Lhe lmporLanL aspecLs of Lhe funcLlon and lLs
managemenL and ls a means Lo ldenLlfy sLrengLhs weaknesses and areas where recLlflcaLlon may be
warranLed An audlL ls done on sampllng basls And ln sampllng noL every lnsLance or slLuaLlon can
be examlned
An P8 audlL can be used by an organlzaLlon for mulLlple purposes ome of Lhe more common
reasons are
1o ldenLlfy and address P8relaLed problems
1o seek ouL P8relaLed opporLunlLles
1o conducL due dlllgence for mergers and acqulslLlons
1o supporL lnlLlal publlc offerlngs
Pow an audlL ls conducLed ls very ofLen deLermlned by lLs lnLended use or lnsLance Lhe Lype of
audlL used Lo ascerLaln P8 pracLlces may be slgnlflcanLly dlfferenL from Lhe Lype of audlL used Lo
supporL an lnlLlal publlc offerlng AlLhough Lhe areas examlned may be slmllar Lhe process used and
Lhe depLh of lnqulry wlll vary from Lhe lnLended ouLcome
1he audlL process
1he P8 audlL process ls conducLed ln dlfferenL phases Lach phase ls deslgned Lo bulld upon Lhe
precedlng phase so LhaL Lhe organlzaLlon wlll have a very sLrong overvlew of Lhe healLh of Lhe P8
funcLlon aL Lhe concluslon of Lhe audlL 1hese phases lnclude
9reAudlL lnformaLlon 1hls phase lnvolves Lhe acqulrlng and revlew of relevanL P8 manuals
handbooks forms reporLs and oLher lnformaLlon A preaudlL lnformaLlon requesL ls forwarded Lo
Lhe cllenL who complles Lhe necessary lnformaLlon for revlew by audlLors
9reAudlL elfAssessmenL ln order Lo maxlmlze Lhe Llme spenL durlng subsequenL porLlons of Lhe
audlL a preaudlL selfassessmenL form lf senL Lo Lhe cllenL can be of use 1he selfadmlnlsLered
yes/no quesLlonnalre asks a number of quesLlons abouL currenL P8 pollcles and pracLlces
1he compleLlon of Lhls selfadmlnlsLered quesLlonnalre allows audlLors Lo ldenLlfy key areas for focus
durlng Lhe P8 audlL
nslLe 8evlew 1hls phase lnvolves an onslLe vlslL aL Lhe cllenLs faclllLy lnLervlewlng sLaff regardlng
P8 pollcles and pracLlces A very lndepLh P8 audlL checkllsL ls compleLed
8ecords 8evlew uurlng Lhe onslLe vlslL a separaLe revlew ls conducLed of P8 records and posLlngs
Lmployee personnel flles are randomly examlned as well as compensaLlon employee clalms
dlsclpllnary acLlons grlevances and oLher relevanL P8 relaLed lnformaLlon are checked
AudlL 8eporL 1he lnformaLlon gaLhered ls used Lo develop an P8 audlL reporL 1he audlL reporL
caLegorlzes acLlon needs lnLo Lhree separaLe areas 1he areas LhaL are urgenL and lmporLanL (ul% noL
urgenL needs buL lmporLanL (nul% noL urgenL buL noL lmporLanL needs (nnl%% and lmporLanL
opporLunlLles needs (l% As a resulL of Lhls scheme of classlflcaLlon managemenLs can prlorlLlze
Lhelr sLeps
1he crlLlcal areas
1he comprehenslve P8 audlL covers all areas of P8 managemenL llke recrulLmenL pracLlces Lralnlng
and developmenL compensaLlon and beneflLs employee and unlon relaLlons healLh safeLy and
securlLy mlscellaneous P8 pollcles and pracLlceswelfare sLraLeglc P8 lssues manpower
plannlng/budgeLlng
8esldes classlfylng needs ln each of Lhe above areas Lhe P8 audlL also clLes relevanL laws cases and
research Lo supporL Lhe recommendaLlons
9reparaLlon for an audlL
AudlLor engagemenL lf exLernal flrm carrylng ouL Lhe audlL lL ls preferable Lo seL Lerms ln wrlLlng
deflnlng and agreelng on scope lf uslng lnLernal resource lL ls beLLer Lo appolnL Lhem formally wlLh
clarlLy on scope and selecL persons who are non pollLlcal or Lhose who are noL hlgh on hlerarchy
Also lf lnLernal persons are audlLlng Lhere musL be Lralnlng ln audlLlng
uocumenLs manuals handbooks forms and reporLs audlLor musL have access Lo relevanL
lnformaLlon conLalned ln employee flles and oLher confldenLlal documenLs of Lhe organlzaLlon
AudlLors musL be glven unresLrlcLed access Lo records once Lhey slgn agreemenL for confldenLlallLy
uaLa gaLherlng ompleLlon of a selfassessmenL quesLlonnalre slgnlflcanLly expedlLes Lhe audlL
process and allows for beLLer audlL plannlng
nslLe access 1he onslLe porLlon of Lhe audlL ls Lhe mosL crlLlcal
uslng audlL flndlngs
Pow does an organlzaLlon use P8 audlL resulLs? lnce Lhe P8 audlL resulLs are classlfled an
lmporLanL aspecL ls already Laken care of rlLlcal needs should be Lhe flrsL ones Lo be addressed
rganlzaLlons generally have Lhree opLlons for deallng wlLh audlL resulLs
* use Lhe P8 audlL as a blueprlnL or acLlon plan for addresslng P8 needs
* Address as many needs as posslble uslng Lhe organlzaLlons lnLernal experLlse and resources
* onLracL ouL Lhose need areas where lnLernal experLlse and resources are noL avallable or do noL
flL ln Lhe core compeLencles of Lhe organlzaLlon
An P8 audlL ls much llke an annual healLh check lL can perform Lhe same funcLlon for Lhe
organlzaLlon An audlL ls a means by whlch an organlzaLlon can measure where lL currenLly sLands
and deLermlne whaL lL has Lo accompllsh Lo lmprove lLs P8 funcLlons lL lnvolves sysLemaLlcally
revlewlng all aspecLs of human resources usually ln a checkllsL fashlon ensurlng LhaL Lhe
governmenL regulaLlons and company pollcles are belng adhered Lo 1he key Lo an audlL ls Lo
remember LhaL lL ls a Lool Lo dlscover and noL Lo LesL 1here wlll always be room for lmprovemenL ln
every organlzaLlon
Where a human resource assoclaLe comes and makes sure LhaL your employee flles are up Lo daLe


8ead more hLLp//wlklanswerscom/C/WhaL_ls_P8_audlL#lxzz18?uyoW






1he Puman 8esource AudlL as an lmprovemenL 1ool
8egardless of Lhe Lype of company or Lhe slze of your P8 deparLmenL Lhe P8 AudlL
ls a slmple yeL comprehenslve Lool Lo analyze and lmprove your effecLlveness as a
funcLlon
1he audlL ls made up of four maln sLeps
1% ueflne deslred P8 pracLlces for your organlzaLlon
2% Assess currenL pracLlces agalnsL Lhe crlLerlon LhaL you have esLabllshed
3% Analyze Lhe resulLs
4% LsLabllsh lmprovemenL goals and Lake acLlon
1hls slmple foursLep approach can be repeaLed as Lhe annual plannlng and goal seLLlng
process occurs wlLhln your company 9rogress can be measured agalnsL goals and a
conLlnuous lmprovemenL cycle naLurally unfolds
9urpose(s% of an AudlL
1he audlL can serve any of Lhe followlng purposes
1o clarlfy deslred pracLlces of P8 work and roles wlLhln Lhe organlzaLlon (P8
ueparLmenL Llne ,anagers%
1o esLabllsh a basellne for fuLure lmprovemenL
1o evaluaLe currenL effecLlveness
1o sLandardlze pracLlces across mulLlple slLes wlLhln a dlvlslon or company
1o assess currenL knowledge and skllls requlred of P8 pracLlLloners
1o lmprove performance levels Lo key cusLomers wlLhln Lhe organlzaLlon
1he AudlL 9rocess
Lep neueflnlng AudlL LaLemenLs
ueflnlLlon of deslred P8 pracLlces can occur Lhrough ln a varleLy of ways
A good sLarLlng polnL ls Lo Lake some Llme and reflecL on Lhe legal requlremenLs and
programs LhaL Lhe deparLmenL musL admlnlsLer lmply llsLlng Lhem ls a good flrsL sLep
nexL conslder your areas of responslblllLy and LradlLlonal P8 pracLlces covered by your
funcLlon 1hey may lnclude P8 9lannlng Lafflng 9erformance ,anagemenL Lmployee
8elaLlons ompensaLlon and 8eneflLs 1ralnlng and uevelopmenL afeLy and Wellness
Lmployee urveys and ommunlcaLlons lnally oLher areas Lo conslder are company
lnlLlaLlves LhaL Lhe P8 funcLlon may be requlred Lo supporL le lnLernal cusLomer
requlremenLs peclflcs are unlque Lo your company buL examples could lnclude
supporLlng a 1oLal CuallLy ,anagemenL lnlLlaLlve 1eam 8ased Work ysLem eLc WlLh Lhls llsL ln
hand a sLaLemenL can be wrlLLen abouL each ma[or pracLlce LhaL you
wanL Lo deflne 1yplcally Lhey are sLaLed ln Lhe presenL Lense and ln a poslLlve manner 1he
followlng examples lllusLraLe Lhese LralLs
1he sLafflng process ls documenLed so LhaL Lhe responslblllLy of each person ln Lhe
process ls clear and undersLood
9erformance appralsals are compleLed for each employee ln Lhe organlzaLlon
1here ls a LralnLheLralner program for each ma[or Lralnlng program wlLhln Lhe company
new employees compleLe a new hlre orlenLaLlon program of key company pollcles and
procedures wlLhln Lhe flrsL 30 days of work
1here ls an lssue resoluLlon process LhaL ls well undersLood and used by employees
As you may noLlce deflnlLlons can be as compleLe or deLalled as Lhe developer deslres
ln sLarLlng ouL lL ls beLLer Lo make more general sLaLemenLs and lmprove from year Lo year
ln Lhose areas LhaL you choose Lo ralse Lhe level of performance
ln summary you may as many as 6070 sLaLemenLs dependlng upon slze of your
company and Lhe level of deLall LhaL you prefer Lo measure 8egardless of Lhe number you
are developlng a descrlpLlon of Lhe level and quallLy of performance you deslre for Lhe
Puman 8esource funcLlon
Lep 1woAssesslng urrenL 9racLlces
WlLh Lhe llsL of sLaLemenLs compleLed Lhe assesslng currenL pracLlces requlres you
Lo be ob[ecLlve A good approach ls Lo look for evldence LhaL supporLs or refuLes each
sLaLemenL made Lvldence may Lake Lhe form of pollcles and procedures ouLpuL from
employee surveys lnLervlews wlLh key cusLomers daLa collecLlon from a Puman 8esource
lnformaLlon ysLem reporLs lssued Lo regulaLory deparLmenLs sLaLlsLlcs eLc
1he flrsL Llme Lhe assessmenL ls made lL may become apparenL LhaL Lhe deflnlLlon ln
sLep one needs lmprovemenL or modlflcaLlon 1hese changes should be noLed and made a
parL of Lhe nexL lmprovemenL cycle
As you revlew Lhe summary of sLaLemenLs and your assessmenL Lhere are several
analysls LhaL can help
Lep 1hreeAnalyze Lhe 8esulLs
lL ls lmporLanL Lo recognlze sLrengLhs and opporLunlLles for lmprovemenL As resulLs
are revlewed Lhemes wlll emerge around speclflc P8 areas or example one company may
be very sLrong ln admlnlsLraLlon and managlng legal requlremenLs n Lhe oLher hand lL
may need lmprovemenL ln developlng hlgherlevel sysLems deflnlLlon AnoLher company
may be very sLrong ln areas afeLy ecurlLy and 1ralnlng buL need lmprovemenL ln
ommunlcaLlon pracLlces LhaL run across Lhe company 8evlewlng Lhe daLa ln a varleLy of
perspecLlves ls helpful Lo formulaLe a plcLure of
overall P8 performance agalnsL Lhe audlL lL can reflecL Lhe poslLlve effecL of acLlons Laken ln
prevlous years as well as provlde lnformaLlon for fuLure acLlons
lL may become apparenL LhaL all deflnlLlons are noL equal ln lmporLance 1he efforL
requlred Lo meeL Lhe deflnlLlon ls one facLor Lo conslder or example havlng performance
appralsals for all employees may requlre slgnlflcanL efforL n Lhe oLher hand lf you already
have a good new hlre orlenLaLlon program ln place LhaL deflnlLlon ls more easlly meL
1he conLrlbuLlon LhaL meeLlng a deflnlLlon may have Lo Lhe organlzaLlon ls anoLher
facLor Lo conslder or example supporLlng a company lnlLlaLlve llke 1oLal CuallLy
,anagemenL may be more meanlngful Lo Lhe organlzaLlon aL Lhls polnL ln Llme Lhan oLher
sLaLemenLs
ln summary Lhe purpose of analysls ls Lo sorL Lhrough Lhe areas of sLrengLh and
opporLunlLles for lmprovemenL ln order Lo Lake poslLlve acLlon sLeps Lo lmprove Lhe
effecLlveness of Lhe P8 funcLlon
Lep ourLsLabllsh lmprovemenL Coals and 1ake AcLlon
1he ldeal Llme Lo compleLe an audlL ls [usL prlor Lo Lhe annual plannlng process WlLh
audlL lnformaLlon ln hand you can be polsed Lo Lake advanLage of your lnslghLs lnLo seLLlng
nexL years goals
1here are Lwo aspecLs of seLLlng goals malnLenance of currenL good pracLlces and
developmenL of lmproved pracLlces knowlng Lhe capaclLy and capablllLy of Lhe P8
deparLmenL and sysLem ls crlLlcal ln developlng a reallsLlc plan Cood pracLlces need Lo
become a parL of Lhe P8 sysLem and baked ln so LhaL Lhey occur ln a rellable predlcLable
fashlon nce a process or program has reached LhaL level Lhen fuLure developmenL can
occur more effecLlvely
WlLh llLLle dlscreLlonary Llme avallable lL ls prudenL Lo revlew Lhe analysls of sLep
Lhree and declde whlch one or Lwo areas wlll provlde Lhe greaLesL overall lmprovemenL for
Lhe P8 funcLlon lLs cusLomers and Lhe organlzaLlon 1hese need Lo be Lhe areas LhaL goals
are esLabllshed for Lhe nexL year
1hls ls Lhe polnL ln Lhe audlL process where deflnlLlons are revlewed and modlfled Lo
creaLe a new and lmproved vlslon of Lhe P8 sysLem as you wlsh lL Lo be uolng Lhls on an
annual basls allows pracLlces Lo be lmproved and beneflLs shared Lxamples of lmproved P8
measures uslng Lhe AudlL 9rocess
PA lncldenL raLes
uevelopmenL and sharlng of 1oLal ompensaLlon 9hllosophy
8educLlon ln LhroughpuL Llme of fllllng open poslLlons
Lmployee Lurnover raLe
P8 cusLomer survey resulLs
of Lralnlng Llme/employee
8educLlon ln LhroughpuL Llme of admlnlsLraLlve requesLs
elf fundlng varlable compensaLlon sLraLegles
Lmployee survey resulLs
uccesslon/replacemenL plannlng
8uslness resulLs
ummary
1he P8 AudlL can be a powerful lever of change ln your deparLmenL and
organlzaLlon ln one sense lL ls slmple ln LhaL each sLep can be compleLed falrly qulckly and
wlLh ease Also Lhe degree of deLall and deflnlLlon of performance ls wlLhln Lhe conLrol of
Lhe audlL developer
AL Llme passes Lhe AudlL enrlches lLself Lhrough beLLer deflnlLlon developmenL and
hlgher levels of performance expecLaLlons lL Lakes on a sysLems approach because lL ls
comprehenslve lncluslve of all LradlLlonal P8 pracLlces yeL accommodaLlng Lo Lhe
unlqueness of company culLures and buslness lnlLlaLlves
lnally lL moves P8 professlonals lnLo an acLlve sLaLe of deflnlng Lhelr dlrecLlon
maklng sense of Lhelr cholces and conLrlbuLlng Lo Lhe buslness ln a more deflnlLlve way








Puman 8esources AudlL
,A81A A LALLA Anu ,lCuLL AnCLL A18L A1lLL

AbsLracL

Puman resource managemenL (P8,% has experlenced a sLrong evoluLlon ln order
Lo provlde useful lnformaLlon Lo managers lL ls necessary Lo evaluaLe Lhe resulLs generaLed by Lhe
deslgn and lmplemenLaLlon of personnel pollcles 1hls ls Lhe goal of Lhe
P8 audlL LhaL lncludes Lwo dlerenL analyses and valuaLlons Lhe P8 pollcles and Lhelr
level of L wlLh Lhe sLraLegy of Lhe rm and Lhe characLerlsLlcs of human caplLal everal
crlLerla have been used Lo assess dlerenL P8 pollcles neverLheless Lhe measuremenL
of Lhe value LhaL human caplLal brlngs Lo Lhe rm ls a very complex Loplc onsequenLly
dlerenL models are belng presenLed LhaL alm Lo properly solve Lhls challenge 1hls paper
wlll analyze Lhe P8 funcLlon from Lwo perspecLlves Lhe evaluaLlon of Lhe lmplemenLed
pollcles and Lhe quallLy of human caplLal ln relaLlon Lo real compeLencles and Lhe capablllLy Lo learn
and develop new skllls (!LL ,10% lnLll Advances ln Lcon 8es 8(1%
pp 3864 eb 02 c All 8lghLs 8eserved


oncepLuallzaLlon of P8 AudlLlng
AudlLlng has evolved becomlng lncreaslngly speclc unLll Lhe Lerm funcLlonal audlL has
emerged 1he ob[ecLlve of a funcLlonal audlL ls Lo dlagnose analyze conLrol and advlse
wlLhln Lhe boundarles of each funcLlonal area of Lhe company
1he P8 audlL ls a Lype of funcLlonal audlL 1hus as a rsL approach one could say LhaL
P8 audlLlng conslsLs of dlagnoslng analyzlng evaluaLlng and assesslng fuLure llnes of acLlon
wlLhln Lhe framework of P8,
P8 audlLlng ls a baslc Lool for Lhe managemenL of a company lLs ob[ecLlve ls noL only
Lhe conLrol and quanLlfylng of resulLs buL also Lhe adopLlon of a wlder perspecLlve LhaL wlll
ald ln denlng fuLure llnes of acLlon ln Lhe P8, eld 1hus P8 audlLlng musL perform Lwo
baslc funcLlons anLera 1993 lrsL lL musL be a managemenL lnformaLlon sysLem whose
feedback provldes lnformaLlon abouL Lhe slLuaLlon ln order Lo faclllLaLe Lhe developmenL of
managlng processes or Lhe developmenL of P8 n Lhe oLher hand lL musL be a way of
conLrolllng and evaluaLlng Lhe pollcles LhaL are belng applled as well as Lhe esLabllshed
processes
lL can be undersLood LhaL ln order Lo secure Lhe operaLlve emclency and user or cllenL
saLlsfacLlon an appralsal of Lhe resulLs of Lhe P8 funcLlon ls necessary Accordlng Lo Lhls
approach Lhe resulLs obLalned can be valued from cerLaln P8 pollcles (an exLernal Lype of
measuremenL% or from Lhe resulLs of Lhe pollcles or Lhe pollcles Lhemselves 1he resulLs can
be valued Lhrough Lhelr cosL (a measuremenL lnLernal Lo Lhe funcLlon% Walker 1998 1hls
would lead Lhe company Lo conslder some baslc quesLlons Are adequaLe P8 pollcles belng
developed? Are Lhe deslred resulLs belng obLalned? 1o whaL exLenL do Lhey add value Lo Lhe
company?



unlversldad ompluLense de ,adrldpaln
38A Anu A18L Pu,An 8Lu8L 39
1he purpose of Lhls work ls Lo oer a few guldellnes for Lhe appralsal of Lhe P8 funcLlon
whlch ls ln lLself Lhe basls for Lhe audlLlng process 1he ob[ecLlve ls Lo seL concepLual llmlLs
for lLs conLenL and Lo presenL Lhe dlerenL approaches wlLh whlch Lhe P8 audlL can be
presenLed


Approaches Lo P8 AudlLlng
P8 audlLlng has evolved ln recenL years Lo Lhe polnL LhaL lL has ceased Lo be a mere
lnsLrumenL of conLrol and has become a necessary declslon maklng Lool ln personnel relaLed
maLLers accordlng Lo Lhe global ob[ecLlves of Lhe company As a resulL all of Lhe funcLlons and
compeLencles of P8 audlLlng are belng progresslvely expanded 1hls ls creaLlng a dlsLlncLlon
beLween lLs componenL elemenLs and Lhe dlerenL Lypes of P8 audlLs ln Lhls way Walker
1998 dlerenLlaLes beLween Lwo approaches relaLlve Lo P8 audlLlng Lhose cenLered ln Lhe
funcLlonls lnLernal aspecL and Lhose cenLered on Lhe exLernal aspecL
rom an lnLernal perspecLlve as ln any sLa funcLlon Lhere ls a Lrend of valulng lLs
acLlons as a resulL of Lhe acLlvlLles underLaken and lLs cosLs ln Lhls way Lhe deparLmenLls
capablllLy would be [udged on lLs ablllLy Lo supply cerLaln servlces Lo Lhe organlzaLlon aL Lhe
lowesL posslble cosL under Lhls approach Lhe operaLlonal measuremenLs LradlLlonally used
are Lhose whlch refer Lo quanLlLy quallLy and rellablllLy or cosL and speed Lherefore placlng
Lhe focus on acLlvlLles cosLs or producLlvlLy raLlos
rom an exLernal perspecLlve lf lL ls undersLood LhaL Lhe ulLlmaLe appralsal of Lhe eecLlveness of
P8 ls based on Lhelr lmpacL on Lhe companyls resulLs Lhen Lhe measuremenLs
should lnclude resulLs obLalned ouLslde Lhe funcLlon
AnoLher wellknown classlcaLlon of P8 audlL approaches whlch ls used Lo sLrucLure Lhe
presenL work ls Lhe dlerence beLween Lhree focuses whlch are Lhe legal audlL of performance
or conformlLy Lhe operaLlve or emcacybased audlL and Lhe sLraLeglcal audlL



1he Legal Approach ln P8 AudlLlng
1hls rsL concepL of P8 audlLlng ls based on a legal ouLlook Accordlng Lo AnLona 1993
p 2 Lhe audlL of performance or conformlLy conslsLs of lmaklng an lnvenLory of Lhe soclal slLuaLlon
of Lhe company conslderlng Lhe labor law norms and regularly verlfylng Lhe
companyls compllance wlLh Lhe appllcable regulaLlonsi 1hus Lhls concepL ls cenLered on
Lhe verlcaLlon LhaL Lhe currenL labor laws are belng fullled 1he audlL should verlfy lf
Lhe rmls pollcles pracLlces and documenLs regardlng employee hlrlng reLenLlon dlsclpllne
LermlnaLlon and posLemploymenL are boLh falr and legal Plgglns 1997 1hese pracLlces
and pollcles musL prohlblL dlscrlmlnaLlon by oerlng equal employmenL opporLunlLles proLecL Lhe
employmenL seeker from belng dlscrlmlnaLed agalnsL on Lhe basls of age carry ouL
mlnlmum wages and conLaln provlslons regardlng menLal dlsablllLles and reasonable
accommodaLlons for dlsabled workers
Accordlng Lo nevado 1998 p 49 Lhe baslc funcLlons of Lhe audlL of conformlLy or of
performance as an elemenL of P8 audlLlng are Lhreefold 1he rsL funcLlon ls examlnlng Lo
see lf Lhe rm ls fullllng all lLs admlnlsLraLlve soclal obllgaLlons as well as Lhose relaLlve
Lo Lhe collecLlve rlghLs of lLs personnel 1he second ls Lo sLudy Lhe relaLlonshlp beLween Lhe
employees and Lhe rm based on Lhe legal sLaLuLes 1he nal funcLlon ls verlfylng lf Lhe
rm fullls lLs nanclal obllgaLlons (for example soclal securlLy paymenLs% as well as lLs
lnformaLlve ones

oncern abouL labor rlsks has creaLed a funcLlon wlLhln P8, wlLh Lhe purpose of alLerlng
worklng condlLlons by ldenLlfylng Lhe rlsks LhaL could sLem from Lhem and lmplemenLlng
necessary prevenLlve measures uch prevenLlve acLlvlLy could L perfecLly lnLo Lhe legal
approach of P8 alLhough Lhe eorL LhaL Lhe company can make ln Lhls sense can go beyond60 lAL8
L88uA8? 2002 vL 8 n 1
Lhe appllcaLlon of Lhe exlsLlng rlsk prevenLlon laws 1he requlremenL for labor securlLy
and hyglene ls a parL of Lhe search for quallLy of llfe ln Lhe workplace whlch ls becomlng
lncreaslngly demanded from companles


ocus of Lhe uncLlon Audl L
1he funcLlon audlL cenLers on lobservlng lf Lhe procedures applled are Lhe adequaLe ones
and lf Lhey funcLlon correcLly 1haL ls checklng Lo see lf Lhe relaLlonshlp beLween ob[ecLlves
and procedures ls a saLlsfacLory one and lf Lhls has been achleved ln Lhe mosL cosL eecLlve
manneri nevado 1998 p 30
1he funcLlon of Lhls level of Lhe P8 audlL ls Lo sLudy and analyze each one of Lhe speclc
areas of P8, 1he analysls should cenLer on Lhe planned measures Lhe meLhod of lmplemenLaLlon
and Lhe resulLs obLalned ln order Lo carry Lhls ouL Lhe areas LhaL are Lo be sLudled
musL rsL be ldenLled AfLerwards a llsL of Lhe lndlcaLors LhaL wlll serve Lo analyze each
of Lhem musL be made 1hese lndlcaLors can be elLher quanLlLaLlvely (absoluLe numbers or
raLlos% or quallLaLlvely derlved from Lhe responses glven by Lhe people lnvolved (managemenL
employees or exLernal experLs% A llsL of Lhe lndlcaLors correspondlng Lo Lhe dlerenL areas
of Lhe P8 funcLlon could conLaln some of Lhe followlng

1% uescrlpLlon of Lhe ompanyls La
1he compleLe sLa can be descrlbed by hlerarchlc levels years of servlce quallcaLlon
sex and naLlonallLy Lhe number of permanenL and Lemporary employees lnLerns and
physlcally or menLally challenged employees and lndexes of personnel roLaLlon and
absenLeelsm
2% !ob Analysls
!ob analysls can lnclude Lhe number of descrlbed posLs and occupanLs per posL Lhe
degree Lo whlch Lhe [ob descrlpLlon cards have been updaLed Lhe degree of deLall ln
Lhe [ob descrlpLlon cards and Lhe meLhods used Lo analyze and descrlbe Lhe [obs
3% P8 9lannlng
9lannlng lncludes Lhe meLhods employed Lo plan personnel needs Lhe measures adopLed
Lo cover fuLure personnel needs and Lhe Lemporary plannlng horlzon
4% 8ecrulLlng and 9ersonnel elecLlon
1hls lncludes Lhe number of days needed Lo ll a vacanL posL Lhe number of appllcaLlons recelved
by work place caLegorles Lhe average amounL of days beLween Lhe
recepLlon of Lhe appllcaLlon and Lhe nal answer Lhe average cosL of recrulLmenL and
selecLlon per [ob posL Lhe degree Lo whlch lnLernal and exLernal sources of recrulLmenL are used
Lhe average number of candldaLes LhaL do noL pass Lhe selecLlve LesLs a
sLudy of Lhe rellablllLy and valldlLy of Lhe selecLlon LesLs and Lhe degree Lo whlch Lhe
recrulLlng eorLs L Lhe companyls buslness plan
3% 1ralnlng
1he Lralnlng lndlcaLors are Lhe procedures followed and Lhe frequency wlLh whlch
personnel Lralnlng needs are analyzed Lhe crlLerla followed Lo dene Lhe conLenL of
Lhe Lralnlng programs Lhe evaluaLlon crlLerla of Lhe emcacy of Lhe Lralnlng programs
Lhe percenLage of Lhe P8 budgeL dedlcaLed Lo Lralnlng Lhe average number of hours
of Lralnlng per employee and Lhe percenLage of employees LhaL parLlclpaLe ln Lralnlng
programs by work place caLegorles
6% uevelopmenL of 9rofesslonal areers
1hese lndlcaLors lnclude Lhe percenLage of people promoLed per number of employees
Lhe percenLage of vacancles covered lnLernally and exLernally and Lhe average Llme per
employee lL Lakes Lo recelve a promoLlonA Anu A18L Pu,An 8Lu8L 61
7% 8eLrlbuLlon
8eLrlbuLlon can be measured by Lhe average wage per employee and wage dlerence
among employees Lhe xed and varlable componenLs of reLrlbuLlon Lhe percenLage
of remuneraLlon llnked Lo Lhe employeels yleld and Lhe lnLernal equlLy and exLernal
compeLlLlveness of Lhe reLrlbuLlon sysLem
8% 9erformance LvaluaLlon
LvaluaLlon lndlcaLors lnclude Lhe level of usage for promoLlon or career Lhe level
of feedback of resulLs Lo Lhe companyls personnel and Lhe degree Lo whlch poorly
performlng employees are asslsLed ln lmprovlng Lhelr performance
9% Work ondlLlons
Work condlLlons can be assessed by Lhe frequency and lndex of Lhe graveness of workrelaLed
accldenLs and by Lhe labor accldenL and slckness prevenLlon pollcles LhaL are ln
place

ln searchlng for adequaLe measuremenLs Lhe use of nanclal references Lo evaluaLe Lhe
cosLs and beneLs of P8 programs has become commonplace 9arsons 1997 lnanclal
analysls models applled Lo P8 developmenL programs are lncreaslngly belng seen ln Lhe
llLeraLure Pead 1993 wanson and Cradous 1998 ,osler 1990 and ln cases LhaL documenL
Lhelr use 9rlfrel 1983 !acobs eL al 1992 leezer eL al 1992

Crossman 2000 proposes a Lhreepronged approach for Lhe measuremenL of Lhe P8
funcLlon lrsL accordlng Lo Lhls model Lhere should be emclency measuremenLs LhaL help
Lo deLermlne Lhe way ln whlch Lhe resources are belng used WlLhln Lhls group are Lhe
measuremenLs of Lurnover qulLs and dlscharges as a percenLage of LoLal employees average
Lenure of employees ln varlous [obs absenLeelsm employee producLlvlLy and lnLellecLual
caplLal AfLer calculaLlng Lhe measuremenLs of emclency Lhey musL be compared Lo Lhe
resulLs obLalned ln prevlous perlods neverLheless Lhls ls noL sumclenL and lL ls crlLlcal Lo
benchmark agalnsL oLhers ln Lhe same lndusLry or professlon When lnemclencles are revealed
careful analysls of Lhe problem should follow before expendlLures are slashed 1hese cover
Lhe emclency slde buL one musL also look aL Lhe valuecreaLlon slde 1hus lL ls necessary
Lo develop a new seL of sLraLeglc measuremenLs LhaL connecL dlrecLly wlLh Lhe mlsslon and
sLraLegles of Lhe company
1he creaLlon and selecLlon of Lhese raLlos ls more dlmculL glven LhaL Lhey depend greaLly
on Lhe speclc company of whlch one ls Lalklng abouL lLzenz 1999 proposes a measuremenL
LhaL lncludes quallLy emclency and servlce Pe suggesLs uslng a raLlo consLrucLed around
ve facLors LhaL can be applled Lo anyLhlng LhaL one chooses Lo measure 1hese ve facLors
are cosL compleLlon Llme quanLlLy quallLy and Lhe human reacLlon 1hls sysLem concludes
wlLh Lhe calculaLlon of measuremenLs of Lhe P8 acLlvlLles whlch Lry Lo demonsLraLe Lhelr
nanclal vlablllLy 1hese measuremenLs are based on Lhe ldea of Lhe 8l raLlo whlch ls
calculaLed by dlvldlng Lhe moneLary value of a P8 program by lLs cosLs or Lhls Lhe cosL
of Lhe program LhaL ls belng measured musL rsL be deLermlned Lhen lL musL be LranslaLed
lnLo moneLary Lerms


1he LraLeglc AudlL Approach
nevado 1998 conslders LhaL Lhe audlL should also analyze lf Lhe personnel pollcles are
ln allgnmenL wlLh Lhe general ob[ecLlves and Lhe global sLraLegy of Lhe company lL musL
also LranslaLe Lhe P8 sLraLegy lnLo plans and programs 1hus appears a new elemenL of
Lhe audlL of P8 Lhe sLraLeglcal audlL uolan chuler and valle 1999 p 390 dene lL as
lLhe evaluaLlon of Lhe adapLaLlon of Lhe P8 pollcles and pracLlces ln Lhelr supporL of Lhe
companyls general sLraLegyi62 lAL8 L88uA8? 2002 vL 8 n 1
1he sLraLeglcal audlL of P8 helps assure LhaL Lhe P8 programs are allgned wlLh Lhe
companyls longLerm ob[ecLlves ln Lhls way Lhe P8 funcLlon ls becomlng a source of compeLlLlve
advanLage and ls ceaslng Lo be consldered as a speclallzed and unrelaLed funcLlon
LhaL lncurs hlgh cosLs Lo Lhe company When performlng Lhls evaluaLlon Lhe audlLor musL
ldenLlfy Lhe companyls global sLraLegy before deslgnlng Lhe P8 pollcles LhaL wlll conLrlbuLe
Lo lLs achlevemenL 1hese pollcles are Lhen compared Lo Lhe P8 pracLlces LhaL are currenLly
belng applled whlch leads Lo Lhe modlcaLlon of some pollcles Lo beLLer conform Lo Lhe rmls
sLraLegy

1he employeecllenLbeneL model LhaL was developed and applled aL ears and oLher
companles lllusLraLes Lhls compleLe allgnmenL of Lhe buslness and P8 measures 1hls allgnmenL
approach presenLs greaLer challenges slnce Lhe lmpacL of cerLaln acLlons on Lhe resulLs
ls frequenLly noL clear ,any P8 professlonals nd lL easler Lo look lnslde Lhan Lo connecL
Lhelr resulLs Lo organlzaLlonal measures ?eL wlLh relaLlvely llLLle eorL P8 leaders can
ldenLlfy Lhe keys Lo Lhelr buslness and Lhe acLlons Lo apply on Lhe people relaLed Lo Lhem
as well as Lhelr resulLs 1he maln change lnvolved for Lhose responslble for P8 ls Lo leave
behlnd Lhelr comforL zone and dedlcaLe more Llme Lo ndlng ways of lnLegraLlng P8 lnLo Lhe
buslness
WlLh Lhls approach Lhe measuremenLs applled musL be useful ln ldenLlfylng lf Lhe P8
acLlvlLles are belng developed adequaLely lf Lhe correcL resulLs are belng obLalned and lf
such acLlons add value Lo Lhe buslness As Welbourne and Andrews 1996 hlghllghL Lhe
lmporLance LhaL managemenL glves Lo lLs human caplLal ls one of Lhe mosL lmporLanL facLors
LhaL lnvesLors look for when assesslng Lhe aLLracLlveness of a company
8ecognlzlng Lhe sLraLeglcal lmporLance of P8 for any organlzaLlon Lhe measuremenLs
of resulLs can lead Lo measurlng Lhe lmpacL on buslness Lhrough Lhe exLraordlnary beneLs
generaLed as a resulL of a beLLer Lralned and moLlvaLed work force

8rown 2000 conslders LhaL Lhe measuremenLs used Lo evaluaLe Lhe companyls personnel
reecL nelLher lLs value nor lLs performance 1hls ls why he proposes an alLernaLe procedure
LhaL conslsLs of creaLlng a human caplLal lndex based on four elemenLs LhaL musL be carefully
sLudled conslderlng Lhelr relaLlve lmporLance Lo Lhe company Lhe number of years ln Lhe
buslness or eld Lhe level ln Lhe company (by [ob grade or organlzaLlonal charL level% Lhe
number and varleLy of poslLlons or asslgnmenLs held and Lhe performance raLlng whlch
ls sub[ecLlve lL ls Lhe resulL of an evaluaLlon of an employeels performance whlch should
lnclude an evaluaLlon by a superlor and anoLher of ob[ecLlve aspecLs such as sales beneLs
or oLher facLors 1hrough Lhe use of Lhls lndex Lhe value LhaL each employee has for Lhe
company would be obLalned over a LoLal of 100 polnLs 1hls lndex ls easy Lo calculaLe and
lnLerpreL and lL ls falr slnce lL ls based on a larger number of ob[ecLlve facLors ?eL lL ls
very slmple and does noL supply lnformaLlon abouL Lhe knowledge ablllLles values managlng
experlence or oLher facLors of each employee 1o overcome Lhls lnconvenlence 8rown has
creaLed a second lndex LhaL aLLempLs Lo measure Lhe employeels level of experlence and
apLlLudes

ome companles on Lhe oLher hand have developed and applled a balanced scorecard
approach Lo Lhe P8 funcLlon and LreaL lL as a buslness unlL ln and of lLself P8 leaders
musL use four dlerenL Lechnlques Lo measure cllenL aLLlLudes nanclal lmpacLs operaLlve
emclency and sLraLeglc capablllLy



oncluslon
Clven LhaL Lhe human facLor ls a prlme sLraLeglcal elemenL whlch explalns a companyls
dlerenLlaLlon capaclLy lL ls loglcal LhaL a measuremenL eorL of Lhe way Lhls funcLlon lsA Anu
A18L Pu,An 8Lu8L 63
underLaken ln Lhe company ls made 1haL ls Lhe conLenL of Lhe P8 audlL whlch goes beyond
Lhe slmple lnvesLlgaLlve funcLlon and ls an exLenslon of Lhe LradlLlonal concepL of Lhe accounLs
audlL
1he exlsLlng llLeraLure descrlbes dlerenL approaches Lo P8 audlLlng lncludlng Lhe legal
approach Lhe funcLlonbased approach and Lhe sLraLeglc approach All of Lhem have been
analyzed ln Lhls work
1he legal approach cenLers on ndlng ouL lf Lhe company ls complylng wlLh Lhe currenL
labor laws 9resenLly lL focuses malnly on Lhe evaluaLlon of Lhe companyls eorLs ln Lhe
prevenLlon of workrelaLed rlsks 1he funcLlon approach analyzes Lhe appllcaLlon of dlerenL
P8 pollcles everal measuremenL sysLems have been presenLed wlLh Lhe same baslc ldeas
whlch lnclude Lhe sLudy of planned measures Lhe meLhod of lmplemenLaLlon and Lhe resulLs
obLalned ?eL Lhese Lwo approaches are llmlLed Lo Lhe operaLlonal and LacLlcal elds and
do noL evaluaLe lf P8, supporLs or alds ln Lhe achlevemenL of Lhe companyls sLraLegy 1hls
ls why Lhe sLraLeglcal approach has been developed as a means of deLermlnlng lf Lhe P8
funcLlon ls a source of compeLlLlve advanLage for Lhe company 1hls Lhlrd approach Lhrough
Lhe use of several sysLems such as Lhe cllenLemployeebeneL model or 8rownls human caplLal
lndex can make Lhe companyls managemenL aware of Lhe Lrue lmporLance of lLs employees
by ldenLlfylng Lhem as a key resource worLh opLlmlzlng 1hls ldea can lead Lo mlsLakes when
Lhe employees come Lo be consldered as properLy of Lhe company 1he correcL lnLerpreLaLlon
would be Lo Lhlnk of personnel noL as human caplLal buL as Lhe owners and lnvesLors of
human caplLal uavenporL 2000













lL ls lnLended Lo evaluaLe Lhe efflclency and effecLlveness of your P8 managemenL funcLlon
lL wlll provlde lmporLanL feedback wheLher Lhe P8 funcLlon ls conLrlbuLlng Lo Lhe achlevemenL of
your organlzaLlons buslness ob[ecLlves
enlor managemenL needs Lhls lnformaLlon ln order Lo make sLraLeglc declslons Lo lmprove
producLlvlLy
?ou can use Lhls feedback Lo Lake correcLlve acLlons and make declslons on lmprovemenL plan
Among varlous purposes you can use Lhe Puman 8esources AudlL lnformaLlon
1o evaluaLe wheLher performance of your P8 funcLlon ls as expecLed
1o lmprove conLrlbuLlon of Lhe P8 funcLlon Lo Lhe achlevemenL of your buslness ob[ecLlves
1o comply wlLh Lhe counLrys laws and organlzaLlonal pollcles and procedures
1o develop Lhe professlonallsm of your P8 people
1o faclllLaLe beLLer P8 plannlng
lL ls clear LhaL Lhls lnvolves examlnlng your currenL P8 pollcles pracLlces and sLraLegles and Lo verlfy
Lhelr effecLlveness ln helplng your organlzaLlon lmprove lLs producLlvlLy and proflLablllLy

omparlson WlLh lnanclal AudlL
lL dlffers from a flnanclal audlL whlch seeks Lo flnd lnaccuracles or mlsLakes
A flnanclal audlL looks aL pasL evenLs An P8 audlL looks Lo Lhe fuLure seeklng Lo dlscover P8 besL
pracLlces LhaL are relevanL Lo your buslness acLlvlLles

Puman 8esource AudlL
Lnables ?our P8 uncLlon Lo
Pelp Achleve ?our 8uslness b[ecLlves



Scope Of the Audit
This is clear Irom what Jeff Sacht (September 2001), had put down as the scope oI an HR audit.
AudlL f 1he uncLlonal 8ole P8
1hls conslsLs of Lhe Puman 8esource uevelopmenL ysLems and 9rocedures (P8u% Puman 8esource
,anagemenL (P8,% P8 lnformaLlon ysLems
AudlL f Lhe ervlce 8ole f P8
AudlL f Lhe ompllance 8ole f P8
AudlL f Lhe LraLeglc 8ole f P8 and
AudlL f Lhe lnanclal ,anagemenL 8ole f P8 (flnanclal raLlos%

!7inciples !7oposed by Ul7ich
ave Ulrich and his associates advocate Iour key principles in Human Resources Audit whereby HR proIessionals must
ensure the existence oI certain speciIic things.
,aklng avallable llne managemenLfrlendly sysLems and procedures Lo help managemenL execuLe
Lhelr people managemenL role 1hls ls Lhe Lechnlcalprofesslonal and servlce role of P8
Lqulpplng llne managemenL ln order Lo work wlLhln labor relaLlons laws and codes of conducL 1hls ls
Lhe compllance role of P8
lmplemenLlng P8 sLraLegy ln each 8uslness unlL ln order Lo lncrease Lhe value of employees Lo Lhe
buslness 1hls ls LhesLraLeglc role of P8 and
8unnlng P8 sysLems and procedures aL Lhe mosL cosLeffecLlve way 1hls ls Lhe flnanclal
managemenL role of P8

ow Do You Conduct an uman Resou7ces Audit?
!repare well Ior the audit. !lanning plays a very important part in its success.
lottlclo Mcloqoo ooJ teom (1990) developed a model Lo help ln preparlng an audlL quesLlonnalre Lo
audlL Lhe role of Lhe P8 funcLlon
1hese are
AudlL of Lhe P8 developmenL sysLems and procedures coverlng
Training and development
rganlzaLlonal developmenL and
areer developmenL
AudlL of Lhe P8 developmenL sysLems and procedures LhaL Lhey musL supporL P8 managemenL
sysLems and procedures lncorporaLlng
rganlzaLlonal and [ob deslgn
P8 plannlng
!erIormance management, and
Recruitment and selecLlon
AudlL of Lhe Human Resources InIormation System LhaL lL musL supporL boLh Lhe P8 developmenL and P8
managemenL Lo achleve resulLs lncludlng
ompensaLlon and beneflLs
Lmployee asslsLance
Labor relaLlons and
P8 research and lnformaLlon sysLems LhaL provlde Llmely lnformaLlon for declslon maklng
AudlL of Lhe servlce role of human resource lncorporaLlng
1anglbles such as faclllLles equlpmenL people
8ellablllLy of human resource wlLh all Lhelr skllls compeLencles and lndlvldual personallLles
8esponslveness of P8 as compared Lo belng reacLlve
Assurance of quallLy and
LmpaLhy Lowards workforce
AudlL of Lhe compllance role of human resource wheLher managemenL and P8 have lncorporaLed
any codes of besL pracLlce requlred by leglslaLlon and oLher requlremenLs
AudlL of Lhe sLraLeglc role of P8 ln
!ob deslgn
9erformance expecLaLlon
rganlzaLlonal sLrucLure
ompensaLlon pollcles
LmploymenL pollcy
Lmployee parLlclpaLlon pollcy
8uslness and P8 lnformaLlon and
LlneP8 relaLlons
AudlL of Lhe flnanclal managemenL role of P8 lncludlng flnanclal raLlos and scorecard measures 1hls
has bearlngs on Lhe requlremenL for Puman 8esource ,anagers and P8 professlonals Lo be
knowledgeable abouL formulaLlon of P8 meLrlcs
1he measures refer Lo
9lannlng and sLafflng acLlvlLles
8ecrulLmenL efflclency for example Lhe requlred people are recrulLed on Llme
8ecrulLmenL effecLlveness such as people of Lhe rlghL quanLlLy and quallLy are successfully recrulLed
ompensaLlon measures and Lhelr effecLlveness ln lmprovlng producLlvlLy
8eneflLs LoLal cosL
rlenLaLlon cosL per employee
ounsellng/dlsclpllnary cosLs
,anhour losL
1urnover raLes showlng effecLlveness of employee reLenLlon plan
1ralnlng and developmenL cosLs and
rganlzaLlonal developmenL measures for example rlsk Laklng sLress

ldenLlfylng Lhe P8 uLcomes of Puman 8esources AudlL
1hese are some of Lhe ouLcomes LhaL you can expecL
osLeffecLlveness of Lhe recrulLmenL and selecLlon process
ompeLency level of employees ln Lhe performance of Lhelr [ob
LffecLlveness of Lralnlng and developmenL programs
Lmployee commlLmenL Lo asslgned Lasks
AblllLy Lo achleve deflned performance LargeLs
8ewards and lncenLlve sysLem LhaL can moLlvaLe employees Lo perform beLLer
LraLegles Lo reLaln good employees

lmplemenLaLlon 9lan
onducL meeLlng Lo agree on audlL seLup
Agree on
scope
meLhods
LlmeLable
performance measures
communlcaLlon Lo P8 llne and unlon(s%
preparaLlon and flnallzaLlon of quesLlonnalre and
preparaLlon balanced scorecard where deemed necessary
8rlef deparLmenLal heads on Lhelr roles aL every sLage of Lhe Puman 8esources AudlL
onducL audlL
comblned efforL/Leamwork
carry ouL audlL on pollcles procedures sysLems lnformaLlon
conducL focus groups dlscusslon
analyze and evaluaLe flndlngs
lnallze reporL based on boLh quanLlLaLlve and quallLaLlve flndlngs 9resenL Lhe resulLs Lo senlor
managemenL for lnformaLlon and endorsemenL lL musL sLaLe Lhe performance gaps and propose
remedlal acLlons
bLaln feedback on Lhe Puman 8esources AudlL

R Management Audit Methods
ou may adopt one oI the methods used by many organizations.
uevelop sLandards from Lhe sLaLlsLlcs generaLed by Lhe P8 AudlL use Lhese Lo evaluaLe your P8
acLlvlLles Lo deLecL mlsLakes and weaknesses
,ake use of Lhe elemenLs of your P8 lnformaLlon sysLem Lo flnd ouL wheLher your P8 acLlvlLles
comply wlLh Lhe law and organlzaLlonal pollcles
use Lhe managemenL by ob[ecLlves (,8% approach ompare Lhe ob[ecLlves wlLh acLual resulLs
1hls deLecLs poor performance enabllng you Lo Lake Llmely remedlal acLlon
uslng an ouLslde parLy Lo conducL Lhe audlL dependlng on Lhe slLuaLlon
hoose whlch approach flLs Lhe slLuaLlon ln your organlzaLlon

ources of lnformaLlon
Ask Lhe rlghL quesLlons Lo ldenLlfy Lhe Lypes of records LhaL you can refer Lo when conducLlng Lhe
Puman 8esources AudlL
?ou may end up wlLh records such as recrulLmenL cosL daLa [ob descrlpLlons employmenL lnLervlew
records accldenL records appralsal lnLervlew records and grlevance records lnd ouL wheLher
Lhere are oLher relevanL documenLs
?ou need Lhese records Lo gaLher lnformaLlon Lo faclllLaLe a good Puman 8esources AudlL
lnadequaLe or lnaccuraLe lnformaLlon leads Lo lnaccuraLe analysls and concluslons


knowlng Well ?our P8 uncLlon
onLrlbuLes Lo LffecLlve Puman 8esource AudlL whlch ln Lurn Pelps lmprove ?our P8 uncLlon


R Function Cont7ibution
There is an increasing call Ior the HR Iunctions to contribute towards the proIitability oI organizations.
1he AudlL flndlngs can help you Lo
ldenLlfy and assess P8 conLrlbuLlon Lo Lhe organlzaLlon
reaLe or lmprove your human resource buslness plan
8ulld up Lhe professlonal lmage of P8
Lnsure LhaL Lhe P8 funcLlon achleves lLs ob[ecLlves
,ake unlform human resource pollcles processes and pracLlces
larlfy P8 duLles and responslblllLles
verlfy your organlzaLlons compllance wlLh currenL regulaLlons and procedures
ldenLlfy rlsks and areas where you can reduce cosL
An arLlcle ln locos quoLes Adler a leadlng consulLanL auLhor and speaker ln Lhearea of P8
audlLs
1he rlsks LhaL organlzaLlons explore when Lhey conducL P8 audlLs Lend Lo relaLe Lo flnanclals Lhe
organlzaLlon's repuLaLlon Lhe employmenL brand and Lhe ablllLy Lo aLLracL andreLaln Lop LalenL
lL sLaLes furLher LhaL rlsks ldenLlflcaLlon and conLrol have been Lhe LradlLlonal drlvers for Lhe P8
AudlL and LhaL from such audlLs many besL pracLlces have sprung
aclllLaLe mlndseL change among employees
uevelop a userfrlendly human resource lnformaLlon sysLem LhaL everybody can easlly undersLand
and lmplemenL

P8 9arLlclpaLlon ln Puman 8esources AudlL
lL ls beneflclal lf P8 ls lnvolved ln Lhe audlL lL can help Lowards beLLer managemenL of Lhe P8
funcLlon
As Lhe Puman 8esource ,anager or an P8 professlonal you are expecLed Lo ldenLlfy P8
performance lndlcaLors LhaL LranslaLe lnLo cash
onducLlng a Puman 8esource AudlL helps you ln fulfllllng Lhls expecLaLlon


8emember

When you make preparaLlon and subsequenLly conducL an P8 AudlL Lake lnLo conslderaLlon
lLs connecLlon wlLh your organlzaLlons overall ob[ecLlves
your Puman 8esource managemenL ob[ecLlves
your Puman 8esource acLlvlLles and
Lhe P8 ouLcomes LhaL you wanL Lo achleve
onducLlng a Puman 8esources audlL adds value Lo your organlzaLlon and your P8 deparLmenL lL
helps Lo make Lhe deparLmenL more relevanL Lo organlzaLlonal acLlvlLles