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HR Audit

Audit a control device

Edwin B Flippo: The HR audit is a systematic survey and analysis of all operative functions of HR with a summarised statement of findings and recommendations for correction of deficiencies.
It covers 1. Measurement and evaluation of HR programmes, policies and practices, 2. Identification of gaps between objectives and results, and, 3. Determination of what should or should not be done in future.

1. To review the system of recruitment, selection, training and development, allocation and utilisation of human resources in the organisation. 2. To evaluate the extent to which the HR Management policies and procedures are implemented by the various departments in the organisation. 3. To find out any deficiencies and shortcomings in the management of human resources.

Need: 1. Increasing size of the organisation and HR in several organisations. 2. Changing philosophy of management towards HR.

3. Increasing strength and influence of trade unions.

4. Increasing dependence of the organisation on the HR system and its effective functioning.


1. Identifies the contributions of HR department.

2. Improves the professional image of HR department. 3. Classifies the HR departments duties and responsibilities. 4. Stimulates uniformity of HR policies and practices. 5. Finds critical HR problems. 6. Ensures timely compliance with legal requirements. 7. Reduces HR costs.

Scope : Areas and Levels

Major areas

Level 1: Results
Personnel shortages, supplies, layoff, etc.

Level II: Level III: Programmes & Policy Procedures

Time bound or network cost/benefit budget, etc. Explicit statement to provide inclusive personnel plans for present & future.

Planning: Forecasting & scheduling to meet organisation & needs.

Major areas

Level 1: Results

Level II: Programmes & Procedures

Level III: Policy

Staffing & Development : Defined requirements & careers; sources, recruitment, selection, training, promotions.

Recruitment times costs, training times cost, labour turnover, etc.

In-house & out house training programmes; guidance in careers, etc.

Let cream rise, nondiscrimination etc.

Major areas

Level 1: Results
Feedback, reader interest, extent of format, organisation, reports, records, etc.

Level II: Level III: Policy Programmes & Procedures

Job definitions for individuals, departments, task forces, house organs, etc. Encourage flexibility, reduce resistance to change, effective threeway communication , etc.

Organising: Maintaining structures for coordinating, communicat ing, collaboratin g, etc.

Major areas

Level 1: Results Productivity, performance norms, comparative costs, etc.

Level II: Programmes & Procedures Job enlargement, wage & salary administration, morale survey, exit interviews, fringe benefits, etc.

Level III: Policy Gain high personal identification, ensure full satisfaction.

Motivation & Commitment : Individual & group motivation, interest, effort, contribution.

Major areas

Level 1: Results
Suggestions, promotions, grievances, discipline, unionmanagement cooperation.

Level II: Programmes & Procedures

Consultative supervision, collective bargaining, unionmanagement committees, etc.

Level III: Policy

Style adapted to changing expectations, participative involvement, collective bargaining, etc.

Administrati on: Style of leadership and supervision, delegation, negotiation.

Major areas

Level 1: Results
Changes, experiments, research reports, publications.

Level II: Level III: Programmes Policy & Procedures

R&D approach in all areas, suggestion plans, etc. Test old & new theory, encourage creativity in management.

Research & innovation: Experiments & theory testing in all areas.

HR audit process: 1. Identifying indices, indicators, statistical ratios and gross numbers in some cases.

2. Examining the variations in time-frame in comparison with a similar previous corresponding period.
3. Comparing the variations of different departments during different periods. 4. Examining the variation of different periods and comparing them with similar units and industries in the same region.

5. Drawing trend lines, frequency distributions and calculating statistical correlations.

6. Preparing and submitting a detailed report to the top management and to the top managers at appropriate levels for information and necessary actions.

Types of audit:
Internal audit: done by employees of the HR department of the organisation. External audit: done by external specialists or consultants in HR management. Crisis audit: conducted when serious crisis occurs like strikes, increase in the number of conflicts, grievances, etc. Regular audit: audit of almost all the HR policies and practices certain indicators like absenteeism and employees grievance should be audited at the end of every month/quarter depending upon the magnitude of the issues.

Audit report:
1. Table of contents 2. Preface

3. Statement of the objectives, methodology, scope and techniques used.

4. Synopsis- summary and conclusion.

5. A clear and in-depth analysis of the data and information, furnished area-wise or departmentwise. 6. Evaluation, discussions and analysis.
7. Appendix supporting data and information. 8. Bibliography important books and journals.

Problems in HR audit:

1. Past ratios, rates of turnover, expenditure, etc of HR dept is compared with those of other depts and organisations. The organisation cannot be taken as standard for comparison.
2. A tendency to turn the survey into a faultfinding process.