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HR Audit

Richard Menes

Aspects of HR Audit

Strategic Functions

Compliance Issues

What is HR Audit?

It is a Comprehensive Evaluation of Human Resource Development: Strategies, Systems and Practices Structures and Competencies Styles and Culture And their appropriateness to achieve the short and long term business goals of the organization.


To assess the effectiveness of the Human Resources function to ensure regulatory compliance To look for potentially serious problems To find areas needing improvement

To document processes for use in merger, reorganization or inspection

To address compliance issues


Create an HR business plan

Streamline HR work processes

Monitor compliance with established regulations and procedures Develop user-friendly HR systems

Identifies the contribution of the personnel departments to the organization

Improves professional image of the personnel department Encourages greater responsibility and professionalism among members of the personnel department Clarifies the personnel departments duties and responsibilities Finds critical personnel problems

To Evaluate and Improve HR Practices in:


Compensation and Benefits

Performance Management Employee Development Employee Relations Safety

Reporting and Recordkeeping

Reasons for HR Audit

For expanding, diversifying and entering into a fast growth phase For promoting more professionalism and professional management Bench-marking for improving HRD practices Growth and diversification Dissatisfaction with any component

Change of leadership

Role of HR Audit in Business Improvements

HRD audit is cost effective

It can give many insights into a company's affairs.

It could get the top management to think in terms of strategic and long term business plans. Changes in the styles of top management Role clarity of HRD Department and the role of line managers in HRD

Role of HR Audit in Business Improvements

Improvements in HRD systems

Increased focus on human resources and human competencies

Better recruitment policies and more professional staff

More planning and more cost effective training

Strengthening accountabilities through appraisal systems and other mechanisms

Streamlining of other management practices

TQM Interventions


Audit of Corporate Strategy Corporate Strategy concerns how the organization is going to gain competitive advantage. Audit of the Human Resource Function Audit touches on Human Resource Information System, Staffing and Development, and Organization Control and Evaluation. Audit of Managerial Compliance Reviews how well managers comply with human resource policies and procedures.

Audit of Employee Satisfaction To learn how well employee needs are met.

Tasks of Auditors

Identify who is responsible for each activity. Determine the objectives sought by each activity.

Review the policies and procedures used to achieve these activities.

Prepare a report commending proper objectives, policies, and procedures. Develop an action plan to correct errors in each activity. Follow up the action plan to see if it solved the problems found through the audit.



Individual and group Top Management Line Managers HRD Staff Workmen and others

Task forces and internal teams External Auditors have a significant role Benchmarking of questionnaire data

Questionnaires Observation

Analysis of records and secondary data