Need and Objectives of HR Audit

Today, human resources are considered as strategic business partner. They are definitely one of the major factors in building world-class and competitive organization. Realizing the importance of human resource development, organizations have started making HR (Human Resource) philosophy as a part of their mission statement. However, when it comes to business priorities, HRD (Human Resource Development) takes a back seat. This is because of lack of linkages of HRM (Human Resource Management) policies with overall business strategy. Again there is lack of clarity on impact of various HRM policies on performance of the organization.

In order to develop HRM in its proper state i.e. recognizing and developing it as a strategic business partner, it is necessary and important for organizations to evaluate and examine the components of their HRM practices. This evaluation should be in terms of alignment of various HRM components with business needs and strategy. After evaluation, this perspective should be used to further enhance and strengthen HRM. HR Audit attempts to make such evaluation.

Human Resource Audit is a comprehensive evaluation of the current HR systems and strategies, structure and competencies, culture and impact’ in the context of short and long term plans of the company. It starts with the long term and short term plans of the organization and attempts to  assess the competency requirements of employees to achieve these plans.

An attempt is made to assess:

• The competencies needed at present
• Existing systems to develop these competencies
• The adequacy/ inadequacy or maturity levels of these systems
• Existing structures and competencies and their adequacy/ inadequacy
• Commitment levels exhibiting mechanisms to further it or build work motivation
• Work culture and methods of building the same.

HR Audit is of great importance in today’s competitive environment. Firms conduct it keeping in view variety of objectives.

Such audit is needed due to following reasons.

• Alignment and realignment of HR with business goals.
• To make HR business driven.
• Promotion of professionalism among employees and company.
• Understanding the reasons for lower employee productivity and employee attrition; and improving the same.
• To review and improve effectiveness of various HR systems like manpower planning and recruitment, training and development, performance appraisal, etc.
• To create high return on investment on HR.

HR Audit is needed because

• It infuses a sense of professionalism among the HRD staff.
• It reduces cost of Human Resource operation through more effective HR practices.
• HR audit ensures that all company policies and programs are in lieu with the legal requirements necessary for that purpose.
• Such audit finds critical HR problems and appropriate solutions to them.
• It enhances positive image of the Human Resource Department.
• The audit reviews the HRD performance and gauges the overall efficacy of the company’s policies.
• It evaluates performance of staff using various tools such as Performance Appraisal Reports and others while putting forward appropriate recommendations for more improvement in their productivity.
• HR audit helps to analyze factors which are detrimental to company’s health in the long run due to implementation and non-implementation of certain policies.
• HR audit suggests corrective measures to identify mistakes and shortcomings if any relating to the company’s day to day activities.
• HR audit lets the business firm analyze where it stands in front of its competitors.

Objectives of the Human Resource Audit

• To review the performance of the Human Resource Department and its relative activities in order to assess the effectiveness on the implementation of the various policies to realize the Organizational goals.
• To identify the gaps, lapses, irregularities, short-comings, in the implementation of the Policies, procedures, practices, directives, of the Human Resource Department and to suggest remedial actions.
• To know the factors which are detrimental to the non-implementation or wrong implementation of the planned Programmes and activities.
• To suggest measures and corrective steps to rectify the mistakes, shortcomings if any, for future guidance, and advise for effective performance of the work of the Human Resource Department.
• v To evaluate the Personnel staff and employees with reference to the Performance Appraisal Reports and suggest suitable recommendations for improving the efficiency of the employees.
• To evaluate the job chart of the Human Resource Managers, Executives, Administrative Officers, Executive Officers, Recruitment Officers, whether they have implemented the directives and guidelines for effective Management of the Human resources in their respective Departments.

HR Audit Benefit

A regular HR audit helps an organization in many ways. The major benefit that we derive from HR audit is its ability to act as a moral check on the company’s staff. In a way, it promotes healthier relationship between the staff and owners ultimately resulting in more success of the firm.

No doubt, the success and longevity of any company ultimately depends upon the caliber of its staff. While most owners solely focus on reducing their cost of operation and enhancing profit, HR audit at the same time looks into the intricacies of how to keep the employer-employee relationship at optimum level for long-run triumph of the firm.

The audit helps clarify the department’s role and leads to greater uniformity, especially in the geographically scattered and decentralized HR function of large organisations. Perhaps most important, it finds problems and ensures compliance with a variety of laws and strategic plans in an organization.

• Identifies the contribution of Human Resource department to the organization
• Improves the professional image of the Human Resource department.
• Encourages greater responsibility and professionalism among member of the Human Resource department.
• Clarifies the HR department’s duties and responsibilities.
• Stimulates uniformity of HR policies and practices.
• Finds critical HR problems.
• Ensures timely compliance with legal requirements.
• Reduces human resource cost through more effective Human Resource procedure.
• Creates increased acceptance of needed change in the Human Resource department.
• Requires thorough review of Human Resource department’s information system.