Scope of HR Audit

From the above discussion it is clear that HR Audit is a detailed comprehensive evaluation, which comprises of detailed study of various aspects and components of HR. These components are:

HR Systems: Systems are organized way of making things happen. They assist in planning, prediction and bringing professionalism, discipline and security. Every system has its own objectives, elements and process. The purpose of HR system is to build competencies and commitment of individuals, teams and entire organization through variety of instruments. These systems include: manpower planning, performance management, feedback, training and development etc.

HR Strategies: Strategies are organized way of doing the things. HR strategies imply the choice of the organization to use various systems related to HR functions like recruitment, training, motivation performance appraisal etc. Some of the important strategies include: culture building strategy, communication strategy, quality and customer orientation strategy etc.

HR Competencies: HR competencies are skill and knowledge required by the main stakeholders of the organization that hold the key for making human resources of the organisation work. These include competencies of people working in the HR department.

HR Culture and Values: HR audit attempts to evaluate the extent to which organization has OCTAPACE values and culture. It indicates culture which encourages and promotes Openness, Collaboration, Trust, Authenticity, Pro -action, Autonomy, Confrontation and Experimentation.

HR Impact and Alignment: HR impact includes the impact made by various HR interventions in terms of its contribution to organizational performance. This performance can be in terms of outcome variables such as cost reduction, revenue generation, profit etc. and process variables in terms of talent management and intellectual capital formation.

The essential features of HR audit are:

• The measurement and effectiveness HR management’s mission, goals, strategies, policies, programmes and activities, and
• To determine the action plan for future in response to the results from such measurement.

According to R.D. Gray, “the primary purpose of audit is to know how the various units are functioning and how they have been able to meet the policies and guidelines which were agreed upon; and to assist the rest of the organization by identifying the gap between objectives and results for the end product of an evaluation should be to formulate plans for corrections or adjustments.”

Approaches to Human Resources Audit

The following approaches are adopted for purpose of evaluation.

• Comparative approach – In this, the auditors identify Competitor Company as the model. The results of their organization are compared with that Company/ industry.
• Outside authority approach – In this, the auditors use standards set by an outside consultant as benchmark for comparison of own results.
• Statistical approach – In this, Statistical measures are performance is developed considering the company’s existing information.
• Compliance approach – In this, auditors review past actions to calculate whether those activities comply with legal requirements and industry policies and procedures.
• Management by objectives (MBO) approach – This approach creates specific goals, against which performance can be measured, to arrive at final decision about organization’s actual performance with the set objectives.