Human resources auditing is the process of reviewing an organization's HR policies, procedures, practices, and documentation to assess legal compliance. The audit can be conducted internally by the organization's HR department or by an independent auditor.
The process involves a comprehensive review of various HR functions like recruitment, performance management, compensation and benefits, employee relations, compliance with labor laws, and record-keeping. The goal of a human resources audit is to ensure that the organization is operating in compliance with relevant laws and regulations.
Auditing also helps ensure that HR practices at your company are effective, and that the organization's employees are being managed properly. This will allow you to identify areas where you can improve HR practices, reduce risk, and increase overall effectiveness.
Simply put, human resources audits are important because they help organizations to ensure that they are complying with the law. Failure to do so can result in legal liabilities and financial penalties, so an audit will help you prevent this by finding out where your company needs to improve compliance practices.
HR audits help you to avoid risks like inadequate documentation, inconsistent application of policies, and poor training. By addressing these risks, organizations can reduce the likelihood of lawsuits, complaints, and other negative consequences.
HR audits also provide an opportunity for organizations to evaluate their current HR practices and identify areas where they can improve. By implementing changes based on the findings of the audit, companies can improve their overall HR effectiveness and better prepare for the next audit.
The auditing process can be complex however there are several key steps that almost always have to be implemented. Let’s take a look in more detail:
Define coverage. Determine the areas you want to audit, such as hiring and recruitment, employee relations, compensation, benefits, etc.
Prepare a checklist. Create a comprehensive list of questions or items to review in each area of the audit. This needs to cover all relevant legal and regulatory requirements.
Collect data. Gather all relevant data on factors like policies and procedures, employee handbooks, job descriptions, etc.
Conduct interviews. Conduct interviews and/or surveys with your employees to gather information about HR practices and identify areas for improvement.
Analyze the data. Analyze the data collected from the audit checklist, interviews, and surveys to identify gaps or areas of noncompliance.
Develop recommendations. Use the analysis to create recommendations on improving HR policies, practices, and procedures.
Implement recommendations. Implement the recommendations and update HR policies and procedures accordingly.
Monitor progress. Monitor progress and evaluate the effectiveness of the changes that you made as part of the audit.
While an HR audit can be conducted at any time, there are certain situations where it is particularly important to conduct one. For example, during mergers and acquisitions, an HR audit can help ensure that both companies are aligned in terms of HR policies, procedures, and practices.
When there are changes in laws or regulations related to employment, an HR audit can help ensure that the organization is in compliance with these new requirements. Additionally, when an organization is growing or expanding, an HR audit can help ensure that HR policies and practices are scalable and can support the increased workforce.
You can best prepare for an HR audit by using PeoplePulse to prepare high-quality surveys for your employees to answer. These will allow you to gauge the current engagement of your team, understand their awareness of local laws and legislation, and discover a number of other key and custom metrics you may need to consider. Send us an email and one of our experts will get back to you with more information.