What are the steps of HR Audit Process?
An HR audit reviews an organization’s essential human resources functions to determine compliance with state and federal regulations. An HR audit gives businesses the opportunity to identify any potential human resources compliance issues and establish HR best practices. It is similar to a financial or tax audit for businesses.
8 steps for a Successful HR audit
1.Identifying the Objectives of HR Audit
HR audit assesses the functions and activities to be carried out under the HR department. The aim, schedule, and planning made by the HR audit should move on the same track. It is necessary to ensure that these HR strategies are in line with corporate strategies. There is a need for an improvement in the way HR is managed.
2.Developing a Rough Audit Plan
An auditor should have an idea about what he has to do before implementing the auditing process. An assessor should have a rough idea about the manpower required, expected costs, and equipment needed for the entire audit procedure. The best means by which relevant information can be gathered is to prepare a framework.
3.Collecting Background Data
An auditor must have appropriate information about internal and external factors that may influence the HR auditing process. External factors include the competency level of the particular organization, the legal environment, and the entire summary of the organization. This information is known as background data or background data
4.Determining the Technique of Data Compilation
- Some of the techniques used for data collection are the interview method, the questionnaire method, the task force method, the observation method, etc. Auditors can opt for one or more than one technique at a time.
- Besides this, the time required and cost of assessment are also decided in advance so that the auditing process can take place effortlessly and effectively.
5.Finalising the Audit Plan
If there is a requirement for any improvement in the rough audit plan, changes can be made at this stage before finalizing it. Background data and knowledge gained can also be useful in upgrading the pre-Figure 8.1: Process of HR Audit planned auditing plan.
6.Audit Data Collection
- In this process, the assessor gathers all the relevant information from various sources and combines it to analyze the strengths and weaknesses of the HR department.
- The HR auditor verifies the data collected from human resource management with the final audit plan after receiving all of the data.
- At this stage, the assessor should keep in mind that the data must be collected completely for the audit function to go smoothly.
7.Developing an Audit Report
- After gathering all the data regarding the HR functioning, an assessment programme is conducted within different areas of the HR department.
- Along with this, the working atmosphere, functioning of employees, the objectives of the HR unit, policies and strategies undertaken by HR audit and HRIS are also included during the evaluation.
8.Decision Based on the Audit Report
- This is the concluding stage in which the organization makes appropriate decisions after seeing the final audit report.
- Management even asks for auditors’ recommendations so that the decision-making process becomes easier for them.
If some changes are required in setting the objectives of the HR department or in the strategies or in the performance of the employees, the HR auditor’s suggestions can prove to be very constructive for the authorities.
Human Resource Audits aren’t common techniques for resolving issues. HR audits, on the other hand, provide information on the sources of present and future difficulties. The findings of these audits are usually internal records that do not need to be shared with the public, and they enhance decision-making within the organization.