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Human Resource Audit: Issues & Benefits

Posted by | August 8, 2020 | blog

Human Resource of an Organisation

The first time I heard the word ‘Human Resource Audit’, I was confused because, before then, I had thought audit was only associated with the accounting profession. This is NOT totally true but they are related in the sense that they both try to investigate and detect what is MISSING or wrong and make recommendations.

Human Resource Audit is a process of accessing the quality and quantity (number) of staff within an organization and current practices with a view to detecting if it meets the requirements necessary for achieving its goals and objectives. It is “a comprehensive method of objective and systematic verification of current practices, documentation, policies and procedures prevalent in the HR system of the organization”.

It is a systematic analysis of the quantity and quality of the human resources of an organization aimed at determining if the organization has more or less staff than it requires to perform its services, or the skills required for effective and efficient realization of its organizational goals are or are not adequately sufficient presently in the organization.

In the process, if there are more staff than required by the organization, the organization may decide to retrench, redeploy or review and determine the appointment of excess staff. On the other hand, if the required skills for the optimal performance of the organization are absent, the organization may resort to redeployment of staff, redesignation of job titles or retraining of job holders.

If the right number of employees with the right age, qualifications and experiences are given the right placement, the organization is said to have adequately performed an ideal human resource planning and it is not likely to request for a human resource audit.

What determines the right job specifications, job descriptions and personnel is an effective human resource policy, systems, plan and procedures.

In effect, HR audit is devised to detect a defective human resource plan and HR audit will be incomplete without establishing an ideal and tailor-made HR plan for the organization.

HR auditors can be internal or external to the organization. Generally, HR consulting firms render the services of external HR auditors.

HR audit is to recognize strengths and identify any needs for improvement in the human resources function.

HR audit may be segmented into several phases: pre-audit information, on-site review, records review, and audit report.

HR audit seeks to review the HR system components: HR Planning, Corporate Structure, Quantitative and Qualitative manning levels, Documentation, Job descriptions, Personnel policies, Legal policies, Hiring and onboarding, Training and Development, Compensation and Employee Benefit System, Career Management, Employee Relations, Performance Measurement and Evaluation Processes, Termination Processes and Exit interviews, Key Performance Indicators (KPI), Personnel Forms, and HR Information Systems (HRIS), Comparative Analysis of other organisations within its niche.

Benefits:

An effective HR audit helps:

– identify the need for improvement and enhancement of the HR function.

– Maintain or enhance the organization and the department’s reputation

– guide the organization in maintaining compliance with ever-changing rules and regulations.

– ensure effective utilization of the organization’s HRs

– assist analyze the gap between the current HR function and what should be the best possible HR function in the organization.

– contribute towards the best possible use of internal resources and maximizing the effectiveness of HR in the organization.

– streamlines the HR processes and practices with the industry best practices and standards.

– review compliance in relation to administration of the organization

–  determines if the human resources programmes and practices serve or do not serve their intended purposes.

– investigates the company’s level of compliance with laws and procedures, and identifies areas requiring improvement

– identify ghost workers

instill sense of confidence in management and HR function

– Save organisational costs

– determine the quantity of human resource accessible to the company

– generate data for other organizational functions and decision making

– perform “due diligence” review for shareholders or potential investors/ owners

– establish a baseline for future improvement of the organisation

For a successful HR audit, it is advisable for the top management to establish the terms and scope of the audit clearly before engaging an external consulting firm for the exercise.

Contributed by Agolo Uzorka Eugene, CEO/ Lead Consultant, Eugene + George Consulting Limited

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