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HR Audit

Human Resources Audit (HR Audit) – The first step you should take for better functioning of your company

Different aspects of business keep changing rapidly. Sometimes, HR may lose track, and that’s the peak time to make a call for Human Resources Audit.

Once late Lee Iacocca said, “Management is nothing more than motivating other people.” However, I beg to differ here. I have my own views about management and would wish to explain my ideology with the help of examples.

Foreign companies operating in China are in trouble. Conducting internal investigation and encountering a potential labor dispute are becoming difficult for them.

In the UAE, any violation related to visa, payroll, gratuity, work culture, annual benefits, and working hours have heavy fines. Hence, it is advised that all these aspects get audited. This will avoid backlashes arising from not being compliant with laws related to human resources.

Why HR Audit when Human Resources Management Software (HRMS) is here for help?

Once I attended a meeting where CEOs and Finance managers of multinational engineering companies were present. There, an obvious question was raised- “When HRMS is available, then why is there a need for HR Audit?”

To this question, I readily answered- since the way of working, business goals, and compliance, keep evolving all the time, the software won’t be able to match with the market challenges. The gap in management, understanding, leadership, and doing work are also not the same. Therefore, HR Audit is necessary.

There could be instances when you even need to pay the penalties. If it happens multiple times, that will be harmful to the company’s productivity as well as the reputation. Besides that, it won’t streamline the different management techniques, which different employees would be following for performing an activity. In addition, an HR audit will even save the amount you may need to pay for the fines when found non-compliant.

What a proficient Human Resources Audit must include

The HR Audit services must cover all the aspects of human resources and find out whether they are efficiently implemented in a company or not. However, on many instances, audits often focus on specific areas of human resources.

As per my experience in the HR industry, I have listed below what all aspects that an HR audit must cover. Do share your views about this list, and you may even contribute to make it better. Like a financial audit, HR Audit is comprehensive too. The audit review includes but is not limited to the following points:

  • Organogram
  • Gradation
  • Department infrastructure
  • Compliance with local employment laws
  • Recruitment and selection processes
  • Employment-related tests
  • Employee relations & participation
  • Performance-evaluation processes
  • Promotion
  • Documentation (including employee handbooks)
  • Job description
  • Personnel’s records and files
  • Benefits and administration practices
  • Benefit costs
  • Timekeeping and pay practices
  • Recordkeeping and posting practices
  • Record validation
  • Policies and violations
  • Training and development
  • Technology adoption
  • Safety and security
  • Areas of exposure

The process of an effectual HR Audit:

  1. Gathering information of various attributes of the HR department to determine compliance, effectiveness, costs, and efficiency.
  2. Evaluating the gathered information and preparing a written report.
  3. Creating an action plan based on exposures, priorities, and a timeline for instituting changes.
  4. In order to reduce exposure to legal liability, some changes will need to be implemented immediately, while others can be introduced in three to six months.

Direct benefits of HR Audit:

  1. Helps to adjust policies and practices.
  2. Provides control on each Human Resources Management (HRM) function.
  3. Eases the cooperation between the management and staff.
  4. Expresses progress against the objective.
  5. Detects the weak areas of HRM.
  6. Keeps the policies and practices updated.

How to simplify the HR Audit process?

  1. Create a process-sheet having a checklist containing HRM attributes and tick mark them if they are functioning well.
  2. Create an action-sheet defining a clear way of what actions should be taken on which areas of human resources department.
  3. The result-sheet defines a clear outcome of the changes done on various aspects of HRM with the help of HR Audit.

Overall, the HR Auditing is the key to remain compliant with the labor laws, maintain the required workflow, build a good company reputation, and retain the employees. You can also check my article on employee retention by clicking this link.

Furthermore, I want to let you know that N R Doshi and Partners provides Human Resources audit services, which will help you to streamline all the functions which are discussed in this article. You can reach us out anytime, and we will make sure you get better than the best Human Resources Audit services in the UAE you have found till now.

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