The purpose of conducting an HR Audit is to perform an in depth analysis of your organizations HR functions to identify strengths, weaknesses and areas for improvement. It consists of taking an objective look at current HR policies, practices and procedures, not to mention, examining strategies to protect the company and organizational benchmarking. Forming a realistic “where are we now” picture allows company leaders to evaluate whether specific practice areas are satisfactory, in compliance with relevant laws and/or effective. Because legislation affecting all aspects of Human Resources constantly evolves, HR Audits allow decision-makers to ensure compliance while measuring the effectiveness of HR programs.
HR Audit areas might include:
- Legal compliance with federal, state and local laws – some of which include (EEO, AA, ADA, FMLA, FLSA, etc.),
- Record-keeping such as personnel files, applications/grievances and terminations, I-9’s, E-Verify, W-4’s etc.,
- Best practices and policies (policies and procedures, employee handbooks),
- Compensation and pay equity practices,
- HR systems (performance appraisal, HRIS, data management),
- Health, safety and security (OSHA compliance, Drug-Free Workplace, bullying and harassment).
HR audits can be comprehensive or focused on a particular area – broad or narrow. When performed regularly, HR Audits help pinpoint gaps between “what is” and “what should be” or “what could be”. You may be wondering if an organization must routinely conduct and HR Audit. The answer is no. There aren’t any laws that require an organization to conduct regular audits, but nonetheless, it’s a good idea.
Let’s take a look at compliance auditing. This involves the systematic comparison of HR practices against existing policy and legal requirements. This type of an audit can help identify gaps between what is required by law and what an organization is currently doing (existing practices and/or policies). The identified gaps can be areas of noncompliance which need to be addressed sooner rather than later.
Getting Started!
Once audit goals, objectives and ways to measure success are defined it is helpful to develop a checklist. A checklist allows audit team members to determine the presence or absence of specified elements such as practices or policies and to compare and contrast those with legal requirements. In an effort not to oversimplify the audit process, it is important to understand that there is much work that goes into performing a thorough audit. There must be planning and guidelines, data collection and analysis, measurement and implementation criteria, and final reporting.
Ultimately, whether or not an audit is broad or narrow, performed all at once or piecemeal, some main objectives should be to maintain compliance with state, federal and local laws, and to create audit processes that are effective and contribute to strategic organizational goals.