HR Audit Tools

A human resources (HR) audit is an objective look at the current state of an organisation's human resource's operations and strategies. A business may conduct an HR audit for a variety of reasons, including ensuring compliance with federal and state employment law; establishing a baseline for process improvement efforts; evaluating the knowledge and skill levels of HR staff; and to standardise processes. (See Reference 1)

Although some organisations may have an internal audit department, it is best to have the audit done by an outside HR auditing firm. This ensures that the audit is fair and objective. After all, the internal audit department is served by the Human Resources Department.

Pre-audit Information Collection and Review

Before an HR audit can begin, various documents must be collected and reviewed, including HR policy and procedure manuals, forms, employee handbooks, union contracts, turnover reports and other documents related to HR operations and compliance with federal and state employment law. The HR auditors use these materials in the audit process.

Pre-audit Self Assessment

Many HR auditing firms ask HR and other organisation leaders to complete a self assessment. Generally, it is a questionnaire that includes yes/no and Likert scale questions; for example, "The hiring process is timely. (1 = Never, 5 = Always)." The self assessment helps auditors understand how an organisation's HR department is perceived by other areas of the business, as well as how HR perceives itself. These self assessments help auditors identify areas on which to focus in the on-site review. (See Reference 2)

On-site Review

HR auditors visit the organisation to conduct in-depth interviews in areas such as hiring and staffing, compensation and benefits, communication, employee education, succession planning, employee relations and leadership development. Typically, the auditors use a detailed checklist that includes all employment and labour laws and regulations that govern HR operations to identify any legal compliance issues.

Records Review

As part of the on-site review, auditors randomly select and examine a sample of records such as employee personnel files, pay and benefit records, employee complaints, disciplinary action, health, safety and other relevant records. They determine if the records are complete, accurate and timely. (See Reference 3)

Audit Report

Once all the documents have been reviewed, the interviews conducted and the data analysed, the auditors prepare a report that summarises their findings, points out strengths and identifies areas for improvement. Improvement areas are ranked depending on their importance. Urgent problems must be addressed and resolved immediately in order to meet federal and state employment laws and regulations.

Important problems, such as changes to a performance review policy, should be addressed sooner rather than later in order to prevent conflicts or misunderstanding in the organisation. Other items in the audit report may be ranked as opportunities. These are areas that are basically in compliance and procedurally fair but could be improved.

In addition, the audit report includes references to various applicable laws, research and court cases to support its recommendations.

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About the Author

Diane Chinn is a freelance writer with more than 15 years experience in many areas, including business and technical communications. She has a Bachelor of Arts in psychology from California State University and a Master of Arts in human resources and industrial relations from the University of Minnesota. She is a Six Sigma Green Belt .

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