Approaches to Human Resource Audit

Approaches to Human Resource Audit

Human Resource Audit

Human resource audit has evolved over time and expanded as it is not only used in decision making, but also as an instrument of control in personnel-related matters. Several approaches have been brought forward to evaluate the effectiveness of the hr function. Previous scholars had their own perspective of human resources audit. Their argument was hr audit has an internal an external background.

From the internal aspect, departments are evaluated from their capability to offer services to the organization at an optimized cost. According to this traditional approach, quality quantity and reliability are used to examine the efficiency of the audit.

On the other hand, the external approach focuses on the impact of the organization’s results, thus the auditors consider data obtained from outside as important in solving the errors encountered.

Five Approaches for HR Audit

Apart from traditional approaches there exist the modern/ common approaches. The modern approaches for HR Audit are;

  • Statistical approach.
  • Compliance approach.
  • Comparative approach.
  • Outside authority approach.
  • Management by objectives (MBO) approach.

1. Statistical approach

Statistical Approach is also known as a quantitative and qualitative approach. This method uses statistical tools and information recorded in the organization’s system. The recorded information may include employee turnover and absenteeism. The checking and auditing of employees involve complex mathematical formulas which form a standard on which all activities and programs are examined.

With the mathematical data as a base, mistakes can be discovered and corrected from an early point. Other times statistical approach is supplemented with records from different sources such as films and surveys.

2. Compliance approach

It is an approach based on legal and organization’s policies. Auditors take a thorough look at past actions to examine whether the organization’s activities are in line with legal requirements together with the set standards, policies and procedures. Although many don’t view it as an efficient approach because it uses past information which may be biased due to various reasons.

3. Comparative approach

In this approach, a benchmarking strategy is used. Auditors identify a competitor organization which is used as a model in comparison. The audit reports are compared analytically to find areas to make corrections.

The benchmarking process is quite tedious as it involves;

  • Forming a team to take care of the process.
  • Identifying the most suitable organization to partner for the benchmarking.
  • Collection of data from both organization/companies.
  • Proper analyzing and interpretation of the data.
  • Creating an action plan and working on loopholes identified.

4. Outside authority approach

Standards set by outside consultants are used by the audit team to benchmark for comparison with their own results. Data from published research finding and research films/ documentaries are also a source for benchmarking, to explore for causes of the problem.

5. Management by objectives (MBO) approach

This is a goal and objective-based approach. Specific targets are laid down against which the organization’s performance is measured so as to arrive at a final decision. The Audit team conducts a survey of the actual performance then compares that performance with the desired objectives of the organization.

It is noted that irrespective of the approach, it can be grouped as a comprehensive plan or special focused plan, with staff, time and costs as factors.

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