What is Human Resource Audit?

What is Human Resource Audit?

The process of Human Resource Audit

Human resource audit is a process of checking/appraising the Hr department in an organization. It comprehensively examines current policies, practices, procedures, strategies, documentation, structure, skills and systems to identify needs for improvement and enhancement of the HR function. It also keeps the organization in compliance with changing rules and regulations.

Conducting A HR Audit

To conduct the HR audit a company may hire an internal or external auditor. Internal auditors are basically employees of the organization while External auditors are specialists who are hired from outside. External auditors are highly preferred since they are experienced and not biased compared to their internal counterparts.

Should a company hire External or Internal Auditor for HR AUDIT?

The cost of hiring an external auditor is quite expensive hence most companies go for internal auditors to save on operational costs. Internal auditors have a history of delivering biased HR judgment. Though they are not specialists, they don’t deliver a clean report since they fear for their positions at the organization. External auditing is the most preferred as it delivers judgment without favor or prejudice. They give a true picture of the HR department

The frequency of the audit depends on the company’s choice. External auditing is normally sophisticated thus it’s carried it out after every twelve months. Internal auditing, on the other hand, can be done continuously and regularly, like in a monthly routine. Stakeholders and the government insist on working with external auditors as their data are used to evaluate growth.

Component of HR Audit

Major components of human resource audit include; hiring employees both internal and external, benefits, performance evaluation process, Compensation, termination process, job descriptions, form review, exit interviews, and personnel file review. These features are grouped into strategic, operational, administrative levels.

The main objective of HR Audit is to recognize strengths and weakness to improve on, optimizing on operation costs, checking on legal and regulatory violations, maintaining world-class competitiveness for the changing environment and a general examination on whether the organization is working towards its goals and objectives. A proper audit will signal areas to be corrected and provide recommendations to the problems.

Benefits of Hr Audit

Benefits of human resource audit include; timely compliance with legal requirements, the audit encourages uniformity of the hr practices and policies, which boosts confidence in maintaining the organization and the department’s reputation in the community. Clarification of HR duties which encourages greater responsibility enabling stakeholders and investors assurity in their investments.

Nevertheless, there are several challenges facing HR audit. An audit is generally expensive and exhausting requiring an organization to be well funded. Apart from costs organization face challenges with the changing set of standards where complex laws and regulations are administered and should be followed. These frequent changes affect the productivity and profitability of the entire organization.

Surprisingly, non-compliance with the set standards of laws and regulations comes with heavy penalties. This carries the risk of bringing down the whole organization. In some parts, governments work with employee unions in an effort to keep management in check. This has brought about the positive outcome as a need for Independence and a proper budget for audit activities is allocated.

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