Human Resource Audit

Introduction : An audit in general terms, means examination and verification of books of accounts and records. Personnel/HR Audit means a systematic and comprehensive analysis of all activities and results of a personnel programme. Definition of HR Audit : Personnel / HR Audit refers to as examination and practices to determine the effectiveness of personnel management. - (G. Seybold) Personnel / HR Audit is an investigative, analytical and comparative process. It not only listens but looks for and discovers answers. It undertakes a systematic search assuming that appropriate policies and programmes can produce positive results which can be identified and evaluated. - (Dale Yoder) Objectives of HR Audit : HR Audit is undertaken to achieve the following objectives : a. To measure the effectiveness of personnel programmes and activities by review all the management programmes, b. To determine what should or should not be done in future for attaining better employee performance,

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To evaluate the extent to which managerial policies have been implemented, To evaluate the performance of employees, To decide on the type of and manner in which managerial training and development programmes need to be carried out.

Importance of HR Audit : HR Audit has acquired the status of a tool through which managers can control the programmes and practices of the HR Dept. as well as evaluation of the results of such programmes on other employees. The following points reflect the increasing importance of HR Audit : a. The managerial philosophy has undergone tremendous change. There is a strong need being felt to encourage participation in organisational activities and to identify individuals with it. This can influence the organisational performance. Hence HR Audit is carried out. b. The Government has started intervening, more often than ever, in the manpower management. This is with the objective of protecting the interests of the employees, bringing an improvement in the working conditions and ensuring economic security to the workers. For this HR Audit is needed, c. The trade unions have become very strong. As a result of this, they often question the managerial competence of the organisation. In order to avoid industrial disputes, HR Audit is taken to evaluate managerial policies and performance,

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Rising wages, changing technical and professional skills and increasing expenditure on HR Dept. encourages the trend of conducting HR Audit.

Need for HR Audit : According to Dale Yoder, the need for HR Audit is felt due to the following reasons : a. Modern organisation are very large in size. As such they employ large number of employees and invest huge sums in other resources. To ensure effective resource utilisation, both men and materials, HR Audit is needed, b. The organisational structure includes many departments each engaged in a specific function. The efficient functioning of each department depends on continuous feedback. HR Audit ensures regular and reliable feedback, c. In certain cases, an organisation may have numbers of isolated plants. In order to implement and assess managerial policies on a uniform basis,HR Audit is undertaken, d. The greater the delegation of authority and decentralisatoin of power, greater is the need and value of a regular and formal audit process, e. In organisations where communication is not effective, need for HR Audit is felt.

Scope of HR Audit : The concept of HR Audit stress on the fact that management of HR is much more than just recruiting, hiring, retaining, and training employees. It examines the performance of policies and people in the organisation. The different areas covered by HR audit includes : a. Planning : This function involves programming, forecasting and scheduling the manpower requirements of an organisation. HR audit of this function involves identification of HR shortages, need for overtime, cost-benefit analysis and evaluation of plans for the development of present and future manpower. b. Staffing & Development : The function includes analyses of manpower requirements, sources of recruitment and selection, training programmes and transfer and promotion policies. HR audit of this function involves analyses of recruitment and training costs, labour turnover rate, career development / advancement guidance, implementation of non-discriminatory policies and providing promotional opportunities to the deserving employees. c. Organising : Organising involves maintaining structures for co-ordinating, communicating and making arrangement for all resource inputs. HR audit involves getting feedback, extent of formal organisation, job definitions and verifying reports and records. It encourages flexibility, reduce resistance to

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e.

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change and bringing about proper and effective communication. Commitment : This function calls for individual and group motivation, effort and contribution. HR audit involves evaluation of productivity and performance norms. It also demands job enlargement, wage and salary administration, sanctioning fringe benefits and conducting exit interviews. It also involves gaining high personal identification and ensuring employee satisfaction. Administration : This function is concerned with style of leadership schemes, grievance handling procedure, extent committees, strategies adopted to change expectations, increase involvement and encourage collective bargaining. Research & Innovation : This is an experimenting and theor-testing function in all areas of management.

HR Audits aims at identifying changes, studying reports and publication, preparing suggestion plans and testing old and new theories. Nature of HR Audit : HR audit involves evaluation of policies, procedures and practices. This analysis is based on time standards, cost records, test scores, training scores, interview records, grievance reports , work stoppages, medical reports, accident reports, turnover reports, payroll data and labour costs. It uses both quantitative and qualitative yardsticks for

evaluation. HR audit is generally conducted on an annual basis. The annual audit report includes statistical information on the activities performed, the results achieved, the costs involved and comparison of the results achieved, the costs involved and comparison of the objectives and accomplishment. This report gives useful information on the activities of the organisation. HR Audit may be internal or external. Internal audit is conducted by those employed in the organisation itself. External audit is conducted by professionals from outside the organisation. Audit Report : The report submitted by the HR Auditor is called audit report. The report should be submitted within a reasonable time. It should be based on the findings and be presented in a factual manner for ready reference in future. The use of graphics should be done wherever appropriate. But the report should not be longer than is necessary : An audit report should contain the following details : a table of the contents of audit a summary and conclusion of the audit a preface giving a brief account of the objectives of the audit a supporting data as is practical a summary that is more complete than that giving in the beginning of the report

an appendix which includes supporting data that would be too voluminous to be included in the body of the report. Signature of all the members involved in conducting the audit.

The contents of audit which include morale survey, safety report or any other item of general interest should be made available to the employees. The contents should be given to the top level of management only.