3a 8 Human Resources Audit

Operational Auditing - Human Resources Audit - in Manufacturing Sector

HR - AUDIT
WHAT ?
WHERE & WHEN?
BY WHOM?
HOW?

“ Human Resource” - An Unique Asset
Resource Classification
Money
Materials
Machinery
Methods
MEN
Now added:
Mouse!
Review Features
(Cost / Benefit)
Acquisition
Maintenance
Utilisation

Unleash the potential !
‘ R O I’ for HR
Focus
‘ Assurance’ Areas & ‘Value Added’ Areas
From ‘Cost’ Centre to that creates ‘Value’!
“ GAP” (in Key Resources, Technology & Structure) between
Current performance& Future requirements and
the time frame in which the gap must be closed
What will be the ROI of the development and over time
period?
What types of skill development will enable the function to
add more value?

The most critical competencies for HR to add greater value to the organistions are,
Consulting Skills
Leadership
Coaching
Facilitation
Business understanding
Cross - Functional expertise
Competencies

An effective HR function therefore will deliver the following
Be able to facilitate change and support the developing agenda of the organisation, its component parts and partners
Ensure that the HR function can provide strategic advice, such as the ability to link people management with the overall objectives of the organisation
Ensure that the HR function can provide specialist advice on particular areas such as pay policy, employee relations, etc.
Deliverables

Improve lines of communication - across departments / organisations and between strategic and implementation activities
Position HR practitioners close to the customers and be able to influence decision-making organisationally and departmentally
Be flexible and therefore able to meet the current and anticipated requirements of the organisation, its component parts and partners
Deliverables An effective HR function therefore will deliver the following

Allow for clearer accountability to enable consistent, high quality HR advice relative to need
Enable HR best practice to be effectively shared across the organisation, its component parts and partners to avoid duplication of effort
Facilitate the ongoing professional and career development of HR staff
Deliverables An effective HR function therefore will deliver the following

Essential outcomes (Effective people Management)
Efficiency, Effectiveness & Economy
Focus & direction mirrors the Business strategy
Consistency in people management delivery
Adequacy of records on employees
Employees know what is expected of them
Employees are supported to deliver what is required of them
Suitable employees are in place when required
by the needs of the service
Employee disputes are handled effectively

Need for developing an Workable Model based on,
Design criteria for HR delivery
KPI (Key Performance Indicators)
Sources of Evidence

Key Performance Indicators for an HR Function

Typical HR Planning Model

Training & its impact on performance

Training & its impact on performance
Need for evaluating Training Programs:
Use of training to improve performance holds massive appeal for HR
Managers
Therefore ineffectiveness of training is a let down for any manager
Quantifiable <--> Qualitative
Employee self esteem, information sharing & employee associations and
team work
ROI on training programs
Translate training into bottom and top line performance improvements
‘ Accenture’ has developed the ‘Accenture’ learning return on
investments methodology

Effective Methods for HR to streamline Cost Structure
HR needs to cut costs and adopt advanced technologies
so that the return on investment (ROI) is bettered / cycle
time reduced
Shift from clerical jobs to higher value activities
Outsourcing (lower value administrative chores)
(Reduce HR expenditure by 20%)
Re-engineering the HR processes
Re-vamp the HR delivery process (Total
empowerment program - ESS) (Strategy to reach out to
the employee rather than expecting them to come to HR)

Effective Methods for HR to streamline Cost Structure
Turnover Costs! (Almost amounts to 50 to 150% of the
employees’ annual salary) - Intangible costs can be greater!
(Proper Human audits, competencies recognition, Retention budget -
calculate replacement (or) retention value of an employee)
Eg: Financial implication of each HR intervention
HR objective : Reduce Turnover rate by increasing the training budget
then compare Rate of Turnover & ROI of the training program
if calculated rate of turnover is say 28% and intervention reduces it by
8%, calculating the cost of this 8% turnover and the cost of training can
decide if it is worth going a lead with the program

Three substantial components of this methodology
Recruitment
Productivity
Performance
Recruitment : Opportunity for growth
(Learning prospects - primary motive for joining)
MEASURE THESE ‘SO CALLED’ SOFT FACTORS
(Running training like a business)
Productivity:
77% considered training information as relevant to work
53% alleged a net worthy increase in productivity
85% sure of a seasonable expansion in skills

Some performance improvement indicators
Performance of Plot data regarding
Sales Executives Sales achieved
Customer care professionals No. of calls attended / queries
solved
Evaluate Financial Benefits
Correlation of cost & benefits analysis

Study revealed
17% more dynamic
Perform at higher levels
Continue with the organisations for longer periods
Yearly per person net profit of the training sessions is
$25,324 (Average of the 50,000/- employees total earnings
of $1.26 billion on training)

‘ HR’ dimension in an ‘ERP’ implementation

‘ HR’ dimension in an ‘ERP’ implementation
Evaluating the effectiveness of ‘HR’ Role!
Change management (Business Process reengineering systems)
Managing the excess manpower after ERP!
Roles & authorities
‘ Security & Control’ Policy implementation effectiveness.
(employee declaration on usage of computers / information
security etc.)
Effective introduction of ‘ESS’ System

Successful Empowerment

Process of successful Empowerment
Empowerment is not a static event but rather a dynamic evolutionary process
Different Stages:
(a) Manager makes decision and
informs the Team.
(Sometimes does not inform also)
(b) Manager asks for suggestions,
makes the decisions & informs
Team.

(c) Manager & the Team discuss the situation at
length and proposals / inputs come from Team.
Manager then takes the decision & informs.
(d) Decisions made co-operatively between
Manager & Team
(e) Manager delegates the decision making to the
Team.

Effectiveness of the
Process
(Facilitated by a proper control System )
Successful Empowerment
of People
(Depends on the
effectiveness of the
process)

HR effectiveness metrics
Most productive people
Right number
Over paying?
Improve their skills
Retention
Forecasting & Preventing people problems

e - HR - Technology tools list
Employment
Employee Relations (ER)
Training and Career Development
HRIS Systems
Corporate, Communications and Other
Call Centers

Thank You

3a 8 Human Resources Audit

by RAJ MUTHU on Oct 31, 2008

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