The document discusses the role and benefits of human resource auditing for organizational effectiveness. It explains that HR auditing provides independent assurance by evaluating HR departments and practices against agreed standards to identify areas for improvement. The benefits of HR auditing include a focus on objectives, standards, and future improvements through an evidence-based approach and high-level reporting.

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Human Resource
Auditing
‘Organisational effectiveness: the role and
benefits of human resources auditing’
Dr Chris Andrews
Director of Human Resources
Bond University,
Gold Coast, Australia

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Introduction
 Introduction
 Acknowledgements: Bond U & SABPP
 Recognition of SABPP achievements
 Organisational effectiveness
 The role & benefits of HR Auditing
 Evaluating HR Auditing
 Summary
 Questions?

3. Audit Assurance
Auditing as: listening to the records
Independent
Standards based
Agreed Work Program
Standard Processes/evidence based
High level credibility and reporting
Action-in-response
Follow up; look toward replication
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Performance to an auditor ..
• Effectiveness (doing the right thing)
• Efficiency (doing things right)
• Economy (alternative cost)
• Equity – as effectiveness criteria
HR tend to focus on effectiveness, auditors
on efficiency and economy (Craven & McNulty 1994)

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Org. Effectiveness Involves:
Khan 2005
 Extent to which organisational objectives are
being achieved (outcomes).
 Ensuring the costs of reaching these
objectives were as expected, or within the
range of expectations
 Analyse the causes of failure (gap analysis)
 Isolate external factors
 Report on the monitoring or reporting
system that tracks progress to achievement

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HR Performance Auditing
The case study demonstrated that a
properly constructed performance audit of
human resource activities can identify areas
where future improvements can be made,
even to a valued, responsive and award
winning HR department.
Endgame – reverse chronology;
performance evaluation; outcomes focus ;
standards: framework; external evaluation:
evidence based: big data analytics;
workforce management standards.

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Observation
A performance audit of HR
activity is difficult when the
current evaluation practices do
not address the concepts of
efficiency, effectiveness or
economy.
There is a need to align
measurement and reporting to
performance evaluation – 3 E’s

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Context – Last Decade
 HR is rated as the worst performing of
all business functions (Global Survey of 555 Senior
Executives, April 2006).
 The world’s best performing companies
spend 25% less on HR and rely on 16%
fewer staff (HR Magazine Nov 2005).
 Could there, or should there be, HR
standards? (SHRM 2005)

9. Recent literature:
 Deloitte Human Capital Trends 2015
– Nearly 40% of new ‘Chief HR Officers’ come
from business, not HR.
 Harvard Business Review:
– It’s time to blow up HR (Cover, 2015)
 The Rise of HR (2015)
– What do HR professionals need to know or do to
be effective in today’s and tomorrow's business
world? … 73 different answers but not standards
or auditing.
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What to do about our profession?
HR Framework - SABPP
HR Standards - SABPP
HR Auditing (independent) - SABPP
HR Performance Auditing - SABPP
Design of HR outcomes criteria - SABPP
HR Reporting that address the 3 E’s.
HR ROI and business justifications
HR Standards & Big Data/Analytics
HR Workforce Management Standard

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The Role of HR Auditing
 Evaluation of HR Department
 Evaluation of People Practices
 Provides Audit Assurance
 Provides Independent Assurance
 Types of audits
 Certification against Standards
 Performance Improvement
 Risk Assessment/Assurance

12. The benefits of HR Auditing
 Evaluation by trained experts
 Focus on Standards
 Focus on Objectives: I – P – O - O – R
 Future orientated; gain funding support
 High level reporting (CEO, Board)
 Big data – a database of better
practices, analytics, etc
 Demonstrate our professionalism
 Recognition & promotion of HR
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13. The costs of HR Auditing
 Direct and indirect costs?
 Time taken acceptable?
 Alternative cost (economics)
 Value (value-for-money)
 Does the whole process add value to
the organisation?
 Does it enhance or detract from HR’s
professional reputations and standing?
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14. The Evaluation of HR Audits
 Are they effective in achieving
objectives?
 Are they efficient?
 Are they economic?
 Can we use technology to improve our
auditing performance?
 Calculating the Return on Investment
(ROI)
 Demonstrating the ROI in case studies
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HR Review/HR Auditing Matrix
Self-assessment; Self-evaluation
Management assurance – internal
Independent audit assurance – internal audit
External Management assurance
Independent, external audit assurance
Review against organisational standards (MIUAYG)
Review against SABPP & organisational standards
Performance audit using national auditing
standards, utilising SABPP standards

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Potential Research topics:
 HDR students; more of these.
 HR Auditing case studies; database of better
practice
 HR Performance Auditing case studies; database
 Evidence based staffing – health sector model
 HR Standards & Big Data Analytics
 HR ROI and business justifications
 Mapping & Aligning: HR competency, membership
and performance standards
 Workforce Management Standard