HR Audit in EIC


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This power point present the research finding of Human Resources Audit. It examining the policies, documentation, systems, and practices with respect to an organization’s HR function. It reveals the strength and weaknesses in the human resources system, and all issues, which need resolution.

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HR Audit in EIC

  1. 1. HR Audit in EIC
  2. 2. Background….cont’d  Without prejudice to the applicability of laws governing insurance business, the Corporation also be governed by the Public Enterprises Proclamation No. 25 of 1992.  Starting from 30 January 2004, the Corporation accountable to the Financial Public Enterprises Agency which is established as autonomous government office having its own legal personality by Council of Ministers Regulations No. 98/2004 to supervise financial public enterprises.
  3. 3. Human Resources Management & Property administration Division Compensation & Benefit Department Human Development Department Personnel Management Department Property Administration Department Career Management Department
  4. 4.  The study arises from the need to manage the HR of the company more effectively.  The rapid growth of service sector, increase in environmental variability and degree of competition, acute shortage of labor and the corresponding increase in labor turnover and costs of employee replacement have forced organizations to identify needs for improvement and enhancement of the HR function to aggressively compete for employees. Statement of the Problem
  5. 5. Research Questions  What are the role of HR Auditing in the transformation of the functions of human resource department of the firms and facilitating decision making?  Does the HRM system of the organization aligned towards business goals of the corporation?  Does the HRM staff reflect adequate understanding and commitment to the business goals of the corporation?
  6. 6.  Which practices, or lack of practices, might place the organization at risk for compliance or regulatory violations related to HRM; and  What Process improvements will support HR in providing the highest quality service to employees. Research ….Cont’d
  7. 7.  To investigate the role of HR Auditing and area of HR functions that should be audited to meet the business goals  To examine the impact of HR alignment with business goal on the HRM department and over all organizational performance.  To develop techniques that help in collecting and extracting critical HR information to improve the quality and effectiveness of HR auditing. Specific Objectives
  8. 8.  To locate gaps, lapses, failings in applying Policies, Procedures, Practices & HR-directives. Also to see areas of wrong/ non- implementation that hindered the planned programs and activities.  To determine whether company’s policies are being applied consistently, whether they are the norm for corporation and branch location, and whether they are consistently communicated to all employees. Specific…cont’d
  9. 9. It examine the level of practice and indicate the main success and failure factor associated with human resource Management in EIC. It enables concerned bodies to expand their knowledge or understanding of the HR audit importance which leads them to design further strategies to use it efficiently. Significance of the Study
  10. 10. It provides additional input for management of EIC in designing ways to improve the HR dept efficiency & overall organization performance. The result of the investigation will have some relevant contribution to improve performance of corporation. The finding of the study will be expected to be used by corporation. Significance …cont’d
  11. 11.  In order to generate the primary data, the questionnaire survey was the basic research design.  A questionnaire was designed and distributed to 17 HR staff and 8 to non HR staff (employees) of EIC.  Data was collected through qualitative and quantitative methods.  The method is reliable enough to realize the objectives of the study and answers the research questions and help in gathering information about the HR Audit in EIC and the basic information about HRM function Data Source and Methodology
  12. 12.  Human Resource Management is the process of managing people in organizations in a structured and thorough manner.  It covers the fields of staffing (hiring people), retention of people, pay and benefit setting and management, performance management, change management and taking care of exits from the company to round off the activities. Human Resource Management EIC
  13. 13. HR Auditing
  14. 14.  To determine whether company’s policies are being applied consistently, whether they are the norm for companies and branch location, and  whether they are consistently communicated to all employees.  HR audit provide insight as to which individuals are responsible for the implementation and enforcement of HR policies.
  15. 15.  Identification of the contributions of the HR department to the organization,  Improvement of the professional image of the HR department,  Encouragement of greater responsibility and professionalism among members of the HR department  Clarification of the HR department’s duties and responsibilities,  Finding critical HR problems,  Reduction of HR costs through more effective personnel procedures,  Creation of increased acceptance of the necessary changes in the HR department  A thorough review of the department’s information system
  16. 16. Comparative approach: Another division or company that has better practices or results is chosen as the model. The audit team audits and compares the audited firm’s results with the best practices of the model organization. External audit: Standards set by a consultant or taken from published research findings serve as the benchmark for the audit team. The consultant or research findings may help diagnose the cause of problems. Approaches to Human Resource Audits
  17. 17. Approach…cont’d Statistical Approach This approach relies on performance measures drawn from the company’s existing information system. From existing records, the audit team generates statistical standards against which activities and programs are evaluated. Compliance Approach This approach reviews past practices, to determine if actions taken followed legal requirements and company policies and procedures. The audit team here often examines a sample of employment, compensation, discipline and employee appraisal forms Management by Objectives (MBO) Managers and specialists set objectives in their area of responsibility. Then they create specific goals against which this performance can be measured. The audit team researches actual performance and compares it with the previously set objectives.
  18. 18. HR AUDIT Research question on HRP Strongly agree Agree Neutral Disagree Strongly Disagree NO % NO % NO % NO % NO % Organization has plans for ensuring its HR needs and development. 2 11 10 55 6 33 - - - - HRM is a strategic tool for the corporation 9 50 9 50 - - - - - - Forecasting future employees by planning the type of work and number of workers needed. - - 7 39 9 50 2 11 - - Restrict hiring, giving compensation, reducing working, early retirement are the strategy that the corporation are going to be act in case of surpluses of employees exist. - - - - 4 22 13 72 1 5 Job analysis provides information about jobs currently being done in organization. - - 11 61 7 39 - - - - The approach that the demand forecast for future HR is only based on the judgment of top managers. - - 9 50 6 33 3 17 - - Labor turnover, retirement, resignation, termination and death are the factors that decrease internal supply of the corporation. - - - - 6 33 11 61 - - 1.Human Resource Planning Data Analysis and Interpretations
  19. 19. Interpretation  Majority of respondents agreed with statement that top managers judge for future HR demand forecast. This implied that the corporation has followed a policy of top-down approach, which is not participatory to all.  Even if most respondents think that HRM is a strategic tool for a corporation, 11% of respondents replied they have no idea their company has plans for ensuring its HR needs and development and  Most respondents (61%) are said that, turnover, resignation, termination are not the factors that decrease internal supply of their corporation.
  20. 20. 0 2 4 6 8 10 12 14 HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 4 HRA Q 5 HRA Q 6 S.agree agree neutral disagree S.disagree 1. Organization has a policy of stating recruitment and selection 2. There is a formal process in identifying job vacancies 3. Recruitment was done proactively from a planning mode 4. Recruitment of the company linked to human resource planning 5. HR division set recruitment strategies before active recruitment begins 6. HR department does perform all initial screening of candidates Recruitment and Selection
  21. 21. Interpretation  Most respondents agreed that their organization has a policy of stating recruitment and selection and almost all respondents they do believe that the recruitment was done proactively from a planning mode and 61% of them knows recruitment of the company linked to HRP.  Almost more than half of respondents agreed exams and personal profiles are used in the selection process of the company. These indicate that the organization has followed the criteria of HR policy and create trust and confidence for the existing employees as well as for new applicants.
  22. 22. 0 2 4 6 8 10 12 HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 4 HRA Q 5 S.agree agree neutral disagree S.disagree 1. The compensation policy of the company contain procedures to guide managers 2. Distribution of compensation among departments are reviewed by management 3. The organization has a policy clearly stating its position on employees salary 4. The organization compensation philosophy clearly communicated to all employees 5. The organization has a clear policy regarding employee benefits Compensation and Benefit
  23. 23. Interpretation  Forty five percent of respondents replied that the distributions of salary among departments are reviewed by management. But on contrary 11% of respondents didn’t agreed.  In regard with this majority of respondents believes that the company’s compensation and benefit policies are clearly communicated to employees.  The results show that the salary structure and benefit policy of the company have satisfied most employees and resolve grievance with management.
  24. 24. 0 55% 39% 6% S.Agree Agree Neutral Disagree 0 45% 55% 0 S.Agree Agree Neutral Disagree 0 39% 50% 11% S.Agree Agree Neutral Disagree 0 50% 45% 5% S.Agree Agree Neutral Disagree 1. 55 % of respondent agree Performance appraisal do reflect an employee’s positive behavior as well as results and 6% of them Disagree. 50 % of the respondent Agree the company’s performance appraisal include a written plan to improve employees knowledge and skills and 5% Disagree 3. The evaluation establish clear objectives, expectations and the criteria are linked to the specific job 4. Employee who are better performers receive higher pay increase than poor performers Performance Management and Evaluation
  25. 25. 0 2 4 6 8 10 HRA Q 1 HRA Q 2 HRA Q 3 HRA Q 4 S.agree agree neutral disagree S.disagree 1. There is a process for assessing the corporation immediate training needs and individual development needs 2. Job skills, knowledge and ability are considered in assessing training needs 3. All training programs and opportunities well communicated to employees 4. The corporation has to give a sponsorship for employee to study in higher education Training and Development
  26. 26.  HRM is a strategic tool that helps an organization for sustainable competitive advantage.  Majority of respondent stated the future HR demand forecast was done by top managers, recruitment was done proactively from a planning mode,  The company’s compensation policies are clearly communicated to employees, the company has the practice of a pay-for-performance system, the company has the practice of allowing budget for welcoming program for new selected employees, Conclusion
  27. 27.  Regarding training programs and opportunities, it was not well communicated to all employees as expected.  The mass of respondents commented difficult to get personal files, and convincing terminated employees are the challenges that occurred in EIC. And  Lack of case study material on HR management auditing in the corporation and other company context presents problems for both researchers and practitioners. Conclusion….cont’d
  28. 28.  By auditing itself, the department finds problems before they become serious.  Effectively conducted auditing process can build strong rapport b/n the department and operating managers, and it can reveal outdated assumptions that can be changed to meet the department’s objectives and future challenges. •
  29. 29.  Finding out what is insufficient and inadequate is the first step toward improvement. If deficiencies are identified, it is important to take steps to correct those deficiencies.  Corporation should take that first step only when they are ready to act on the findings, and to make necessary improvements in their HR skills, processes, and systems.
  30. 30. Even though the company has plans for ensuring its developmental and human resource needs, there should be further carefully revision of the human resource planning in order to minimize the problem of overstaffed and understaffed. The recruitment and selection process of the company should continue following the HR policy and procedures Since the corporation’s is a backbone for economic and insurance development in the country.
  31. 31.  The company should be advisable to revise, administer and improve the current employees’ compensation and benefit scheme, unless the labor turnover will be high in the future.  Retaining excellent staff depends on outstanding pay and benefits which are critical factors that will ultimately determine how well employees feel about the corporation and the likelihood that they will remain with company in the future.
  32. 32.  The performance evaluation system should be clear, objectives and related to the specific task .  Redesigning performance review proficiently are needed to manage the performances of employees as an integral part process, maintaining it and effectively monitoring its implementation should be an important function of HR department for better performance of the corporation.
  33. 33.  Human resource development is one of the factors that the company’s has productive and their competitive advantage will be consistent.  The ability to create training programs that solve human performance problems will yield important benefits for corporation. so in order to gain the competitive advantage, the company’s training and development strategy should be strong and clearly communicated to all staffs effectively.  In relation to T&D, the company was doing well and advisable to continue allowing a sponsorship for employees to attend in higher education learning either in the country or abroad. Recommendation….cont’d