A Human Resource Audit is a systematic review of HR policies, procedures, and practices to ensure compliance, efficiency, and alignment with organizational goals. It assesses areas such as recruitment, training, performance management, and legal compliance, identifying strengths and areas for improvement to enhance overall HR effectiveness.

1. Human resource
Audit
Presented By
Rajesh Mondal

2. Nature of Human Resource Audit
• An HR audit is a tool for evaluating the personnel activities of an
organization.
• The audit may include one division or an entire company.
• It gives feedback about the HR functions to operating managers and
HR specialists.
• It also provides feedback about how well managers are meeting their
HR duties.
• The audit is an overall quality control check on HR activities in a
division or company and an evaluation of how these activities support
the organization's strategy.

3. Benefits of Human Resource management Audit
• 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
• Stimulation of uniformity of HR policies and practices, Finding critical
personnel problems
• Ensuring timely compliance with legal requirements
• Reduction of HR costs through more effective personnel procedures
• Creation of increased acceptance of the necessary changes in the HR
department, and
• A thorough review of the department's information system.

4. Process of Human resource Audit
Corporate
strategy
Human
Resource
Research
Managerial
compliance
Employee
satisfaction
comparison
MBO
Statistical
compliance
Evaluation
Report
Human Resource
Functions
scope
Approaches
Outside Authority

5. Audit of Human Resource Function
It involves audit of all HR activities
• Determine the objective of each activity.
• Identify who is responsible for it performance,
• Review the performance,
• Develop an action plan to correct deviations, if any, between results and
goals
• Follow up the action plan.

6. Audit of Managerial Compliance
• It involves audit of managerial compliance of
personnel policies, procedures and legal provisions.
• How well are these complied with should be
uncovered by the audit so that corrective action can be
taken.
• Compliance with the legal provisions is particularly
important as any violation makes the management
guilty of an offense.

7. Audit of the Human Resource Climate
The HRM climate has an impact on employee motivation, morale and
job satisfaction.
• Employee Turnover - Employee turnover refers to the process of
employees leaving an organization and requiring to be replaced.
• Absenteeism - Absenteeism refers to the failure on the part of
employees to report to work though they are scheduled to work
• Attitude surveys - Attitude surveys are probably the most powerful
indicators of organizational climate. Attitudes determine an employee's
feeling towards the organization, supervisor, peers and activities.

8. Audit of Corporate Strategy
• HR professionals do not set corporate strategy, but they strongly
determine its success.
• Corporate strategy helps the organization gain competitive advantage.
• By assessing the company's internal strengths and weaknesses and its
external threats and opportunities, the senior management devises ways
of gaining an advantage.
• Whether the company stresses superior marketing channels, service,
innovation, low-cost production, or some other approach, HRM is
affected.
• Understanding the strategy has strong implications for HR planning,
staffing, remuneration, industrial relations, and other HR activities.

9. Auditors may adopt any of the five approaches for the purpose of evaluation
1. Comparative approach
2. Outside authority approach
3. Statistical approach
4. Compliance approach
5. Management By Objectives (MBO) approach

10. Approach Definition Real-life Example
Comparative
Approach
Compares the HR practices of an
organization to industry standards or
benchmarks to identify areas for
improvement.
Google conducts regular HR audits using a
comparative approach, benchmarking its practices
against other tech giants like Apple and Microsoft.
Outside Authority
Approach
Involves bringing in external experts to
evaluate the organization's HR practices,
ensuring objectivity and impartiality.
Amazon employs external HR consultants to conduct
periodic audits, seeking fresh perspectives on its HR
policies and procedures.
Statistical Approach
Utilizes statistical methods to analyze HR
data, identifying trends and patterns that
may indicate underlying issues or areas for
improvement.
Walmart utilizes statistical analysis of HR data to
identify potential areas of discrimination or bias in its
hiring and promotion practices.
Compliance Approach
Assesses the organization's adherence to
legal and regulatory requirements related to
HR practices.
Johnson & Johnson conducts regular compliance audits
to ensure its HR practices comply with labor laws, non-
discrimination regulations, and data privacy laws.
Management by
Objectives (MBO)
Approach:
Evaluates HR practices based on their
effectiveness in achieving organizational
goals and objectives.
General Electric employs an MBO approach to HR
audits, assessing whether HR practices are aligned with
the company's overall strategic goals and contributing
to its success.
APPROACHES TO HUMAN RESOURCE AUDIT

11. Discussion