Hr audit

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“..the starting point for enterprises wishing to manage their human capital successfully and seeking a labour competitive advantage is activities of the HR department.”

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Hr audit

  1. 1. HR Audit “The things that get measured gets managed” www.humanikaconsulting.com
  2. 2. Agenda 1. Introduction 14. General Auditing Method 2. Challenges For H.R. 15. Methods Of Hr Audit Department Eight Challenges 16. Research Approaches To Audits 3. Meaning & Purpose Of Hr 17. Hrm Auditing Process Audit 4. Purposes Of Hrm Auditing 5. Objectives Of Hr Audit 6. Benefits Of HR Audit 7. Frequency Of HR Audit 8. The Principles Of Effective Hrm Auditing 9. Types Of HR Audits 10. The Scope Of Human Resource Audits 11. Hrm Audit Measures 12. HR Standards 13. Task Auditor
  3. 3. INTRODUCTION • “How does a firm know if its human resource practices have an impact on business results? • “..most professional service firms and organizations complete an extensive audit of their financial statements on an annual basis, but the programmes involving “people”, such as recruiting, training or pay-for-performance are seldom given the same scrutiny.” • “..the starting point for enterprises wishing to manage their human capital successfully and seeking a labour competitive advantage is activities of the HR department.”
  4. 4. CHALLENGES FOR H.R. DEPARTMENT EIGHT CHALLENGES IDENTIFIED BY DAVE ULRICH (1997)
  5. 5. Globalization The H.R department will need to create models and processes for achieving global activeness, effectiveness and competitiveness.
  6. 6. Managing the Value Chain for Business Competitiveness Innovation Faster Decision Making Price or Value Advantage Effective linking with Suppliers
  7. 7. Growth of the organization By increasing customer, acquisition and mergers
  8. 8. Building organizational capabilities Reviewing existing capabilities New capabilities Aligning new capabilities with business strategies.
  9. 9. Managing Change • Adopting some new H.R. Practices • Learning some New Skills and Attitudes • Unlearning some existing skills and Attitudes.
  10. 10. Making Technology viable Finding out ways and means to make technology successful.
  11. 11. Attracting and Retaining Intellectual Capital • Attracting Talented People. • Retaining them. • Utilizing them suitably.
  12. 12. Transforming the Organization Creating fundamental and lasting changes.
  13. 13. MEANING OF HR AUDIT The Human Resources (HR) Audit is a process of examining policies, procedures, documentation, systems, and practices with respect to an organization’s HR functions. The purpose of the audit is to reveal the strengths and weaknesses in the organization's human resources system and any issues needing resolution. The audit works best when the focus is on analyzing and improving the HR function in the organization.
  14. 14. PURPOSES OF HRM AUDITING • Value – strategic (roi); operational (effectiveness); administrative (efficiency) and resource optimization (economical) • Compliance – legislative and organizational policy • Risk – people and related e.G. Ohs
  15. 15. OBJECTIVES OF HR AUDIT • • • • • • Effectiveness of performance of HR Department Implementation of HR policies, procedures; To find out the reasons for low productivity and improve HRD Strategies; Evaluation of the HR staffs & employee; Modify and Review HR system & challenges Questioning: To seek answers to : What happened ? Why did it happen? Why did it not happen?
  16. 16. Benefits of HR Audit • Identification of contributions of HR department • Helps identify the gaps between the current state and the standard, thereby streamlining HR work processes • Encouragement of greater responsibility and professionalism among HR members • Clarification of HR duties and responsibilities • Stimulation of uniformity of HR policies and practices • Ensuring timely compliance with legal requirements • Reduction of HR costs through more effective personnel procedures • A thorough review of HR information systems.
  17. 17. Frequency of HR audit • It is best to have a HR audit once in a year. The HR audit, if conducted continuously and regularly, then it becomes a fairly managed process. • The chances of drastic corrections become lower if it is conducted regularly. Usually, the frequency of the audit being conducted depends on the company. • An ideal audit can be conducted for every 18 months but the management must see to it that a well efficient audit is done on yearly basis.
  18. 18. THE PRINCIPLES OF EFFECTIVE HRM AUDITING • • • • • • • • • • Need for independence; Audit activities should be budgeted for properly; Acknowledgement that there are many types of audits; Each type of an hr audit has its own purpose and objectives; Establish timeframes for every phase/step of the audit; Training of auditors is a must; Set standards for the hr audits; Agree on reporting template; Auditors should sign a confidentiality agreement; and Auditors should agree beforehand on communication strategy.
  19. 19. Types of HR Audits • Compliance: Focuses on how well the company is complying with current federal, state and local laws and regulations. • Best Practices: Helps the organization maintain or improve a competitive advantage by comparing its practices with those of companies identified as having exceptional HR practices. • Strategic: Focuses on strengths and weaknesses of systems and processes to determine whether they align with the HR department’s and/or the company’s strategic plan. • Function-Specific: Focuses on a specific area in the HR function (e.g., payroll, performance management, records retention, etc.)
  20. 20. HR AUDIT-SECTION HRIS Performance Management and evaluation Recruitment Resourcing Documentation Training, & Development Safety Employee Relations Compensation and Benefits Welfare systems Health
  21. 21. The Scope of Human Resource Audits • Audit of Corporate Strategy The organization is going to gain competitive advantage. • Audit of the Human Resource Function Human Resource Information System, Staffing and Development, and Organization Control and Evaluation. • Audit of Managerial Compliance Human resource policies and procedures. • Audit of Employee Satisfaction To learn how well employee needs are met.
  22. 22. Audit of the Human Resource Function 1. Human Resource Information System - Human Resource Plans : Supply and demand estimates; skill inventories; replacement charts and summaries - Job Analysis Information : Job standards, Job descriptions, Job specifications - Compensation Management : Wage, salary, and incentive levels; Fringe benefit package; Employer-provided services
  23. 23. 2. Staffing and Development • Recruiting : sources, availability, employment applications • Selection : selection ratios, selection procedures, equal opportunity. • Training and development : orientation program, training objectives and procedures, learning rates • Career development : internal placement, career planning program, human resource development efforts
  24. 24. 3. Organization Control and Evaluation • Performance appraisals : standards and measures of performance, performance appraisal techniques, evaluation interview. • Labor-Management Relations : Legal compliance, management rights, dispute resolution problems. • Human Resource Controls : employee communications, discipline procedures, change and development procedures
  25. 25. Audit of Managerial Compliance • Compliance with laws is especially important. When safety, compensation, or labor laws are violated, the government holds the company responsible. • If managers ignore policies or violate employee relations laws, the audit should uncover these errors so that corrective action can be started.
  26. 26. Audit of Employee Satisfaction • It refers to an employee’s general attitude toward his or her job. • When employee needs are unmet, turnover, absenteeism, and union activity are more likely. To learn how well employee needs are met. • The team collects information about wages, benefits, supervisory practices, career planning assistance, and other dimensions of job.
  27. 27. HRM AUDIT MEASURES • HR PLANNING • RESOURCING – RECRUITMENT EFFICIENCY AND EFFECTIVENESS • COMPENSATION AND BENEFITS MEASURES • ORIENTATION/ON-BOARDING • EMPLOYEE COUNSELING AND DISCIPLINARY COSTS • LOST TIME COSTS • EMPLOYEE TURNOVER RATES • TRAINING AND DEVELOPMENT COSTS E.G. ROI • ORGANIZATIONAL DEVELOPMENT AND CHANGE MANAGEMENT
  28. 28. HR STANDARDS REFER TO ANNEXURE: • • • • • • • • • • • • • Strategic HR Management Talent Management HR Risk Management Workforce Planning Learning & Development Performance Management Reward Employee Wellness Employment Relations Management Organization Development HR Service Delivery HR Technology HR Measurement
  29. 29. Tasks of Auditors • Identify who is responsible for each activity. • Determine the objectives sought by each activity. • Review the policies and procedures used to achieve these activities. • Prepare a report commending proper objectives, policies, and procedures. • Develop an action plan to correct errors in each activity. • Follow up the action plan to see if it solved the problems found through the audit.
  30. 30. GENERAL AUDITING METHOD  Develop an understanding of the management system and procedures  Assess the strength and weaknesses of the management systems and procedures  Gather evidence and verify findings  Validate audit findings and exceptions
  31. 31. METHODS OF HR AUDIT INDIVIDUAL INTERVIEW METHOD GROUP INTERVIEW METHOD WORKSHOP METHOD QUESTIONNAIRE METHOD OBSERVATION ANALYSIS OF SECONDARY DATA ANALYSIS OF REPORTS, RECORDS, MANUALS AND OTHER PUBLISHED LITERATURE
  32. 32. INDIVIDUAL INTERVIEW METHOD • Top level management and senior managers are interviewed, individually. It helps in following: •  Knowing their thinking about future plans and opportunities available for the company  Knowing about their expectations from the HR audit  Getting sensitive information pertaining to working styles and culture
  33. 33. GROUP INTERVIEW METHOD Group interviews and discussions with the employees and executives of large companies for HR audit, facilitate collection of information about effectiveness of existing systems.
  34. 34. Relevant Questions that are asked in Individual And Group Interviews :          What do you see as the future growth opportunities and business directions of the company? What skills and competencies does the company have which you are proud of? What skills and competencies do you need to run your business, or to perform your role, more effectively at present? What are the strengths of your HRD function? What are the areas where your HRD function can do better? What is good about your HRD subsystems, such as: performance appraisal , career planning, job rotation, training, quality circles, induction training, recruitment policies, performance counseling, worker development programmes, and HRD departments? What is weak about them? What can be improved? What changes do you suggest to strengthen HRD in your company? What do you think are the ways in which line managers can perform more developmental roles?
  35. 35. WORKSHOP METHOD Workshop Methods also known as Large Scale Interactive Process (LSIP) is conducted in some cases of audit.
  36. 36. QUESTIONNAIRE METHOD • Feed back about various dimensions of HRD, including the competency base of HRD staff, the styles of line managers, the implementation of various HRD systems, etc are obtained through a detailed questionnaire from individuals or groups for HR audit. • This method helps in benchmarking.
  37. 37. OBSERVATION • The auditors should physically visit the workplace • To assess the extent to which a congenial and supportive human welfare oriented climate exists in the company. • This is essential because employees are not likely to give their best if they do not live in good surroundings • The observations can be conducted using a check list of questions.
  38. 38. ANALYSIS OF SECONDARY DATA  Analysis of secondary data can give an insight into the HRD assets and liabilities of the company.  Analysis of age profiles of the employees, analysis of the training attended, analysis of the minutes of the meetings held etc., help in determining the assets and liabilities.
  39. 39. ANALYSIS OF REPORTS,RECORDS, MANUALS AND OTHER PUBLISHED LITERATURE Published literature of the company including annual reports, marked hand-outs, training calendar personnel manual, and various circulars issued from time to time are also likely to help immensely in assessing the strengths and weaknesses of HRD.
  40. 40. HRM AUDITING PROCESS • PHASE 1: FOUNDATIONAL/INITIATION • PHASE 2: ASSESSMENT • PHASE 3: CONCLUDING AND REPORTING
  41. 41. OVERVIEW OF THE GENERIC HRM AUDITING PROCESS • DESIGN AND DEVELOP HR POLICIES, PROCEDURES AND PRACTICES FOR YOUR ORGANIZATION; • ASSESS CURRENT HR POLICIES, PROCEDURES AND PRACTICES AGAINST SET CRITERIA; • ANALYSE THE RESULTS FROM EVIDENCE; AND • TAKE ACTION: TO CLOSE GAPS, MAKE RECOMMENDATIONS/ SET IMPROVEMENT GOALS.
  42. 42. HRM AUDITING PROCESS ILLUSTRATED
  43. 43. HRM AUDITING PROCESS ILLUSTRATED
  44. 44. PHASE 1: FOUNDATIONAL/INITIATION • AUDIT SET-UP ACTIONS • AUDIT PLANNING ACTIONS       Determine the purpose and objectives of the audit Determine the scope of the audit Determine the organizational components to be audited Determine the auditing tool to be used Determine costs and resources needed to perform the audit Determine audit team governance
  45. 45. PHASE 2: ASSESSMENT • GENERAL COMMENTS • IDENTIFY KEY ORGANIZATIONAL DETERMINE EMPLOYMENT ACCOUNTABILITY METRICS ISSUES • DEVELOPING A CHECKLIST  REFER TO THE ATTACHED ANNEXURE: HUMAN RESOURCES BEST PRACTICE AUDIT AND NEEDS ASSESSMENT TOOL • FORMULATING AUDITING METHODOLOGY AND TOOLS
  46. 46. PHASE 3: CONCLUDING AND REPORTING • REPORT PREPARATION • REPORT PRESENTATION  QUANTIFY YOUR RESULTS - START WITH OUTCOMES  INCLUDE AN EXECUTIVE SUMMARY  IDENTIFY RISKS  IDENTIFY AND PRIORITIZE SOLUTIONS TO PROBLEMS IDENTIFY. WHERE POSSIBLE, FRAME YOUR SOLUTIONS FROM A BOTTOM LINE PERSPECTIVE, I.E., CALCULATE THE BENEFITS AND COSTS OF PROPOSED SOLUTIONS  EVALUATE AND DISCUSS THE ORGANIZATIONAL, FINANCIAL AND EMPLOYEE RELATIONS IMPACT OF ACTION OR INACTION • DEVELOP A HR IMPROVEMENT PLAN
  47. 47. The audit report Findings of research are used to developed a picture of the organization’s resource activities. For this information to be useful, it is compiled into audit report. The audit report is a comprehensive description of human resource activities that includes both commendations for effective practices and recommendations for improving practices that are less effective. Audit report often contain several sections. One part is for line managers, another is for manager of specific human resource function, and the final part is for the human resource manager.
  48. 48. Report for line managers How line managers handle their duties such as: • • • • • Interviewing applicants Training employees Evaluating performance Motivating workers Satisfying employee needs The report also identifies people problems. Violations of policies and employee relations law are highlighted
  49. 49. Report for the HR Specialist The specialists who handle employment training, compensation, and other activities also need feedback. Such feedbacks are : 1. Unqualified workers that need for training 2. Qualified workers that need for development 3. What others company are doing 4. Attitude operating managers toward personnel policies 5. Workers pay dissatisfaction
  50. 50. Report for HR Manager • It is contains all the information given to both operating managers and staff specialists. In addition, HR Mangers gets feedback about : • Attitude operating managers and employees about services given by HRD • A review of HRD plans • Human resource problems and their implication • Recommendations for needed changes and priorities for their implementation
  51. 51. Belajar dan Berbagi untuk 1ndONEsia lebih Baik

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