HR AUDIT
PRESENTED BY –
1. SUYOG LOHAKARE
(03)
2. KIRTI CHOUKIKAR
(20)
3. SHIVANGI SAIN (45)
4. AKSHAT MANDLOI
Human Resource Audit is a systematic
assessment of the strengths, limitations,
and developmental needs of its existing
human resources in the context of
organizational performance – (Flamholtz,
1987)
LAYOUT
1. Objectives
2. Purpose
3. Types
4. What does an audit entail
5. Approaches
6. Auditing process
7. Challenges for HR department – Dave Ulrich
8. Auditing methods
9. Case Study
10. Conclusion
OBJECTIVES OF AUDIT
1. The audit itself is a diagnostic tool, not a prescriptive
instrument
2.It will helps to identify what you are missing or need to
improve, and it may even tell you what you need to do to
address these issues.
3.It is most useful when an organization is ready to act on
the findings, and to evolve its HR function to a level where
its full potential to support the organization’s mission and
objectives can be realized.
Purpose of audit
1.To examine and pinpoint strength and weaknesses related to H.R.
areas and Skills and Competencies to enable an organization to
achieve its long-term and short-term goals.
2. To increase the effectiveness of the design and implementation of
human resource policies, planning and programs.
To help human resource planners develop and update employment
and program plans.
3.To insure the effective utilization of an organization's human
resources.
4.To review compliance with a myriad of administrative regulations.
5.To instill a sense of confidence in management and the human
resources function that it is well managed and prepared to meet
potential challenges.
6. To maintain or enhance the organization's and the department's
reputation in the community.
7.To perform a "due diligence" review for shareholders or potential
investors/owners.
compliance
function
specific TYPES Best practice
Strategic
WHAT DOES AN HR AUDIT ENTAIL ?
1.Legal compliance
2.Compensation/Salary Administration
3.Employment/Recruiting
4.Orientation
5. Terminations
6.Training and Development
7.Employee Relations
8.Files/Record Maintenance/Technology
9.Policies and procedures(including employee
handbook)
APPROACHES:
Approaches to Human Resources Audit
Prof. K. Aswathappa has identified the following approaches, which are
adopted for purpose of evaluation:
• Comparative approach
• Outside authority approach
• Statistical approach
• Compliance approach
• Management by objectives (MBO) approach
What we infer from these approaches??
The main functions of human
resources audit are to take specific actions that
will help minimize employee turnover orientation
training, working conditions, remuneration and
benefits and opportunities for advancement.
Therefore, quality of turnover is more
important than the quantity of people leaving
and joining the industry. Human resources
management should create a work environment
to make employee realize that it makes a sense to
work in the factory rather than staying at home
and waste their time.
AUDITING PROCESS: STEPS IN
H.R. AUDIT
STEP ONE: Briefing and Orientation
STEP TWO: Scanning material information
STEP THREE: Surveying employees
STEP FOUR: Conducting interviews:
STEP FIVE: Synthesizing
STEP SIX: Reporting
CHALLENGES FOR H.R. DEPARTMENT
EIGHT CHALLENGES IDENTIFIED BY DAVE ULRICH (1997)
1. Globalization
The H.R department will need to create models and processes
for achieving global activeness, effectiveness and competitiveness.
2. Managing the Value Chain for Business Competitiveness.
Innovation
Faster Decision Making
Price or Value Advantage
Effective linking with Suppliers
3. Growth of the organization
By increasing customer, acquisition and mergers.
4. Building organizational capabilities
Reviewing existing capabilities
New capabilities
Aligning new capabilities with business strategies.
5. Managing Change
Adopting some new H.R. Practices
Learning some New Skills and Attitudes
Unlearning some existing skills and Attitudes.
6. Making Technology viable
Finding out ways and means to make technology
successful.
7. Attracting and Retaining Intellectual Capital
Attracting Talented People.
Retaining them.
Utilizing them suitably.
8. Transforming the Organisation
Creating fundamental and lasting changes.
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
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
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
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.
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?
WORKSHOP METHOD
Workshop Methods also known as Large Scale Interactive Process
(LSIP) is conducted in some cases of audit.
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.
OBSERVATION
o The auditors should physically visit the workplace
o To assess the extent to which a congenial and supportive
human welfare oriented climate exists in the company.
o This is essential because employees are not likely to give
their best if they do not live in good surroundings
o The observations can be conducted using a check list
of questions.
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.
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.
IT SECURITY AUDITING
CASE STUDY
Steps of An ITAudit
1. Planning Phase
2. Testing Phase
3. Reporting Phase
PLANNING PHASE
Entry Meeting Site Survey
Define Scope Review Current Policies
Learn Controls Questionnaires
Historical Incidents Define Objectives
Past Audits Develop Audit Plan / Checklist
Testing Phase
1. Meet With Site Managers
2. Data Collection
3. Types of Data
REPORTING PHASE
Long Report After Going Through Data
Intro defining objectives/scope
How data was collected
Summary of problems
Table format
Historical data (if
available)
Ratings
Fixes
In depth description
PREPARING TO BE AUDITED
This Is NOT a Confrontation
Make Your Self Available
Know What The Scope/Objectives Are
Know What Type of Data Will be Collected
Know What Data Shouldn’t be Collected
CONCLUSION
Audit will give all the necessary information required about finance and
performance of the employees
planning phase is very important.
Employees should be available for testing phase
Reports should focus on in depth description of
problems
