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HUMAN RESOURCE AUDIT CRITERIA

HUMAN RESOURCE AUDIT CRITERIA

 

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A human resource audit reviews an organization’s policies, procedures, and practices. Its purpose is to examine the technical and practical dimensions of the HR function and to create a comprehensive system that adds value to the organization.

An audit is a means by which an organization can measure where it currently stands and determine what it has to accomplish to improve its human resources function. It involves systematically reviewing all aspects of human resources, usually in a checklist fashion, ensuring that government regulations and company policies are being adhered to. The key to an audit is to remember it is a learning or discovery tool, not a test. There will always be room for improvement in every organization.
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)

NEED FOR H.R. AUDIT:

Top Management saw solutions to their problems, issues and challenges in HRD to face business competition and to achieve organizational goals.

PURPOSE OF H.R. 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.
  3. To help human resource planners develop and update employment and program plans.
  4. To insure the effective utilization of an organization’s human resources.
  5. To review compliance with a myriad of administrative regulations.
  6. To instill a sense of confidence in management and the human resources function that it is well managed and prepared to meet potential challenges.
  7. To maintain or enhance the organization’s and the department’s reputation in the community.
  8. To perform a “due diligence” review for shareholders or potential investors/owners.

SCOPE OF HUMAN RESOURCE AUDIT

Whenever the H.R. Audit it taken up, the scope is decided. Audit need not be exhaustive, but should be focused on particular function of H.R.M. such as Training and Development, Performance Appraisal, Compensation, etc.. However, the objective and approach of H.R. Audit, more or less, remains the same, regardless of scope.

What does a full 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)Communications

9)Files/Record Maintenance/Technology

10)Policies and procedures (including employee handbook)

11)Communications

The following lists the core HR functional areas and summarizes what will be reviewed during an audit; it is not all-inclusive, and it may be subject to change. The scope of work for the audit may include a review of internal policies and processes, a review of filing and tracking systems, and surveys and questionnaires of employees and managers on the effectiveness of the human resources operation in the department. The Audit Schedule outlines who will be audited, when the audits will occur, and the functional area to be audited.

HUMAN RESOURCES ORGANIZATION/ADMINISTRATION. Organization of HR office, including appropriate class of professional positions; delegation of authority to and within the department; quality control to ensure consistency in authorities delegated within the department; documentation of processes, operating standards, and internal controls; administration of retention rights, including notices, matrix, use of separation incentives, and outplacement practices; how staff remain current and up to date with the HR field and the state personnel system; and techniques for communicating with employees and appointing authorities in department.

SELECTION. Recruitment methods, methods used in workforce and succession planning, and use of turnover data; access to and quality of job announcements; quality of job analyses; exam development, administration, and scoring; length of eligible lists, including merged lists and notice of appeal rights; and referrals and interviewing practices.

JOB EVALUATION . Standards, processes, and internal and quality control methods for reviewing and updating PDQs including essential functions, FLSA notification, turnaround times, and repeat requests; internships for new evaluators; allocation process including quality of reports and employee notification; process to address concerns with non-appealable decisions; communication process for official system maintenance studies; and standards, internal controls, and processes for reviewing and exempting positions from the state personnel system.

TOTAL COMPENSATION. Standards, and processes used to develop and communicate internal compensation policy and plans; internal controls to ensure accuracy and consistency of pay and leave; policies on pay adjustments; pay differentials and incentive awards; overtime pay; premium pay awards including hazardous duty pay, housing premium pay, documentation on approval of requests to pay shift and on-call premiums to individuals in classes not designated by the state personnel director. Leave management standards, internal controls, and practices; confidentiality policies and agreements with those handling health-related information; leave tracking systems; FLMA compliance including designation and notification; leave sharing plans; and maintenance of annual SES performance contracts, including filing with state personnel director. Standards and processes for enrollment for new employees in benefit plans; communication methods for open enrollment; worker’s compensation reporting; process for reporting employment claims; and compliance with COBRA and STD benefits requirements.

PERFORMANCE MANAGEMENT. Most current Performance Pay Program is approved and on file with the state personnel director, including methods of communication to new and current staff and plan for mandatory supervisory training; completion rate of plans and ratings including quality control and review for consistency of ratings; methods used to determine distribution of awards; efficiency and communication of the internal dispute resolution process; and compliance with requirements for sanctions.

WORKFORCE DEVELOPMENT. Orientation program for new employees and supervisors; training programs and delivery methods including courses, training staff, and cost; workforce development policies including drug-free workplace, workforce violence and sexual harassment prevention, diversity, etc.

EMPLOYEE RELATIONS. Number, type, and outcome of appeals, grievances, and director’s reviews; internal grievance processes; other forms of alternative dispute resolution used; communication methods and forms; number, type, and outcome of corrective and disciplinary actions; any methods used to address work environment issues.


RECORDS MANAGEMENT
. Content of employee, payroll, medical, and position files; internal controls to ensure accuracy and control access; compliance with IRCA (I-9); process for purging records; FLSA designations; a review of employee timesheets; posting of required notices; and methods to ensure timely and accurate reporting of information to the state personnel director.

HR AUDIT FORM

EMPLOYEE RELATIONS

• Are the “Employer/Employee Guidelines for Wrongful Termination” followed?

• Is there a formal Performance Improvement Program policy?

• Are terminations handled in a manner that complies with applicable laws and association policy?

• Is written performance documentation maintained?

• Are performance reviews done on a regular basis?

• Do employees clearly know upon what their appraisals will be based?

• Do you have an open door policy for employee complaints?

• Is the sexual harassment policy clearly communicated to all employees?

• Are employees provided with a comfortable work environment?

• Are personnel files retained in compliance with applicable laws?

• Have all employees received a copy of the employee handbook? Have they signed a statement that they have received, read and understand its contents?

• Does the handbook have the appropriate “Employment At Will” disclaimer?

RECRUITING

• Is a standard application form used?

• Do job descriptions exist for open positions?

• Does the job description drive the writing of the employment ad?

• Does the job description drive the selection of behavioral interview questions?

• Are all qualified candidates interviewed?

• Is the selection decision made in compliance with the applicable employment laws?

• Have candidates given written permission to contact references?

• Are references checked before offers are made?

LEGAL
• Are all employee decisions based on Bona Fide Occupational Qualifications?

• Are required employment law posters displayed in an appropriate place?

• Are you making employment decisions based on applicable employment laws and compliance thresholds?

TRAINING
• Is an orientation conducted for all new hires?

• Do all new hires receive job-specific training?

• Are current employees allowed to take skills-based training as needed?

COMPENSATION
• Are employees appropriately classified (exempt vs. nonexempt, employee vs. independent contractor)?
• Is there compliance with the Fair Labor Standards Act in terms of minimum wage, overtime pay and record keeping?

• Is there compliance with other applicable employment laws?

• Are employees paid a competitive rate?

• Is there internal equity among current employees?

• Is compensation tied to performance?

BENEFITS
• Are the benefits offered sufficient to attract the desired level of talent?

• Are the benefits offered in compliance with the appropriate laws?

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