Unfortunately, most organizations never audit their human resource policies, practices or outcomes to see if they need similar improvements in effectiveness or to be more legally defensible.

Why Conduct an HR Audit?
Oftentimes the individual responsible for HR has many other duties and is pulled in many directions. This can lead to compliance gaps when areas are not reviewed on a regular basis to ensure the organization is still in compliance with ever-changing laws.

Equally as often, we find organizations that do not have an HR function, per se, but rather several individuals handling various portions of HR. This situation frequently leads to disconnects between policy and actual processes, generally because no one person is responsible or accountable for administering HR according to policy.

Focus of the Audit
The Human Resources Assessment is a comprehensive review of all general functional areas related to human resources management. Typical areas for review can include any or all of the sections found in Human Resource Basics. The most common areas that fall under Human Resources include:

• Recruitment and Retention
• Policies and Procedures
• Compensation and Benefits
• Legal Compliance
• Training

Audit Feedback and Action Plan
In a report, findings and recommendations are generally prioritized based upon the risk level assigned to each item. These risk levels include:

1. High: legal requirements based upon HR legislation, case law and compliance. These are items that, in our opinion, require immediate attention.

2. Medium: best practices that help a company avoid risks and are, therefore, highly recommended. These are items that we recommend be dealt with in a relatively short timeframe as they can easily become high risks if items fall between the cracks.

3. Low: best practice based upon our experience with HR administration in other, similar organizations. These are administrative suggestions to make the department more effective and efficient.

From this report, an HR action plan can be developed to address the most pressing items first. The most common errors found generally include:

• Lack of written policies and procedures or inconsistencies in administering them.
• Personnel files and all documentation are filed incorrectly.
• Poorly designed or indefensible compensation systems.
• Non-existent or poor disciplinary documentation.
• Lack of awareness regarding compliance requirements.

The Bottom Line
The importance of conducting periodic and systematic human resources audits cannot be overemphasized. Through the audit process, an employer is able to identify those aspects of its human resources management that are in disarray, before the problems become the subject of a claim or lawsuit. A human resource audit of your organization will provide clear direction for developing and implementing effective human resource strategies, practices and policies to further the overall goals of the firm. Because of these benefits, the wise employer will conduct systematic and periodic human resources audits, and treat them just as seriously as financial audits.

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