HR Audits: What, Why, and How

Strategic HRD

Conducting the Human

Resources Audit

What keeps you awake at night?

2by Dr.Gowri Ramachandran

What is an HR audit?

An HR audit is a process

• to review implementation of your institutions policies and procedures,

• ensure compliance with employment law,

eliminate liabilities,

• implement best practices and educate your managers. 3by Dr.Gowri Ramachandran

The audit should be:

Proactive

Reactive

Informative

Developmental

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Why conduct an HR audit?

• Ensure compliance

• Improve HR practices

• Train your managers

• Prepare for potential government audit or litigation

• Gain an understanding of department’s environment

• Show a “good faith effort”

• Correct errors5by Dr.Gowri Ramachandran

Audit Tools:

• Interview

• Document review

• Questionnaire

• Sampling

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What is the audit ‘testing’?

• Compliance with employment law

• Compliance with institution policies/procedures

• Training opportunities

• Department environment

• Potential liabilities

• Accuracy of records

• Manager’s understanding of law/policies/procedures

7by Dr.Gowri Ramachandran

Before you begin the audit process…

1. Determine who will conduct the audit.

Internal vs. External

2. Secure senior management commitment.

a. Are they ready to fix what’s broken, even if it costs $$$$?

b. Do they agree with the methodology?

c. Will they allow access to all departments/information?

d. Will they publicly support the process?8by Dr.Gowri Ramachandran

Before you begin the audit process…

3. Define the parameters.

a. Who will be audited?

b. What do you want to audit?

c. What audit tools will you use?

d. How will the process be rolled out?

e. How will results get reported?

f. Who will get the results?

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Before you begin the audit process…

4. Introduce the audit process to your managers.

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How do you introduce the HR audit to your

managers?1. Explain the reason for it.

a. To protect them and the institution

b. To help them understand policies, procedures, and laws

c. To gain a better understanding of their department

d. To help them set best practice procedures

e. To avoid costly and time consuming litigation

11by Dr.Gowri Ramachandran

How do you introduce the HR audit to your

managers?2. Give them a copy of the questions before the interview.

If you have an intranet, post the questions on it.

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Departmental AuditsWhat should you be concerned about?

Record Keeping

•Sick and vacation tracking

•Overtime reporting

• Statutory application

•Temporary worker tracking•Accessibility/safety/security of records

•Accuracy of records

Employee Files

•What is and isn’t in the employee file

•Access to the file

•Safety and security of the files

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Departmental AuditsWhat should you be concerned about?

(cont’d)Manager’s Understanding of Policies/Practices

•How to handle complaints of harassment

•How to calculate/report overtime

•Difference between exempt and non-exempt

•Giving employment references

•Affirmative Action requirements

•Statutory requirements

•Consistency applying policies and procedures14by Dr.Gowri Ramachandran

Reporting the Results

• Compile your findings in a draft letter

• Allow department head/manager to review your draft and make comments/corrections

• Compile final version

• Present report to senior management

• Copy department head/manager

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Remember….

The findings are not negotiable!

Allowing a department head and or manager to review your

draft is not a license for him/her to change your

findings.

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What should your memo contain?

• Recognition of department’s cooperation (or lack of it)

• State the facts – avoid opinions

• Document areas that need attention

• Document areas where department was proactive, compliant, practiced good judgment

• “Suggestions” on how to correct problem areas

• Time line for follow-up

• Offer Human Resources’ assistance

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Don’t forget to conduct an audit in your own (Human Resources)

department!Benefits

•No phantom participants

•Compliance with HRA

•Paying correct rates

Compensation/Payroll

•Correct use of exempts vs. non- exempt status

•Employees are correctly graded

•Job descriptions are available for all position or grade categories

•Limited access to systems/records

•PF numbers are secure and only used when necessary

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Review…Employee Relations

•Correct documentation of investigations

•Warning/disciplinary letters

•Policies and procedures are readily available to staff

•Required posters are visible to staff

•Sick and vacation tracking is accurate

Training and Development

•Programs are readily available to staff

•Tracking attendance

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Review…Records

•Employee files are kept in safe and secure area

•Limited access to files

•Necessary paperwork is readily available (job description, application, I9, W4, emergency contact)

•Certain records are kept separate from employee file (references, medical records, investigatory documents)

Employment/Recruitment

•Staffing and selection paperwork

•Affirmative Action forms

•Posting information

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Thank you!

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