Human resource Audit PDF

Introduction:
Human resource audit is defined as the vital tool that is conducted regularly for analyzing the
administration of the human resources encompassing monitoring and gathering of the data, its
evaluation and the assessment based on the efficiency with which the firm’s uses the human
resources. The main motive for the adoption of the human resource audit is to enhance the
performance of the staff and to increase the job satisfaction by ensuring proper evaluation of the
HR performance. HR audit has a massive influence on the morale and performance of the
employees and this helps to boost the performance of the firm. It is due to this that human
resource audit is strongly correlated to the balance scorecard of the business using productivity,
people and process. HR audit plays a key role in the HR transformation and enables the firm to
evaluate its strengths and weakness. (Gupta 2008).
HR audit involves the analysis of the system of the human resource in the firm at various levels
of the hierarchy. The incorporation of the HR audit is useful since it enables the firm to augment
the employee morale and plays a vital role in making them think constructively. It is possible for
the company to identify the organization’s deficiency and is crucial in recognizing the
recommendations for improvement. HR audit is a diagnostic method that is useful in recognizing
the existing conditions and the deviation presence between the existing and the needed
performance. While adopting to the HR audit, it is necessary to make sure that there is an
alignment between the HR process and the business (Osama, 2012)
Q1. The objectives and practices of Human Resources Audit:
As pointed out in the case study, there are several objectives for the incorporation of the HR
audit in the firm. These are discussed in correlation to the variables including job satisfaction,
commitment and morale of the employees. HR audit is an organized process that is developed for
evaluating the strategies, policies, methods, documentation, structure etc. as correlated to the
human resource management of the firm. The strengths, limitations and the needs of the HR can
be successfully evaluated by the usage of the HR audit. HR audit is vital for ensuring the
efficiency of the firm. Several objectives can be attained by HR audits like making sure that
there is legal adherence, assisting in enhancing the competitive advantage, laying down proper
documentation and practices of technology, recognizing the strengths and weakness of training
and communication etc. (Mayo, 2005)
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The objectives of the human resource audit as are follows:
 To evaluate the compensation program and the rewards provided by the HR department
to ensure that it is adequate enough to boost the job satisfaction, commitment and morale
of the employees.
 To ensure the compliance of the HR activities with the right standards which will help to
provide fair and discrimination free policies. This fair treatment of the employees will
help to boost the job satisfaction and morale of the employees.
 To assess the HRD performance and the activities for the purpose of evaluating the
effectiveness of incorporating the different policies to attain the goals of the firm.
 To recognize the various gaps and drawbacks in the policies and the guidelines laid down
by the HRD and to develop measures to overcome it. These revised policies are vital for
enhancing the level of satisfaction of the staff.
 To find out the different factors that is harmful to the lack of implementation of the
anticipated activities of the firm and those which obstruct the employee satisfaction and
productivity.
 To recommend the different steps to correct the mistakes and the drawbacks such that it
helps to attain good performance of the HRD and helps to boost the commitment level of
the employees.
 To analyze the performance of the employees as stated in the performance appraisal
report and give suggestions for boosting the productivity of the staff.
 To evaluate if the recruitment and selection and other HR process are carried out
efficiently or not and the costs which are associated with it and ensure that it is lowered.
 To analyze the process used by HR and how technologically advanced methods can help
to boost the technology (Foster, 2010)
There are several different approaches of HR audit and this include comparative approach,
outside authority approach, statistical approach and compliance approach. Comparative approach
involve HR auditors making use of a single model and the outcome is compared with the audited
outcomes. Outside authority approach serves as the benchmark for comparing the results. The
outside consultant sets the standard which is referred as the benchmark. The statistical approach
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involves the statistical data of the firm related to absenteeism, turnover rate of the employees etc.
and is used as the measure for analyzing the performance. The compliance approach involves
auditors reviewing the past actions for evaluating if the activities is in adherence to the legal
provisions and the policies of the firm. The management by objectives approach have fixed
specific target. The performance is evaluated against this target.
Q2. 4 HRA dilemmas and its effectiveness towards achieving organizational objective:
HR audits are not the usual practices which have the motive of solving the issues. Rather than
providing direct solution for the issues, HR audits benefit in giving insight for the possible
causes of the current or the upcoming dilemmas. Some of the HRA dilemmas are:
 Salary and benefits: There is possibility for absence of the competitiveness due to the
compensation program not being good enough and not providing incentives to the
employees for boosting the performance. This issue can be analyzed using the HRM audit
and it can be ensured that the better salary and reward system is utilized in the firm. This
will help in boosting the employee morale and the satisfaction of the employees. This is
essential for attracting and retaining the talent in the company and hence is highly
essential for the attainment of the organizational objectives.
 Training and development activities: The lack of proper training and development
opportunities to ensure that the employees are equipped with the required skills and
competencies for gaining higher value added roles can lead to absence of the
competitiveness. HR audit plays a vital role in recognizing this inefficiency of the
training and development opportunities and to take measures to boost the training and
development opportunities given to the employees. This will help to meet the skills set
required for performing the tasks of the company and to ensure satisfaction and employee
morale.
 HR Audit helps to identify the absence of the due process and the fairness since the firm
does not have proper guidelines for the HRM practices. The incorporation of fair
practices in the organization is very vital for boosting the morale of the employees and
for retaining them. HR audit will help to ensure that fair practices and policies are used in
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the firm and this helps to overcome the obstacles to the attainment of the goals of the firm
because of employee turnover, absenteeism etc.
 Absence of efficiency due to the incapability to utilize the technology for automating the
HR process and ensuring quick access to the information which is necessary for the
decision making of the firm. HRA is able to identify this inefficiency and is able to
overcome this. It is crucial for the top management of the firm to have fast access to the
vital information of the company as this will enable the firm to take efficient, wise
decision and will help to adapt to the changes in the environment in a quick manner. This
is vital for gaining the competitive advantage and helps to accomplish the objectives and
long term goals of the firm. The implementation of HR audit will help to identify this
issue and will make sure that advanced technological methods are used which will benefit
in boosting the speed of information access to the top management of the firm.
Q3. Analysis of HR Audit by external expertise and discussion of whether Internal or
External audit is more sufficient:
There are two types of audit: internal audit and external audit. The internal audit is carried out
with the help of the own staff of the organization as a part of the firm’s control activities. On the
other hand, the external audit of the firm is conducted by the external auditors who are hired just
for this purpose. The benefit of using the external audit is that it helps to gain an unbiased
analysis by the proficient individuals working in the HR management aspects. Conducting an HR
audit by an external expertise such as Buck Consultants Inc. helps to have an independent
evaluation of the HR activities of the firm. Since it is conducted by an external organization (like
Buck Consultants Inc.), it is independent and unbiased. A thorough and precise evaluation of the
HR department activities can be conducted by conducting external audit.
The external HR audit is more preferred than the internal one because it helps to lower the
probability of the conflict of interest. This is because the external auditing organization does not
have any involvement in the other activities of the firm. The external auditing is given more
preference and is considered more adequate as compared to internal auditing. This is because
conducting HR audit by external auditors is more precise since they are more experienced and
proficient at it. Also, the level of biasness is not present when the external organizations are
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approached for HR audits as compared to the internal ones. Even though the cost involved for
hiring an external organization or auditor is higher, it is better as compared to the internal HR
audit. Some firms choose internal auditors for conducting HR audits because it is cheaper but
this results in a biased HR judgment. The internal auditors who are the staff of the firm, fail to
provide an accurate report regarding the HR activities and prevailing conditions since they fear
for their job positions and do not want to lose their job. This forces them to give a positive
review regardless of the prevailing circumstance, thus failing the purpose of conducting the audit
at the first place (Longenecker, 2013)
The more sufficient and comprehensive analysis of the HR activities can be obtained by
choosing the external auditing. It helps to deliver the viewpoint of the auditor without any
biasness and gives a true and fair insight of the human resource department. While the internal
audits are carried out very frequently i.e. every month (since it is simple and less time
consuming), the external audits are carried out on an annual basis (as it is complicated and time
consuming). As per the opinion of the stakeholders and the government, the presence of external
auditing for the HR department is better since the information can be useful in analyzing the
growth. This helps to provide a fair and true insight of the HR activities and thus offers more
transparency to the stakeholders. This is beneficial for the potential candidates and employees
since they can make a wise decision regarding joining the firm. This is helpful for the current
employees too as it will help to enhance the working conditions and work environment thus
leading to more satisfaction, morale and commitment of the employees (AFS, 2019)
Conclusion:
The main motive for the adoption of the human resource audit is to enhance the performance of
the staff and to increase the job satisfaction by ensuring proper evaluation of the HR
performance. Rather than providing direct solution for the issues, HR audits benefit in giving
insight for the possible causes of the current or the upcoming dilemmas. This includes dilemmas
associated with pay and wage, training and development, fair practices etc. The more sufficient
and comprehensive analysis of the HR activities can be obtained by choosing the external
auditing. It helps to lower the probability of the conflict of interest. This helps to provide a fair
and true insight of the HR activities and thus offers more transparency to the stakeholders.
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References:
1. AFS (2019) Human resource audit process [Online] Accessed from:
https://www.affluentcpa.com/human-resource-audit/ [Accessed on: 24th April 2020]
2. Lee, Soo Hoon (2000) A managerial perspective of the objectives of HRM practices in
Singapore: An exploratory study, Singapore Management Review; 22, 1; ProQuest
Central
pg. 65
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Performance Management, Vol. 67 No. 9, pp. 2108-2125.
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7. Mayo, A. (2005), "Helping HR to understand the strategic value chain", Strategic HR
Review, Vol. 5 No. 1, pp. 32-35.
8. Foster, S. (2010), "Creating HR value through technology", Strategic Direction, Vol. 26
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9. Meijerink, J., Bondarouk, T. and Kees Looise, J. (2013), "Value creation through HR
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