Human Resource Audit

August 18, 2017 | Author: Sara Riaz | Category: Audit, Employment, Business Ethics, Recruitment, Performance Appraisal
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Human Resource Audit


Fatima Malik 1066104 Sara Riaz 1066109 Alee Hasan 1066111 Adeel

About the author: The article of Joan Curtice Published online inWiley InterScience further elaborates the purpose of the HR Audit. Joan Curtice is a human resources consultant based in Burlington, Massachusetts. She has 20 years of experience designing, developing, and implementing legally compliant HR functions in both established and fast-paced start-up high-technology and biotechnology organizations. The author also supports clients by conducting HR audits, investigating inappropriate workplace behaviors, and conducting interactive workshops to identify and recommend changes to inappropriate behaviors. She has also consulted to clients in benefits analysis and design, training, career development and outplacement, and recruitment strategies.

Human Resource Audit: Human resource Audit is basically a framework through which the Human Resource managers measure the effectiveness and efficiency of the embedded polices practices and functions of HR. The process starts with the identification of the of desired HR practices followed with assessing the current HR practices against the established criteria, analyze results and establishing improvement Goals. The HR audit involves the following steps Planning

→ Goal Setting

→ measuring progress

Continuous improvement cycle

Purpose: HR audit evaluates the legal compliance and safe business practices.


The Aspects of HR Audit: It includes overall all the aspects of the HR including the process of recruiting new employees, bringing them aboard, enrolling them in benefits programs, safeguarding their confidential information, managing and supporting them, and participating in their exit from the company. For a brief review of how it works the author has given a checklist that s the major visible, tangible areas of HR that can be evaluated for compliance. The items included in each area are checked off as being in compliance with what is legally required or “not up to standard” or “missing.” It is then the company’s decision to take the appropriate actions or recommendations included in the report.

Area of HR Audit: A) Pre employment requirements: Pre employment phase involves getting resources for the new hires.

1) Mandated Posting: Includes all those posts that are required in the worksite so that workers have access to information about applicable labor laws.

2) Employment Application: The process of planning to hire new recruits requires the use of the employment application designed to capture the information that a company needs for assessing the candidate’s suitability for both the job opening and the corporate culture. This includes the all the essential details for e.g. candidate’s name, contact information, the position applied for, education, work/volunteer history with dates, previous compensation, specific skills, references, and so on. Additionally, the application serves to make some specific legal statements to potential candidates. -3-

3) The employee Handbook: A handbook should be formulated that provides comprehensive overview to the employees regarding the corporate culture, code of conduct and policy. The same shall be updated and reviewed regularly. Moreover the handbook must not hold fake or overstated promises regarding the work environment. The handbook includes the areas like equal opportunity, medical, maternity leaves, provident funds, employment laws, safety measures etc. Also the communication channel should be mentioned for the employees for recommendations, whistle blowing, this can be done through email or intranet. The legal counsel shall also review the handbook to ensure its compliance with the State & federal requirements.

4) Interviewing Standards: The individuals designated for interviewing the candidates must be trained regarding the dos and don’ts of the interview for this training would be feasible. For instance the interviewer shall not inquire about the personal information of the candidate like marital status, ethnic, racial, national origin or religious affiliation.

B) Hiring Process: The process includes the pre employment testing for e.g. skill, medical, or drug testing.

1) Skill Testing: The skill test includes the preamble for the job. The test should be able uncover the candidates ability to perform a specific task those are relevant to particular position. For e.g. the administrative position require the person to be an efficient typist. Moreover the hiring practices shall not be discriminatory.


2) Medical Testing: The candidate undergoes the medical test after the offer letter has been received. The candidate can be refused for employment if the test is not satisfactory. In certain companies where candidates health can directly affect the service for e.g. the driver of the pilot in such cases the individual undergoes the drug testing program.

3) Offer Letter: The offer letter may clearly state the candidate’s position, restate the requirements or expectations. It shall also state the salary and the pay period. Permanent should not be used as the employment status they should be referred as full time/ regular of part time employees.

4) New hire orientation process: New employees require consistency in facilitating the employee’s assimilation into the organizations culture and also to ensure legal compliance with respective to materials that are distributed to all employees. The new-employee package that includes a checklist indicating the materials an employee is being given to read and keep and those forms that must be completed and returned to the company. The checklist serves as a helpful tracking tool in two ways. It ensures that relevant legal documents are returned and executed.

5) Work Place policies & practices: The workplace policies & practices differ from organization to organization. Certain companies highlight each and every aspect and formulate a policy for compliance whereas some of the organization may not depend on the spelling out of their entire process.


6) Safeguarding Employee Information: Companies must work to safeguard the employees’ confidentiality. For instance personal information such as marital status, children, and age. Employers must handle the information with confidentiality. Proper maintenance of the candidate’s documents in separate file is recommended.

7) Employee Performance Management An audit will review the company’s job descriptions for ADA compliance also to ensure that the JD reflects all the necessary functions because many legal issues arise out of performance problems, the audit will review or recommend standard items such as:  A 90-day written standard performance evaluation form,  An annual written standard performance evaluation form,  A performance management/performance improvement plan  A description of the company’s policy for both voluntary resignation and companyinitiated termination.  To ensure consistency in compensation, an audit will review your:  Wage and salary administration program  Bonus/stock option criteria (if applicable)

8) Safe Work Environment Audit practices vary among companies. A company may choose to develop an audit sheet formulated to address a particular issue, such as the company’s zero-tolerance policy for harassment.


The companion policy to a zero-tolerance policy for harassment is a clear statement that the company will not retaliate against anyone who makes a complaint about such a violation. The non harassment policy is only as good as the company’s willingness to allow it to work. It cannot work in an environment that contains fear of retribution. A non retaliation policy sends a clear message that retaliation won’t be tolerated and that it also is illegal. In truly safe work environments, employees feel confident that they have a place to go when they have workrelated problems.

In truly safe work environments, employees are confident that they have a place where they can discuss their work-related problems. In this environment, executives actively announce and ensure that all employees know that senior staff members are behind this effort. They model the behavior and communicate relevant procedures and resources so that everyone feels comfort-able and safe. An open-door policy is well worth the effort of informing the supervisors and managers how to deal with the employees. It also includes the aspects of how managers react to inappropriate behaviors and activities in the workplace. HR manager must portray a clear procedure through which employees are and afraid of reporting incidents.

C) Auditing work place behavior that supports legal compliance: A Good work environment is not only mandated by the law, but also makes good business sense. Increased motivation and productivity typically are the results of a safe environment. People are at their most productive when they are not distracted with concerns for their safety or well-being.

Method of Review: The HR Manager must audit on the basis of following:

 Referring to the HR audit report, are there posters visible throughout the company specifically prohibiting such behaviors? -7-

 Review of new employee: Does each employee receive a copy of the policy upon package hire?

 Does the company redistribute a copy of the policy with a cover memo from a senior manager clearly stating the company’s expectation of appropriate and Respectful behaviors?

 Does the memo contain information regarding to whom/where to report violations of the policy?

 Does the company have a clearly published and posted employee handbook (both) non retaliation policy?

 Are reports of harassment or other inappropriate interviews behaviors investigated promptly by HR and handled discreetly? Review of HR files Is there documentation representing such investigations with the results?

 Is there documentation indicating various forms of sanction up to and including termination if an investigation indicates that inappropriate behaviors occurred?

 Are managers trained on how to handle reports of harassment?

 Are employees advised of their rights and informed on how and where to make a report of inappropriate behaviors?

 Do employees indicate a thorough understanding of the company’s beliefs regarding safe and respectful workplace behaviors? -8-

D) Checklist audit versus Business purposes audit:  The use of a checklist for HR audit with, the auditor reviews are considered the “visible” or “tangible” employment-related items that help the employer standardize the employment process.

 An auditor will walk through the worksite and look for and review such things as offer letters, written policies, and, perhaps, the text of an interviewer training program, confirming that certain items exist and indicating what items are missing or insufficient.

 A report is then sent to management recommending changes that are needed to bring the company into legal compliance.

 The portion of an HR audit that evaluates business practices is more difficult to conduct.

 To assess the company’s business practices, an auditor should first spend time observing interactions among employees and conduct random interviews. If inappropriate behaviors are observed and/or recounted during interviews.

The auditor will review employee files for evidence that employees have been given the documented verbal warnings, recommendations for counseling to alter inappropriate behaviors, performance improvement plans, and disciplinary warnings up to and including termination if allegations can be proven to have occurred. If inappropriate behaviors are witnessed or discovered through interviews and no evidence is found in any employee files to sanction certain employees, then the auditor will indicate in a report to management that the company is at risk for legal intervention

Training is required for managers and supervisors as how to listen and watch for potential problems even before an employee reports inappropriate behaviors. In -9-

addition to these proactive efforts, managers need to learn how to handle difficult situations to prevent disruptions, distractions, and a decline in productivity. A dignified and respectful workplace makes good business sense, as employees are at their most productive when they feel secure and safe in their work environment.

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